Companies providing IT-enabled services in Gift city will benefit following today's announcement on the reduction in Minimum Alternative Tax. Union Finance Minister Nirmala Sitharaman today reduced the rate of Minimum Alternate Tax has from existing 18.5 per cent to 15 per cent.
Gift City, situated at Gandhinagar in Gujarat, was formed as a Finance Special Economic Zone (FSEZ) and is an International Financial Services Centre. Hence the MAT applicable there for financial services units is nine per cent, which is a concessional rate. However, according to a Gift City official, IT and IT-enabled Services units numbering around 40 in Gift City will get a big concession in MAT.
They were to pay 18.5 per cent MAT so far, but will now have to pay 15 per cent MAT.
These services include back office work, global delivery centre, design services and so on. Some 40-odd IT and ITeS units in Gift city will benefit and attract more such units which are part of the business chain.
Post presentation of Union Budget on July 5, there has been good traction and some hedge funds are in the process of getting final approval, Four or five insurance services companies, a foreign bank and some new ventures have also been approved in the past two months.
Gift City is now waiting for a common regulator for all financial services. The proposal mooted by the Reserve Bank of India four years ago and endorsed by the ministry of finance, “is under finalisation and the bill to amend relevant laws is likely to be introduced in the winter session of the parliament,” said the source privy to the development.
As of now, various financial services units are governed under their respective sectoral regulators like the RBI, Sebi and IRDAI.