Govt waives 3-year lock-in period on investments by non-residents in IDF bonds – Livemint

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  • Last Updated on 28 October, 2020

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17th September, 2019
 
Naveen Wadhwa, Deputy General Manager, Taxmann Said:
To attract off-shore investments into IDFs, any amount of interest received by non-resident or foreign company from investment in such IDFs is charged at a reduced tax rate of 5%, said Taxmann Deputy General Manager Naveen Wadhwa.
 
IDFs are investment vehicles to accelerate the flow of long-term debt to the sector.
 
Wadhwa said if a non-resident transfers rupee-denominated bonds of IDF to another non-resident outside India, such transfer is not regarded as transfer for the purpose of capital gain, and no capital gain tax is charged on such transfer.
 
However, all these benefits are available only when IDF is set up as per the prescribed guidelines and fulfil required conditions.
 
One of such conditions was that the investment made by a non-resident in bonds should be subject to a lock-in period of three years except where transfer is made to another non-resident.
 
“In order to further boost the foreign investment in the infrastructure sector, the government has decided to remove the said lock-in period. Thus, non-resident investors would now be able to freely transfer the bonds of IDFs,” Wadhwa said.

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