To increase business activity at the Gujarat International Finance Tec-City (GIFT) IFSC at Gandhinagar, Finance Minister Nirmala Sitharaman has announced a number of facilitating measures and sops in Budget including a proposal to delegate powers under the SEZ Act to the International Financial Services Centres Authority (IFSCA) to avoid dual regulation.
Regulations for SEZ units, however, have been tightened with the Budget proposing to provide a time limit for an SEZ unit to bring the proceeds from exports of goods or services into India and making the filing of income-tax return mandatory for claiming deduction on export income.
In August 2022, the Comptroller & Auditor General of India had asked the Central Board of Direct Taxes to consider specifying a time limit for remittance of export proceeds by SEZ units to claim deduction under Section 10A of the Income Tax Act. It observed that in the absence of time limit, deductions were being allowed even in cases where major part of export proceeds was pending realisation.
The bouquet of benefits for GIFT IFSC, which aspires to become India’s gateway for inbound and outbound requirements of the international financial services, includes decision to establish a subsidiary of EXIM Bank for trade re-financing at GIFT, recognising offshore derivative instruments as valid contracts and permitting acquisition financing by IFSC Banking Units of foreign banks.
Measures were also announced for improving ease of doing business at GIFT IFSC such as setting up a single window IT system for registration and approval from IFSCA, SEZ authorities, GSTN, RBI, SEBI and IRDAI, and amending IFSCA Act for statutory provisions for arbitration, ancillary services, and avoiding dual regulation under SEZ Act, the FM pointed out.
The FM also proposed an extension of the period of tax benefits to funds relocating to IFSC, GIFT City till March 31 2025 from the existing March 31 2023.
“For countries looking for digital continuity solutions, we will facilitate setting up of their Data Embassies in GIFT IFSC,” Sitharaman said.
The policy support laid out by the government will act as a catalyst in expediting the growth of GIFT City thus making it a vibrant global financial hub for domestic and international entities, said Tapan Ray, MD & Group CEO, GIFT City, DeshGujarat. “The establishment of an EXIM Bank subsidiary would encourage emerging sectors such as aircraft & ship financing activities in GIFT City. The setting up of data embassies at GIFT City would facilitate digital continuity solutions for countries . ,” said Ray.
The government operationalised the International Financial Services Centre (IFSC) at GIFT Multi Services SEZ in April 2015, with Budget 2016 providing a competitive tax regime for the Centre.