GIFT City is a acronym for “Gujarat International Finance Tech-City”. GIFT City is a central business district established in Ahmedabad District in Gujarat, India. This is a government promoted greenfield project inaugurated in 2015. GIFT City is the India’s first Operational smart city.
As the name depicts, GIFT City is intended to make a global hub in India to provide financial and business services and attract the business and investors around the world. GIFT City is intended to create a Tech City in India. The services industries established in Gift City are Offshore banking, asset management, insurances, capital market etc. Units established in GIFT City intends to offer global financial and IT Services.
A area of gift city is a notified Special Economic Zone (SEZ) and remaining part is considered as Domestic Tarriff area (DTA). So far, many companies have already established there unit in GIFT City.
To promote entities in GIFT City, the government of India has provided various tax incentives to units located in GIFT City. This article discusses the tax incentives available to units located in GIFT city.
1. Tax incentives under Income Tax Act
1.1 For Units located in IFSC
Following incentives are available to the units located in IFSC Units:
a. Tax Holidays for consecutive period of 10 Years
- As per Section 80LA(1A) of Income Tax Act, Units of an International Financial Services Centre (IFSC) shall be allowed a deduction of 100% of total income for any 10 consecutive assessment years, at the option of the assessee, out of 15 years.
- Computation of such 15 years shall commence from the assessment year relevant to the previous year in which the registration under the International Financial Services Centres Authority Act, 2019 (50 of 2019) was obtained.
- Further, Such deduction shall be allowed with respect to income arises from any Unit of the International Financial Services Centre from its business for which it has been approved for setting up in such a Centre in a Special Economic Zone.
b. MAT/AMT applicable at the rate 9%
- As per Section 115JB of Income Tax Act, every company is liable to pay Minimum alternate tax of 18.5% of its book profit.
- However, as per Section 115JB(7) of Income Tax Act, where the assessee is a unit located in International Financial Services Centre and drives its income solely in convertible foreign exchange then such unit shall be liable to pay MAT at the rate of 9% instead of 18.5%.
- Further, provisions of MAT and AMT shall not apply to companies and units located in IFSC which has opted for new tax regime.
c. Taxability of Dividend Income in hands of Shareholders
- Till 31st March, 2020, as per Section 115-O of Income Tax Act, any amount declared, distributed or paid by any company in form dividend (whether interim or otherwise) on or after 01.04.2003 till 31.03.2020 then such distributed dividend shall be charged to additional income-tax (DDT) at the rate of 15% in the hands of company.
- As per Section 115-O(8) of Income tax act, where dividend income is distributed by any unit located in International Financial Service Centre (IFSC) on or after 1st April, 2017 then such dividend income shall neither be taxable in hand of the company nor the person racing such dividend;
- However, provisions of Section 115-O has become ineffective from 1st April, 2020 onwards and dividend income is taxable in hands of the shareholders.
- For Units located in IFSC also, the dividend income is taxable in hands of the shareholders with effect from 01.04.2020.
d. Non applicability of Surcharge and cess on certain incomes
Surcharge and health and education cess not applicable on certain incomes earned by specified funds in the IFSC.
1.2 Tax incentives to Investors
a. Income tax on dividend income received from NRI or foreign Company
- As per Section 115A of Income Tax Act, where total income of a non-resident or a foreign company includes any income by way of dividend received from units located in IFSC then such dividend income shall be liable to Income tax @ 10%.
b. No capital gain on transfer of specified securities listed on IFSC Exchange
- La Sección 47 de la Ley del Impuesto sobre la Renta de 1961 enumera la naturaleza de las transacciones que no se consideran transferencias y, por lo tanto, las disposiciones sobre ganancias de capital no se aplican a las mismas.
- Según la Sección 47(viiiab) de la Ley del Impuesto sobre la Renta, cualquier transferencia de un activo de capital, ya sea
- un bono o un Recibo de Depósito Global al que se refiere el subapartado (1) de la sección 115AC; o
- un bono denominado en rupias de una empresa india; o
- un derivado; o
- otros valores que el Gobierno Central notifique a tal efecto,
realizada por un no residente en una bolsa de valores reconocida ubicada en cualquier IFSC y donde la contraprestación por dicha transacción se pague o sea pagadera en moneda extranjera, no se considerará una transferencia.
- En consecuencia, no se aplicará ningún impuesto sobre ganancias de capital a dicha transferencia.
c. No sujeción a impuestos de los ingresos por intereses y regalías en manos de no residentes
- Según la Sección 10(4F) de la Ley del Impuesto sobre la Renta, cualquier ingreso obtenido por un no residente en forma de regalías o intereses de una unidad de un Centro Internacional de Servicios Financieros (como se menciona en la Sección 80LA(1A)) no estará sujeto al impuesto sobre la renta.
- Siempre que dicha unidad haya comenzado sus operaciones antes del 31 de marzo de 2045.
d. Otras exenciones
- Intereses sobre bonos a largo plazo y bonos denominados en rupias cotizados únicamente en una bolsa de valores reconocida en el IFSC:
- Los ingresos recibidos por un no residente de una cartera de valores, productos financieros o fondos, gestionados o administrados por cualquier gestor de cartera en nombre de dicho no residente, en una cuenta mantenida en una Unidad Bancaria Offshore de un IFSC, en la medida en que dichos ingresos se devenguen o surjan fuera de la India, están exentos de impuestos y no se consideran devengados o surgidos en la India.
2. Incentivos fiscales bajo el Impuesto sobre Bienes y Servicios (GST)
Bajo la ley del Impuesto sobre Bienes y Servicios (GST), no se aplica GST a los servicios prestados a unidades ubicadas en el IFSC. Sin embargo, los servicios prestados por el IFSC a unidades o empresas ubicadas en el Área Arancelaria Nacional (DTA) están sujetos a GST.
Además, desde la perspectiva de los inversores, no se aplica GST a las transacciones realizadas en las bolsas del IFSC.
3. Otros incentivos
Para las unidades ubicadas en el IFSC, existen subsidios disponibles para diversos gastos como alquileres de arrendamiento, contribuciones a fondos de previsión y cargos por electricidad. Para los inversores, existe una exención del impuesto sobre transacciones de valores, CTT y derechos de timbre en relación con las transacciones realizadas en la bolsa del IFSC.
