Budget 2024: A compelling case for a sunset extension for Sovereign and Pension Funds tax incentive
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While we have become the fifth largest economy, the target is to become the world’s third largest economy by 2030. Given the rapid growth in public expenditure especially in the infrastructure space, it is quite clear that the aim of the government is to do so on the back of our ambition of becoming the next global manufacturing hub, which in turn would be aided by a single-minded focus on improving logistics and other core infrastructure required by the manufacturing sector to flourish.
Indian Government has rightly prioritized “Infrastructure and investment” by terming it as one of the “Sap rishi” (i.e., Key Priority) in Budget 2023.
The Government has also launched National Infrastructure Pipeline (NIP) and National Monetization Plan, established the National Investment and Infrastructure Fund (NIIF), introduced Infrastructure Investment Trust, combined with other initiatives to promote development of infrastructure in India.
Infrastructure projects are capital intensive, have a longer gestation period and call for a steady and patient flow of capital. With a view to facilitate this, Indian Government through the Budget 2020 introduced a new tax incentive provision (section 10(23FE)) in the Income-tax Act to attract long term investment for promoting infrastructure development in India.
