[Opinion] About International Financial Service Centre & Benefits under Indirect Tax

Jigar Doshi & Sunil Kumar – [2023] 150 taxmann.com 455 (Article)

1. Introduction

The establishment of India’s International Financial Services Centre (IFSC) in Gujarat’s Gift City represents a momentous achievement for the nation’s financial sector. This landmark event reflects India’s ambition to establish a thriving IFSC that can compete with renowned global financial hubs such as London, Singapore, Hong Kong, and Dubai.

The introduction of the International Financial Services Centres Authority Act, 2019 consolidated the regulatory powers of multiple financial services regulators into a single entity, streamlining the regulatory framework and providing a cohesive structure for operations in Gift City.

The government’s proactive efforts have created an enabling environment in Gift City, attracting both domestic and international players. One of the key factors in establishing Gift City as a competitive destination is addressing the concerns and suggestions of stakeholders, particularly in relation to taxation. The government has strived to establish a tax-efficient environment, reducing the tax burden and increasing the attractiveness of operating within the IFSC.

Overall, the inauguration of the IFSC at Gift City represents a significant step forward for India’s financial sector. This article focuses on highlighting the various indirect tax advantages available to the units operating within the IFSC.

2. Recent developments in GIFT City

In India, the establishment of an International Financial Service Centre (IFSC) is authorized and supervised by the Government of India through the Special Economic Zones Act, 2005. GIFT City has received approval from the Government as a Multi Services Special Economic Zone (GIFT SEZ) and has been designated as India’s inaugural IFSC. In the past two years, the benefits offered by the GIFT City IFSC to offshore financial market investors have become increasingly apparent and highly competitive.

It encompasses diverse industries such as banking, capital markets, fund management, insurance, bullion, finance companies, aircraft leasing, ship leasing, global in-house centers (GICs), FinTech, foreign universities, and ancillary services. This comprehensive ecosystem ensures that GIFT City provides a conducive environment for various players in the financial services sector.

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