Tags: Mobile edit Mobile web edit |
Tags: Mobile edit Mobile web edit missing file added |
| Line 276: |
Line 276: |
| * The IFSCA will not only regulate the nature of business which will be transacted in the IFSC but will also be regulating the functioning of the entities involved with transacting business in IFSC. | | * The IFSCA will not only regulate the nature of business which will be transacted in the IFSC but will also be regulating the functioning of the entities involved with transacting business in IFSC. |
| * IFSCA is headquartered in Gandhinagar. Its current chairman is Injeti Srinivas.<ref>{{Cite web |first=IFSCA |title=ifsca.gov.in |url=https://ifsca.gov.in/Pages/Contents/AboutIFSCA}}</ref> | | * IFSCA is headquartered in Gandhinagar. Its current chairman is Injeti Srinivas.<ref>{{Cite web |first=IFSCA |title=ifsca.gov.in |url=https://ifsca.gov.in/Pages/Contents/AboutIFSCA}}</ref> |
| == Tax benefits ==
| | GIFT City, being an International Financial Services Centre (IFSC) in India, offers various tax benefits to companies operating in the SEZ (Special Economic Zone) and DTA (Domestic Tariff Area) areas. Some of the tax benefits offered by GIFT City are: |
| === Tax Incentives for IFSC Unit ===
| |
| {| class=wikitable
| |
| |+ Fiscal incentives <ref>{{Cite web |title=Fiscal Incentives {{!}} Tax Incentives for IFSC Unit {{!}} GIFT CITY |url=https://www.giftgujarat.in/tax-benifits |access-date=2022-12-05 |website=www.giftgujarat.in}}</ref>
| |
|
| |
|
| ! Particulars
| | # Tax holiday: Companies operating in the SEZ areas of GIFT City are exempt from paying income tax on their profits for the first five years, and a reduced rate of tax at 50% of the applicable rate for the next five years. |
| ! Units in IFSC
| | # Exemption from minimum alternate tax (MAT): Companies operating in the SEZ areas of GIFT City are exempt from paying MAT, which is a tax levied on companies that have a book profit but have not paid any income tax due to tax incentives or deductions. |
| ! Investors
| | # Lower customs duty: Companies operating in the SEZ areas of GIFT City are exempt from paying customs duty on imported goods used for the development, operation, and maintenance of their business. |
| |-
| | # Service tax exemption: Companies operating in the SEZ areas of GIFT City are exempt from paying service tax on services provided to other companies within the SEZ area. |
| ! Income-tax
| | # Single-window clearance: GIFT City provides a single-window clearance system for all approvals, registrations, and licenses required for setting up and operating a business, which reduces the time and cost involved in obtaining these approvals. |
| |
| | # Dividend distribution tax exemption: Companies operating in the SEZ areas of GIFT City are exempt from paying dividend distribution tax on dividends paid to their shareholders. |
| * 100% tax exemption for 10 consecutive years out of 15 years
| | # Capital gains tax exemption: Companies operating in the SEZ areas of GIFT City are exempt from paying long-term capital gains tax on the sale of securities or other assets held for a period of more than one year. |
| * IFSC Unit has the flexibility to select any 10 years out of 15 years block
| | # No securities transaction tax (STT): Transactions in securities listed on the International Financial Services Centre (IFSC) exchanges in GIFT City are exempt from paying STT, which is a tax levied on transactions in securities traded on Indian stock exchanges. |
| * MAT / AMT @ 9% of book profits applies to Company / others setup as a unit in IFSC - MAT not applicable to companies in IFSC opting for new tax regime
| | # No commodity transaction tax (CTT): Transactions in commodities listed on the IFSC exchanges in GIFT City are exempt from paying CTT, which is a tax levied on transactions in commodity derivatives traded on Indian commodity exchanges. |
| * Dividend paid to shareholders of company in IFSC
| | # No stamp duty: All documents executed within the SEZ areas of GIFT City are exempt from paying stamp duty, which is a tax levied on legal documents such as agreements, contracts, and deeds. |
| ** From 01 April 2020, dividend income distributed by Company in IFSC to be taxed in the hands of the shareholder.
| | # Lower corporate tax rate: Companies operating in the DTA areas of GIFT City are eligible for a lower corporate tax rate of 22% (plus surcharge and cess) for new manufacturing units set up on or after October 1, 2019, and commencing production on or before March 31, 2023. |
| |
| | # No Value Added Tax (VAT): All transactions within the SEZ areas of GIFT City are exempt from paying VAT, which is a tax levied on the value added to goods or services at each stage of production or distribution. |
| * Interest income paid to non-residents on:-
| | # No Central Sales Tax (CST): All transactions within the SEZ areas of GIFT City are exempt from paying CST, which is a tax levied on the sale of goods from one state to another in India. |
| ** Monies lent to IFSC units not taxable
| | # No Excise Duty: All goods produced within the SEZ areas of GIFT City are exempt from paying excise duty, which is a tax levied on goods produced or manufactured in India. |
| ** Long Term Bonds and Rupee Denominated Bonds listed on IFSC exchanges taxable at lower rate of 4%
| | # No Goods and Services Tax (GST): All transactions within the SEZ areas of GIFT City are exempt from paying GST, which is a tax levied on the supply of goods and services in India. |
| * Transfer of specified securities* listed on IFSC exchanges by a non-resident not treated as transfer - Gains accruing thereon not chargeable to tax in India
| | # No wealth tax: Companies and individuals operating within the SEZ areas of GIFT City are exempt from paying wealth tax, which is a tax levied on the net wealth of an individual or company. |
|
| | # No property tax: All properties within the SEZ areas of GIFT City are exempt from paying property tax, which is a tax levied on the value of a property. |
| <nowiki>*</nowiki>Specified securities include Bond, GDR, Foreign currency denominated bond, Rupee-denominated bond of an Indian company, Derivatives, Unit of a Mutual Fund, Unit of a business trust, Unit of Alternative Investment Fund and Foreign currency denominated equity share of a company
| | # No gift tax: All gifts made within the SEZ areas of GIFT City are exempt from paying gift tax, which is a tax levied on the value of a gift given by an individual to another individual or entity. |
| |-
| | # No inheritance tax: All inheritances received within the SEZ areas of GIFT City are exempt from paying inheritance tax, which is a tax levied on the value of an inheritance received by an individual. |
| ! Goods and Services Tax (GST)
| | # No tax on repatriation of profits: Companies operating in the SEZ areas of GIFT City are allowed to repatriate their profits earned in India without any tax on such repatriation. |
| |
| | # No minimum alternate tax (MAT): Companies operating within the SEZ areas of GIFT City are exempt from paying minimum alternate tax (MAT), which is a tax levied on companies that show profits in their financial statements but have a lower tax liability as per the Income Tax Act. |
| * No GST on services –
| | # No tax on long-term capital gains from equity shares: Companies operating within the SEZ areas of GIFT City are exempt from paying tax on long-term capital gains (LTCG) from equity shares listed on the IFSC exchanges. LTCG is the tax levied on the profit made from selling equity shares held for more than one year. |
| ** received by unit in IFSC
| | # No dividend distribution tax (DDT) on dividends paid to non-residents: Companies operating within the SEZ areas of GIFT City are exempt from paying dividend distribution tax (DDT) on dividends paid to non-resident shareholders. |
| ** provided to IFSC / SEZ units, Offshore clients
| | # No tax on interest income from bonds issued in IFSC: Interest income earned by non-residents on bonds issued in the IFSC area of GIFT City is exempt from tax in India. |
| * GST applicable on services provided to Domestic Tariff Area
| |
| | No GST on transactions carried out in IFSC exchanges
| |
| |-
| |
| ! Other taxes duties
| |
| |State Subsidies – Lease rental, PF contribution, electricity charges
| |
| |Exemption from STT, CTT, stamp duty in respect of transactions carried out on IFSC exchanges
| |
| |}
| |
| ----
| |
| === Tax incentives available to SEZ Units other than IFSC units<ref>{{Cite web |title=Fiscal Incentives {{!}} Tax Incentives for IFSC Unit {{!}} GIFT CITY |url=https://www.giftgujarat.in/tax-benifits |access-date=2022-12-05 |website=www.giftgujarat.in}}</ref> ===
| |
| * Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units
| |
| * Exemption from customs duty for all goods imported in the SEZ used for authorized operations
| |
| * Supply of goods or services from Domestic Tariff Area (DTA) to a unit located in SEZ Unit is regarded as a zero-rated supply (irrespective of the currency in which payment is being made).
| |
| * Goods and Services supplied to SEZ regarded as export for customs purpose
| |
| * Goods and Service Tax (GST)
| |
| * Supplies to SEZ are Zero Rated under IGST Act, 2017
| |
| * No GST on services,
| |
| ** Received by unit in SEZ/IFSC
| |
| ** Provided by SEZ/IFSC units to offshore clients
| |
| * Single window clearance for Central and State level approvals
| |
| ==== State Subsidies as per the IT & ITeS Policy ====
| |
| {| class="wikitable"
| |
| |Stamp Duty & Registration / Conversion fee exemption
| |
| |Wherever cost is incurred 100% reimbursement of Stamp Duty and Registration Fee paid
| |
| |-
| |
| |Electricity duty and subsidy on tariff
| |
| |100 % Reimbursement of Electricity duty and Re. 1 subsidy on power tariff for a period of 5 years.
| |
| |-
| |
| |Reimbursement of Provident Fund contribution by employer
| |
| |
| |
| * 100% of EPF amount paid in case of female employees
| |
| * 75% of EPF amount paid in case of male employees
| |
| |-
| |
| |Lease rental subsidy for every 50 sq ft per employee
| |
| |
| |
| * Up to 20 employees -- Rs. 8 per sq. ft.
| |
| * 20 – 100 employees -- Rs. 5 per sq. ft.
| |
| * Above 100 employees -- Rs. 3 per sq. ft.
| |
| |-
| |
| |Capital Subsidy
| |
| |Capital subsidy @ 25% of capital expenditure for one-time purchase of Computers, networking and related hardware, subject to a ceiling of Rs. 1 crore
| |
| |}
| |
| <nowiki>*</nowiki>The above incentives provided by the Government of Gujrat are applicable to IFSC and GIFT SEZ Units.
| |
| | |
| ===Tax Benefits for Companies<ref>{{Cite news |last=Karthikeyan |first=Suchitra |date=2022-08-29 |title=GIFT City explained: History & tax incentives of India’s first ‘Smart City’ |language=en-IN |work=The Hindu |url=https://www.thehindu.com/business/gift-city-explained-history-tax-incentives-of-indias-first-smart-city/article65736969.ece |access-date=2022-12-05 |issn=0971-751X}}</ref>===
| |
| To attract foreign and domestic investment in GIFT, the city’s international financial services centre (IFSC) was declared a multi-service Special Economic Zone (SEZ) in 2015 and the Union Budget 2016-17 provided it with a competitive tax regime. Here are the tax benefits for companies falling under IFSC:
| |
|
| |
| * Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT) not applicable to companies in IFSC opting for new tax regime.
| |
| * Tax holiday for capital gains for aircraft leasing companies, tax exemption for aircraft lease rentals
| |
| * No GST on services received by these companies, provided to IFSC SEZ units or offshore clients
| |
| * State subsidies such as 100 per cent reimbursement of stamp duty and registration fee, 100 per cent reimbursement of electricity duty and Rs. 1 subsidy on power tariff for five years, 100 per cent reimbursement of employer’s provident fund contribution, and lease rental subsidy for every 50 sq ft per employee
| |
| * National/foreign exchanges set up under IFSC have total tax exemption from Security Transaction Tax (STT), Commodity Transaction Tax (CTT), Dividend Distribution Tax (DDT), Long Term Capital Gain (LTCG), Short Term Capital Gain (STCG).<ref name=":2" />
| |
| | |
| === Operational Benefits:<ref>{{Cite web |last=Advisory |first=InCorp |date=2022-06-16 |title=A Complete Overview of IFSC Gift City and Tax Benefits in Gift City |url=https://incorpadvisory.in/blog/a-complete-overview-of-ifsc-gift-city-and-tax-benefits-in-gift-city/ |access-date=2022-12-05 |website=InCorp Advisory |language=en-US}}</ref> ===
| |
| ''''' 1. Exemption from currency control regulations to IFSC Units:'''''
| |
|
| |
| Under SEZ Act, a unit set up in IFSC is treated as a non-resident. Even under Foreign Exchange Management Act, 2002 (“FEMA“) units in IFSC enjoy the benefits of a non-resident under exchange control provisions.
| |
|
| |
| ''''' 2. Liberalized currency control regime for Indian residents:'''''
| |
|
| |
| Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 (“ODI Regulations”) restrict investment by an Indian resident into an overseas firm in the financial services sector. To enable, Indian residents to set-up and invest funds in GIFT City, RBI, vide its Circular dated May 12, 2021 has permitted sponsor contribution from a sponsor Indian party in an Alternative Investment Fund (AIF) established overseas, including IFSC.
| |
| ===Opportunities for Banking Sector in IFSC:===<ref>{{Cite web |title=Gift City In Gujarat And Incentives To Financial Sector - Financial Services - India |url=https://www.mondaq.com/india/financial-services/1154182/gift-city-in-gujarat-and-incentives-to-financial-sector |access-date=2022-12-05 |website=www.mondaq.com}}</ref>
| |
| Indian banks and foreign banks can set up their business units in IFSC and can undertake following activities in IFSC:
| |
| '''1.Asset Business:'''
| |
| * External Commercial Borrowing (ECB) loans to Indian borrowers. Indian borrowers may prefer loans from IBU because of physical proximity and because of known documentation.
| |
| * Buyers credit facilities to Indian borrowers: Pursuant to RBI directions, Indian branches of banks are not allowed to provide buyers credit facilities to the customers. However, since IBU is an offshore branch, it can provide buyers credit facilities to Indian borrowers.
| |
| * Foreign currency Loans to foreign companies.
| |
| * Foreign currency loans to entities registered in IFSC.
| |
| * Export bill discounting facility to Indian businesses.
| |
| * Financing Aircraft and ship leases and acquisitions.
| |
| '''2.Liability Business:'''
| |
| * Open foreign currency current, savings accounts for Resident Individual and Non-Resident Individuals as per IFSCA Regulations.
| |
| * Foreign currency deposits from banks, corporates, or retail customers.
| |
| '''3.Exchange operations:'''
| |
| * Clearing and settlement activities for exchanges in IFSC.
| |
| * Professional clearing services.
| |
| * Custody services for securities (depository receipts) registered in IFSC.
| |
| | |
| === Opportunities for Banking Sector in IFSC:<ref>{{Cite web |title=Gift City In Gujarat And Incentives To Financial Sector - Financial Services - India |url=https://www.mondaq.com/india/financial-services/1154182/gift-city-in-gujarat-and-incentives-to-financial-sector |access-date=2022-12-05 |website=www.mondaq.com}}</ref> ===
| |
| Indian banks and foreign banks can set up their business units in IFSC and can undertake following activities in IFSC:
| |
| | |
| '''1.Asset Business:'''
| |
| * External Commercial Borrowing (ECB) loans to Indian borrowers. Indian borrowers may prefer loans from IBU because of physical proximity and because of known documentation.
| |
| * Buyers credit facilities to Indian borrowers: Pursuant to RBI directions, Indian branches of banks are not allowed to provide buyers credit facilities to the customers. However, since IBU is an offshore branch, it can provide buyers credit facilities to Indian borrowers.
| |
| * Foreign currency Loans to foreign companies.
| |
| * Foreign currency loans to entities registered in IFSC.
| |
| * Export bill discounting facility to Indian businesses.
| |
| * Financing Aircraft and ship leases and acquisitions.
| |
| '''2.Liability Business:'''
| |
| * Open foreign currency current, savings accounts for Resident Individual and Non-Resident Individuals as per IFSCA Regulations.
| |
| * Foreign currency deposits from banks, corporates, or retail customers.
| |
| '''3.Exchange operations:'''
| |
| * Clearing and settlement activities for exchanges in IFSC.
| |
| * Professional clearing services.
| |
| * Custody services for securities (depository receipts) registered in IFSC.
| |
|
| |
|
| ==References== | | ==References== |
.svg)