The dearth of single window clearance leads to delayed decisions affecting the financial services structure at the IFSC. To bridge the gap in regulatory framework, Union Finance minister’s announcement of creating a conducive and coherent unified regulator came in as a boon to India’s IFSC. This imperative announcement will take India’s IFSC at par with the global financial centres.
Presenting the General Budget 2018-19 in Parliament, Shri Arun Jaitley also proposed to exempt transfer of derivatives and certain securities by non-residents from capital gains tax. The Finance Minister added that non-corporate taxpayers operating in IFSC shall be charged Alternate Minimum Tax (AMT) at concessional rate of 9 per cent at par with Minimum Alternate Tax (MAT) applicable for corporates. “In recent years, various measures including competitive tax incentives have been provided in order to fulfill the objective of developing a world class international financial services centre in India.”
“Currently, different regulators such as SEBI, RBI, and IRDA have evolved specific regulations for IFSCs. A unified regulator for IFSCs will facilitate more effective and efficient decision making, improve ease of doing business and enhance the competitiveness of IFSCs vis-à-vis offshore financial centres,” said Dr Niranjan Hiranandani, CMD Hiranandani Communities adding that it was in keeping with international practices such as the Dubai Financial Services Authority for Dubai International Financial Centre.
The Budget has also proposed an amendment to section 47 of the ITA to exempt from taxation, gains arising to a non-resident from the transfer of foreign currency bonds, GDRs, rupee denominated bonds of Indian companies and derivatives (which includes futures and options) where the consideration for the transaction is paid or payable in foreign currency. The Finance Bill also proposes to impose tax at a concessional rate of 10 per cent on LTCG arising from transfer of listed assets being equity shares, units of equity oriented funds or units of business trusts as long as (among other conditions) STT has been paid. However, the Finance Bill has created a carve-out from the requirement to pay STT for such transactions undertaken on a recognised stock exchange in IFSC where the consideration is received or receivable in foreign currency.
The big ticket announcement will further push the India’s International Financial Services Centre (IFSC) at the global financial level and lead to better regulation and supervision of the financial entities