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IFSC Units

Tax Incentives for IFSC Unit

 
ParticularsUnits in IFSCInvestors
Income-tax
  • 100% tax exemption for 10 consecutive years out of 15 years
  • IFSC Unit has the flexibility to select any 10 years out of 15 years block
  • MAT / AMT @ 9% of book profits applies to Company / others setup as a unit in IFSC - MAT not applicable to companies in IFSC opting for new tax regime
  • Dividend paid to shareholders of company in IFSC
    • From 01 April 2020, dividend income distributed by Company in IFSC to be taxed in the hands of the shareholder.
  • Interest income paid to non-residents on:-
    • Monies lent to IFSC units not taxable
    • Long Term Bonds and Rupee Denominated Bonds listed on IFSC exchanges taxable at lower rate of 4%
  • Transfer of specified securities* listed on IFSC exchanges by a non-resident not treated as transfer - Gains accruing thereon not chargeable to tax in India

*Specified securities include Bond, GDR, Foreign currency denominated bond, Rupee-denominated bond of an Indian company, Derivatives, Unit of a Mutual Fund, Unit of a business trust, Unit of Alternative Investment Fund and Foreign currency denominated equity share of a company
Goods and Services Tax (GST)
  • No GST on services –
    • received by unit in IFSC
    • provided to IFSC / SEZ units, Offshore clients
  • GST applicable on services provided to Domestic Tariff Area
 No GST on transactions carried out in IFSC exchanges
Other taxes duties State Subsidies – Lease rental, PF contribution, electricity charges Exemption from STT, CTT, stamp duty in respect of transactions carried out on IFSC exchanges

NIL Tax

  • Security Transaction Tax (STT)

  • Commodity Transaction Tax (CTT)

  • Dividend Distribution Tax (DDT)

  • Long Term Capital Gain (LTCG)

  • Short Term Capital Gain (STCG)

*Subject to certain conditions

Tax incentives for SEZ Units (Non IFSC)

Tax incentives available to SEZ Units other than IFSC units

  • Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units

  • Exemption from customs duty for all goods imported in the SEZ used for authorized operations

  • Supply of goods or services from Domestic Tariff Area (DTA) to a unit located in SEZ Unit is regarded as a zero-rated supply (irrespective of the currency in which payment is being made).

  • Goods and Services supplied to SEZ regarded as export for customs purpose

  • Goods and Service Tax (GST)

  • Supplies to SEZ are Zero Rated under IGST Act, 2017

  • No GST on services,

    • Received by unit in SEZ/IFSC

    • Provided by SEZ/IFSC units to offshore clients

  • Single window clearance for Central and State level approvals

State Subsidies as per the IT & ITeS Policy
  
Stamp Duty & Registration / Conversion fee exemption Wherever cost is incurred 100% reimbursement of Stamp Duty and Registration Fee paid
Electricity duty and subsidy on tariff 100 % Reimbursement of Electricity duty and Re. 1 subsidy on power tariff for a period of 5 years.
Reimbursement of Provident Fund contribution by employer
  • 100% of EPF amount paid in case of female employees
  • 75% of EPF amount paid in case of male employees
Lease rental subsidy for every 50 sq ft per employee
  • Up to 20 employees -- Rs. 8 per sq. ft.
  • 20 – 100 employees -- Rs. 5 per sq. ft.
  • Above 100 employees -- Rs. 3 per sq. ft.
Capital Subsidy Capital subsidy @ 25% of capital expenditure for one-time purchase of Computers, networking and related hardware, subject to a ceiling of Rs. 1 crore

*The above incentives provided by the Government of Gujrat are applicable to IFSC and GIFT SEZ Units.