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Switzerland: New withholding tax exemption in India, opportunities for Swiss pension funds

Switzerland: New withholding tax exemption in India

Certain tax exemptions in India, with an effective date of 1 April 2020, may provide opportunities for Swiss pension funds that are making investments in India.


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Until recently, the Indian market has not been particularly attractive for Swiss pension funds to make investments, due primarily to the tax treatment in India on the generated returns (for example, a 10% withholding tax on interest, a domestic 15% distribution tax on dividends, and taxes on both short-term and long-term capital gains). As a result, India historically was not on the target investment list of Swiss pension funds.

India’s Finance Act 2020, however, includes provisions to allow exemptions from tax for certain income earned by sovereign wealth funds and foreign pension funds. The exemptions will be available for interest, dividends, and long-term capital gains if certain conditions are satisfied.

Read a May 2020 report prepared by the KPMG member firm in Switzerland

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