Monday, January 24, 2022
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Tax department issues rules on computing relief for IFSC banking units


NEW DELHI: The Money Tax office has issued new policies on computing tax-exempt profits of offshore banking models set up in an worldwide fiscal companies centre.

The Profits Tax (First Amendment) guidelines, 2022, issued on Friday lay down the formulation for computing the cash flow of a fund established up by the investment division of an offshore banking unit, which is eligible for tax exemption.

It involves income from transfer of a capital asset on a recognised stock exchange situated in any international monetary products and services centre (IFSC) and where by the consideration for such transaction is paid in convertible foreign exchange. It also consists of money from transfer of securities other than shares in an Indian resident enterprise. Money from securities held by these cash which are issued by non-resident entities and any earnings from a securitisation trust which is chargeable under the head ‘profits and gains of company or profession’ are also exempt from tax.

The new principles will implement from 1 April 2022. Offshore banking models are entities established up by domestic or foreign financial institutions in the IFSC. The authorities has been granting concessions to units in the first IFSC in India established up in Ahmedabad to acquire the town as a global money hub like Singapore or London. The plan is to aid create a robust fiscal services market in India and to seize some of the marketplace for these providers India has shed to other centres in the environment.

The new regulations have also established ailments for availing tax aid. Suitable expenditure divisions of offshore banking models will have to retain individual accounts, get it audited and file an once-a-year statement.

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