In order to provide avenues to the finest financial minds in India and to fully exhibit and exploit their strength to the country’s advantage and to enable India to become a producer and exporter of international financial services, in 2015 the Government had proposed to set up International Financial Services Centres (hereinafter referred as ‘IFSC’) in the country. Since then, various measures including tax incentives have been provided in furtherance of this objective.
Recently proposed tax incentives:
Shri Arun Jaitley, the Union Finance and Corporate Affairs Minister had proposed in General Budget 2018-19 to provide concessions for IFSC. In furtherance to the same, the Ministry of Finance vide press release dated February 1, 2018, has notified that it has been proposed that for the purpose of promoting trade in stock exchanges located in IFSC, exemption should be granted on transfer of derivatives and certain securities by non-residents from capital gains tax.
Further, non-corporate taxpayers operating in IFSC are proposed to be charged Alternate Minimum Tax at a concessional rate of 9% at par with Minimum Alternate Tax applicable for corporates.
Also, the Finance Minister urged regulators to move from ‘AA’ to ‘A’ rating for investment eligibility in order to encourage raising funds from bond market. He also said that the Government will establish a unified authority for regulating all financial services in International Finance Service Centre (IFSCs) in India.
India intends to be a leading exporter of international financial services and is taking active steps in that direction. Exemption from capital gains tax for trading by non-residents as well as charging the Alternate Minimum Tax at concessional rate are huge incentives proposed for promoting trading in stock exchanges located in IFSCs.