GIFT City: A Global Hub For Business and Financial Services Offering Remarkable Tax Benefits
Introduction
In India’s vibrant economic landscape, GIFT city stands out as a symbol of innovation and potential. An acronym for “Gujarat International Finance Tech-City,” GIFT City is the nation’s first operational smart city located in Ahmedabad District, Gujarat.
Inaugurated in 2015, GIFT City was envisioned as a global hub to provide superior business and financial services. Its mission is to put India on the world map for offshore banking, asset management, insurances, capital market operations, and IT services, among other domains.
Distinguished as the nation’s first greenfield project, GIFT City is a mixture of Special Economic Zone (SEZ) and Domestic Tariff Area (DTA). Its impressive business landscape already hosts a host of successful companies.
To further its growth, the Indian Government has furnished it with a plethora of tax incentives. In this article, we dive into the numerous tax benefits that companies established in GIFT City can leverage.
Income tax incentives for IFSC Units
Units established in the International Financial Services Centre (IFSC) enjoy a variety of benefits under the Income Tax Act.
A decade of Tax Holidays
Under Section 80LA(1A), IFSC units enjoy a 100% tax deduction for any ten consecutive years within the first fifteen years of their establishment.
Relaxation in MAT/AMT
Units with income in convertible foreign exchange see a lower Minimum Alternate Tax (MAT) rate of just 9% instead of the usual 18.5%, as indicated by Section 115JB(7).
Friendlier Dividend Distribution
Provisions under Section 115-O(8) make dividend distribution by any unit in IFSC non-taxable, both for the distributing company and the receiving entity.
Waived off Surcharge and Cess
Specified funds based in IFSC do not have to pay surcharge and health and education cess.
Tax incentives for investors
GIFT City not only extends tax benefits to established units but also to investors.
Lower Tax Rate on Dividend Income
As per Section 115A, investors receiving dividend income from units in IFSC only face a tax rate of 10%.
Capital Gain Exemptions
Investors gain capital exemption on transfer of specified securities listed on the IFSC Exchange as per Section 47(viiiab).
Non-Taxation on Interest and Royalty Income
Under Section 10(4F), non-residential investors raking in interest or royality income from IFSC units aren’t subject to income tax.
Other Noteworthy Tax Incentives
The benefits extolled by GIFT City extend beyond income tax laws.
GST Benefits
Under Goods and Services Tax law, services provided to units in IFSC aren’t liable to GST. Additionally, transactions carried out in the IFSC exchange are also exempt from GST for investors.
Other Incentives
Units located in IFSC can also avail subsidies for various expenses such as lease rental, PF contribution, and electricity charges. Moreover, transactions carried out on the IFSC Exchange are exempt from Security Transaction Tax, Commodity Transaction Tax (CTT), and Stamp Duty.
Exploring the Sectors within GIFT City
GIFT City is home to a diverse array of service industries setting up their units to offer international financial and IT services. For investors eying sectors to venture into, the following are some that dominate the spectrum within GIFT City:
Offshore Banking
Offshore banking stands as one of the most promising sectors within GIFT City. Companies operating here offer diverse banking activities while leveraging the assortment of tax incentives provided.
Asset Management
The asset management industry within GIFT City oversees managing and investing its clients’ funds into diverse financial assets. It benefits considerably from the tax relief measures instituted for companies within the smart city.
Insurance
The insurance sector thrives within GIFT City, offering a range of services from policy underwriting to risk management. The tax havens provided further bolster the attractiveness of this sector.
Capital Market Operations
This sector has a vibrant presence within GIFT city, offering services ranging from stock brokerage to investment banking. With the fantastic lottery presented by the government’s tax incentives, this sector is experiencing accelerated growth.
Harnessing GIFT City’s Growth Avenues
As an investor or a business, touching base with GIFT City offers numerous growth avenues:
Access to a Global Market
GIFT City, as an international financial hub, provides access to a global marketplace. This exposure not only offers numerous business opportunities but also boosts the company’s reputation.
Enjoying Tax Incentives
The ample tax incentives proposed by GIFT City make it a lucrative platform for businesses and investors. A mixture of income tax, GST, and other exemptions make operating expenses cheaper, improving overall profit margins.
Investing in the Future
With GIFT City touted as India’s first smart city, it’s an investment into the country’s urban future. Participation here points to being part of shaping a sustainable, world-class business environment with international appeal.
Enhanced Infrastructure
GIFT City offers superior infrastructure equipped with state-of-the-art facilities. This advantage provides a conducive environment for businesses to thrive and expand seamlessly.
Making the Move
Your interest as an investor or a business owner is probably piqued by now. Here’s how you can make meaningful strides in setting foot into this global hub:
Thorough Research
Understand the market dynamics within GIFT City and identify which sectors align with your business goals. Look into the competitive landscape, evaluate the risks, and consider the returns on investment.
Leverage Available Tax Incentives
Huge tax incentives are key attractions for doing business in GIFT City. Leverage them to plan your financial structure and maximize profit.
Seek Expert Assistance
Navigating through the new world of GIFT City can be challenging. Seek assistance from industry experts and consultants to guide you in your journey.
In Conclusion
From its tax benefits to its cutting-edge infrastructure, GIFT City promises an exciting arena for businesses and investors alike. It is a true embodiment of a futuristic city – fostering growth, promoting innovation, and propelling businesses to greater heights on a global platform. The future beckons at GIFT City – are you ready to step in?
In conclusion, GIFT City offers an abundance of opportunities and financial advantages for businesses and investors alike. Combining its world-class infrastructure, strategic location, and extensive tax benefits, GIFT City proves to cater to a dynamic future reshaping the landscape of finance, banking, and IT services in India.
