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What is an International Financial Services Centers (IFSC)? and their Tax Benefits | Tax-India.in

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What is an International Financial Services Centers (IFSC)?

IFSC Stands for International Financial Services Centers. An International Financial Services Centers Caters to Customers outside the jurisdiction of domestic economy, dealing with flows of Finance, Financial Products and Services across borders.

Gujarat International Finance Tech-City (GIFT City), Gandhinagar, is being developed as the India’s First International Financial Services Centers (IFSC).  London, New York, Dubai, Hong Kong and Singapore can be counted as Global Financial Centers.

 

Tax Benefits to International Financial Services Centers (IFSC).

In order to encourage the growth of International Financial Services Centers (IFSC) into a world class Financial Services Hub, the following tax Benefits or Incentives provided by Finance act, 2016 to the Units set-up or to be set-up in the IFSC.

  • Exemption from Levy of STT and CTT

Exemption from Levy of STT and CTT on transaction undertaken in Foreign currency on recognized stock exchanges in IFSC 

  • Exemption from Long Term Capital Gain (LTCG)

Section 10(38) Provides Exemption from Long Term Capital Gain (LTCG) on Foreign currency transactions made on a recognized stock exchanges in IFSC, even if no STT is levied on such transactions.

  • Concessional Rate of Tax on Short Term Capital Gain (STCG)

Section 111A (1) Provides for Concessional Rate of Tax of 15% on Short Term Capital Gain (STCG) on Foreign currency transactions made on a recognized stock exchanges in IFSC, even if no STT is levied on such transactions.

  • Minimum Alternate Tax (MAT) reduced from 18.5 % to 9 % in IFSC

Section 115JB, Reduce the Minimum Alternate Tax MAT) Rate from 18% to 9% on Companies in IFSC that derive all their income from convertible Foreign Exchange.

  • No Dividend Distribution Tax (DDT)

Section 115-0(8) Provides Exemption from Levy of Dividend Distribution Tax (DDT) for the company paying the dividend and the payee on dividends distributed by a unit located in IFSC that derive all their income from convertible Foreign Exchange.

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