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Budget new rules on holding firms queer pitch for sovereign, pension funds

A proposed regime requiring investments through holding companies may have tax implications, say experts

holding companies, holdco, funds, promoters, firms
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Amit Singhania, Partner at Shardul Amarchand Mangaldas & Co, said that there is no definition of what will qualify as sovereign wealth fund | Illustration: Binay Sinha

Sachin P Mampatta Mumbai
The Union Budget 2021-22 has made it easier for sovereign wealth funds and pension funds to invest in Indian infrastructure projects, but some of the new rules may need more clarity, experts said. The proposed regime requiring investments through holding companies may have adverse tax implications for such funds and may create an arbitrage between the new and old projects, they said. Besides, the ownership structure of holding companies through which investments are to be made requires further clarification, they added.  

"While investments can be made through holding company (holdco) structures, such holdcos themselves have not been given tax pass-through

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