Parity in taxation for non-resident investors in IDFs

Investor protection fund set-up by depositor for protection of interest of beneficial owners will be exempt from income tax

The government today said 5% tax would be levied at the time of distribution of payout to non-resident investors in an Infrastructure Development Fund (IDF), irrespective of being promoted through either mutual fund or NBFC route.

"I propose to provide parity in taxation between an IDF- Mutual Fund that distributes income and an IDF-NBFC that pays interest, when the payment is made to a non-resident," Finance Minister P Chidambaram said in the Budget speech for 2013-14.

The rate of tax on such distributed income or interest will be 5%, he said.

He also stated that investor protection fund set-up by depositor for protection of the interest of beneficial owners will be exempt from income tax, he added.