New Delhi, Feb 1: In order to incentivise the investment by the Sovereign Wealth Fund of foreign governments in the priority sectors, Union Finance Minister Nirmala Sitharaman proposed to grant 100 per cent tax exemption to their interest, dividend and capital gains income in respect of investment made in infrastructure and other notified sectors before March 31, 2024 and with a minimum lock-in period of three years.
Ms Sitharaman said to make available foreign funds at a lower cost, she proposed to extend the period of concessional withholding rate of 5 per cent under section 194LC for interest payment to non-residents in respect of moneys borrowed and bonds issued up to June 30, 2023. Presenting the Union Budget 2020-21 in Parliament, the Finance Minister proposed to extend the period up to 30th June, 2023 for lower rate of withholding of 5 per cent under section 194LD for interest payment to Foreign Portfolio Investors (FPIs) and Qualified Foreign Investors (QFIs) in respect of bonds issued by Indian companies and government securities.
She said that entrepreneurship has always been the strength of India and young men and women of the country have been contributing to India’s growth with their entrepreneurial skills. 'We recognise the knowledge, skills and risk taking capabilities of our youth and they are no longer job seekers but they are job creators,' she added. The Finance Minister proposed setting up of an Investment Clearance Cell that will provide 'end to end' facilitation and support to create more opportunities to youth and remove roadblocks.
She also proposed to develop five new smart cities in collaboration with States in PPP mode and such sites would be chosen that offer the best choices in terms of the aforementioned principles. The Finance Minister proposed to further consolidate the gains in order to make India more attractive Foreign Direct Investment (FDI), destination. She said the Government will examine suggestions of further opening up of FDI in aviation, media and insurance sectors in consultation with all stakeholders. Hundred per cent FDI will be permitted for insurance intermediaries and local sourcing norms will be eased for FDI in single brand retail sector.
Growing inflows of FDI rebounding of portfolio flows from net outflow to net inflow and receipt of robust remittances, all showing up in higher accretion of foreign exchange reserves, which as on end December, 2019 stood at USD 457.5 billion. (UNI)