Govt proposes tax incentives for GIFT City

The government on Friday announced several tax incentives, including extension of deduction of 100 per cent of profits to 10 straight years, to units in the GIFT City, the country's first intenational financial services centre (IFSC).

Finance Minister Nirmala Sitharaman in her maiden budget also proposed exemption from dividend distribution tax from current and accumulated income to companies and mutual funds, exemptions on capital gain to Category-III AIF in order to promote the IFSC in GIFT City.

Experts said the measures hold significance as the GIFT IFSC alone can provide USD 1 trillion to Indian industry.

"Currently, a unit in the IFSC is allowed deduction of 100 per cent of profits for first five consecutive years and 50 per cent for next five consecutive years from the year of commencement.

"It is proposed to provide for 100 per cent deduction for 10 consecutive years and also to provide that the unit may claim the said deduction, at its option, for any 10 consecutive years out of 15 years from the year of commencement," the finance minister said in the budget speech.

"The Union Budget presented lots of opportunities for the IFSC. Extending income tax exemption to 10 years from 5 years and exempting dividend distribution tax is very much welcome