- Taking forward its efforts to further promote the International Financial Services Centre (IFSC) in Gujarat, the government has proposed Income Tax incentives to promote various business activities such as ship leasing and financing, offshore fund management and offshore banking activities at GIFT City.
- The Union Budget has proposed to provide that income of a non-resident from offshore derivative instruments, or over-the-counter derivatives issued by an offshore banking unit, income from royalty and interest on account of lease of ship and income received from portfolio management services in IFSC shall be exempt from tax, subject to conditions.
About International Financial Service Centre:
- An IFSC caters to customers outside the jurisdiction of the domestic economy. Such centres deal with flows of finance, financial products and services across borders.
- An expert panel headed by former World Bank economist Percy Mistry submitted a report on making Mumbai an international financial centre in 2007. However, the global financial crisis in 2008 made countries including India cautious about rapidly opening up their financial sectors.
- In India, IFSC has been defined in SEZ Act, 2005. As per the act:
- The Central Government may approve the setting up of an International Financial Service Centre in a Special Economic Zone and may prescribe the requirements for setting up and operation of such centre.
- The Central Government shall approve only one International Financial Services Centre in a Special Economic Zone.
How it works?
- The International Financial Services Centres Authority (IFSCA), headquartered at GIFT City, Gandhinagar Gujarat, has been established under the International Financial Services Centres Authority Act, 2019.
- It works as a unified authority for the development and regulation of financial products, financial services and financial institutions in the International Financial Services Centre (IFSC) in India.
- An IFSC caters to customers outside the jurisdiction of the domestic economy.
- Such centres deal with flows of finance, financial products and services across borders.
- London, New York and Singapore can be counted as global financial centres.
Source: THE HINDU.