Budget 2019: Government Proposes Tax Incentives For GIFT City
The government announced several tax incentives to units in the Gujarat International Finance Tec-City— the country's first international financial services centre.
Finance Minister Nirmala Sitharaman also proposed exemption from dividend distribution tax from current and accumulated income to companies and mutual funds, exemptions on capital gain to Category-III AIF in order to promote the IFSC in GIFT City.
Experts said the measures hold significance as the GIFT IFSC alone can provide $1 trillion to Indian industry.
"Currently, a unit in the IFSC is allowed a deduction of 100 percent of its profits for first five consecutive years, and 50 percent for next five consecutive years from the year of commencement.,” she said in her speech.
"It is proposed to provide for 100 percent deduction for 10 consecutive years and also to provide that the unit may claim the said deduction, at its option, for any 10 consecutive years out of 15 years from the year of commencement," the finance minister said in the budget speech.
"The Union Budget presented lots of opportunities for the IFSC. Extending income tax exemption to 10 years from five years and exempting dividend distribution tax is very much welcome" said V. Balasubramaniam, the Managing Director and Chief Executive Officer of India International Exchange IFSC Ltd. (India INX).
Another significant announcement by the government is the exemption of Alternate Investment Funds from the capital gains, which will attract them to move from other DTAA jurisdictions, Balasubramaniam added.
Tapan Roy, the MD and CEO of GIFT City, said the Union budget announcement has re-emphasised the importance of GIFT IFSC as an emerging global financial services hub.
The policy pronouncement regarding GIFT IFSC would give a tremendous boost to investor confidence both in India and abroad.
He further said the setting up of unified regulator will further put GIFT IFSC in a fast track mode.
GIFT is the Gujarat government project in partnership with IL&FS for developing India's first global financial hub.
GIFT City is India's first multi-service special economic zone with IFSC status which is catering to the nation's large financial services market by offering global firms, world-class infrastructure and facilities.