Gandhinagar, February 1
The Union Budget's proposals to extend tax exemptions send a strong signal to global investors and significantly strengthen GIFT City's position as an international financial services hub, said Sanjay Kaul, Managing Director and Group CEO of GIFT City, following the Budget announcement by the central government on Sunday.
Presenting the Budget for 2026-27, Finance Minister Nirmala Sitharaman today proposed to increase the period of deduction under section 147 to 20 consecutive years out of 25 years for units in IFSC and 20 consecutive years for OBUs. It was also proposed that the business income of these units from IFSC after the expiry of the period of deduction will be taxed at a rate of 15 per cent, to increase the competitiveness of IFSC.
"When someone has an option of going to some other financial center in the world, when they see that here you're getting a 20-year tax break, they would definitely want to come in here first," Kaul said, talking to ANI.
It was also proposed to rationalise the provisions of deemed dividend applicable to treasury centre in IFSC by providing that provisions of deemed dividend shall not be applicable, though with some riders.
These interventions by the government in the Budget, according to Kaul, is "very important" and are "very far-reaching", helping global companies to come into Gift City.
"It (institutions globally) want clarity of rules and regulations, continuity of regulations, as well as it has to be on par with other jurisdictions," he said, lauding the Budget announcements.
"Up to now what happened was they were a little reluctant to come because regulations, certain tweaks in the regulations were required. One example was the deemed dividend that was applicable. Now this has been done away in this Budget," he said, referring to the proposal to rationalize the provisions of deemed dividend.
"The announcement is that the deemed dividend will not be applicable to these entities. So once this is not there, so intra-company lending or intra-company fund transfers will no longer attract tax which was there previously."
He reiterated that these two fundamental steps are going to help Gift City increase its business in "a very big way."
"Any global capital looks at two things, global positioning as well as what the regulations and governance are," he supplemented. "There's continuity of governance, policies, continuity is there. Regulatory benchmarks are at par with global centres and, of course, the tax concessions.
"So it is very clear, they have confidence in us. You have confidence in us, you come in here and do business. That is the biggest message which gives confidence to anyone wanting to bring their capital here."
- ANI
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