IFSCA working with govt to ease tax hurdles for GIFT outbound funds

Executive director at IFSCA said, "We are already working with the government on the outbound tax. That is, of course, the request of the funds. That is something which we are working on."

Outbound investments from GIFT IFSC remain constrained due to tax-related issues, and the International Financial Services Centres Authority (IFSCA) is working with the government on the matter, a senior official said on Wednesday.

"We are already working with the government on the outbound tax. That is, of course, the request of the funds. That is something which we are working on," Pradeep Ramakrishnan, executive director at IFSCA, said during a panel discussion at an Artha Bharat Investment Managers IFSC LLP event.

Ramakrishnan's remarks come amid industry demands for a more competitive tax framework to encourage outbound investment structures from GIFT City.

 

Further, Sachin Sawrikar, managing partner at Artha Bharat Investment Managers IFSC LLP, in an interview to PTI, said outbound investments remain relatively small and continue to face multiple constraints, including taxation and the tax collected at source (TCS) framework.

Sawrikar said while the IFSC regulator has made representations to the government on the issue, the final decision rests with policymakers.

He added that the current policy approach does not actively encourage outbound investments.

However, he said, the Liberalised Remittance Scheme (LRS) has already created a framework for overseas investing by resident Indians and outbound investments are expected to increase over time despite existing hurdles.

Sawrikar stressed that overseas investments should not be viewed as capital permanently leaving the country, noting that such investments continue to be owned by Indian investors and generate returns that ultimately accrue to them.

"In that sense, overseas investing can be a productive use of capital," he said.

Investors increasingly recognise the need to diversify beyond a single market, adding that overseas investments can complement domestic portfolios over the long term.