CBDT Circular No. 03 of 2026: Complete Guide to Sovereign Wealth Fund Notification and Compliance Under the Income-tax Act, 2025

The Central Board of Direct Taxes has released Circular No. 03 of 2026, dated 30th March, 2026, establishing a comprehensive procedural framework for the notification and ongoing compliance obligations of Sovereign Wealth Funds (SWFs) under the Income-tax Act, 2025. The circular, issued by the TPL Division under F.No.370142/46/2025-TPL, takes effect from 1st April, 2026, and governs tax year 2026-27 onwards. This framework is pivotal for foreign sovereign investors seeking structured tax exemption benefits on eligible income generated from infrastructure investments in India.

Statutory Basis

Schedule V [Table: Sl. No. 7] of the Income-tax Act, 2025 lays down the exemption framework for income earned by specified persons from qualifying investments made in India. Under this provision, eligible income includes:

  • Dividends received from investments in specified infrastructure businesses
  • Interest income arising from such qualifying investments
  • Any sum referred to under section 92(2)(k) of the Act
  • Long-term capital gains — including those that may be treated as short-term capital gains under section 76 of the Act — arising from qualifying investments

Important Note: The exemption under Schedule V [Table: Sl. No. 7] is not automatic. It is conditional on the investment being made within the prescribed window and meeting specific holding requirements.

Conditions for Exemption Eligibility

For an SWF to benefit from the above income exemptions, the following conditions must be satisfied cumulatively:

  1. The investment must be made in specified infrastructure business, including sub-sectors notified vide Notification F.No. 13/1/2025-IPP dated 19.09.2025 (covering infrastructure sub-sectors listed in the Harmonised Master List)
  2. The investment must have been made during the period from 01.04.2020 to 31.03.2030
  3. The investment must be held for a minimum period of three years
  4. The investing entity must qualify as a notified Sovereign Wealth Fund satisfying the conditions prescribed under Schedule V [Table: Sl. No. 7, Note 5(a)]

Who Qualifies as a Specified Person?

Under the statutory framework, a Sovereign Wealth Fund constitutes a "specified person" for the purposes of Schedule V [Table: Sl. No. 7] provided it satisfies all conditions prescribed under Schedule V [Table: Sl. No. 7. Note 5(a)]. Mere categorization as a sovereign fund by a foreign government does not automatically confer eligibility — formal notification by the CBDT remains a prerequisite for claiming the exemption.

Notification Procedure: Filing Form I

Authority for Notification

The CBDT, exercising its powers under section 239 of the Income-tax Act, 2025, has specified that SWFs seeking notification must submit Form I — the prescribed application format introduced through the Annexure to Circular No. 03 of 2026.

Where to Submit Form I

The application in Form I must be addressed and filed with the: