July 6, 2019 2:24:41 am
Finance Minister Nirmala Sitharaman announced a series of sops for India’s first International Finance Service Centre (IFSC) that is housed within GIFT City. Officials said the new budgetary provisions will help quadruple the business transactions happening in GIFT City. Tapan Ray, the new managing director and Group CEO of GIFT City, said “Today’s Union Budget announcement has re-emphasised the importance of GIFT IFSC as an emerging Global financial services hub. The policy pronouncement regarding GIFT IFSC would give a tremendous boost to investor confidence both in India and abroad.”
Key measures related to aircraft leasing business and improvements to profit-linked tax deductions is expected to the boost IFSC operations in a big way. “The announcements made in today’s budget will increase business activities at IFSC by four to five times, said Dipesh Shah, head (GIFT IFSC), Gujarat International Finance Tec-City Company Ltd.
“The biggest announcement in today’s budget according to me is the one related to profit-linked deduction under Section 80-LA where a unit that opens in IFSC was given a tax-holiday in form of allowing deduction of 100 percent of profits for first five consecutive years and 50 percent for the next five consecutive years from the year of commencement of operations.
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“Today it has been proposed to provide this 100 percent deduction for 10 years and allow the unit to claim the said deduction for any 10 consecutive years out of the 15 years from the year of commencement. It gives a clear long-term map for people to come into GIFT City now. This will help attract a lot of firms who would now be keen to make long-term investments in the project. Secondly, this tax holiday will provide a competitive regime for IFSC here in comparison to Dubai and other places,” Shah explained.
The incentives announced in the Budget for the IFSC have come as a breath of fresh air for Gujarat International Finance Tec-City (GIFT) in Gandhinagar, which is in the process of transition after crisis hit Infrastructure Leasing & Financing Services that has a fifty per cent stake in it.
A dream project of Prime Minister Narendra Modi, when he was Gujarat Chief Minister, GIFT city houses the first IFSC in the country. An independent valuation and transaction advisory firm based in Mumbai has been appointed to arrive at the right valuation of the 50 percent equity stake that IL&FS holds in GIFT City.
“RBSA Advisors (headed by chairman and founder RB Shah) has been selected just a few weeks back to determine the value of IL&FS stake. They are valuation experts. They were selected from five to six entities that were short-listed for the purpose. The appointment has been made jointly by IL&FS and Gujarat government,” Ray told The Indian Express.
“Once they conduct the valuation, we will take the next step. The idea is quickly get the valuation. All options are open. We need to drive the GIFT City project hard,” said Ray when asked if the equity owned by IL&FS would be bought by the state government as announced by Gujarat Chief Minister Vijay Rupani in November 2018 or invite a new private partner who could replace IL&FS.
Ray recently he took over from Ajay Pandey who had to step down in March 2019. GIFT City is a 50:50 joint venture between IL&FS and the state government owned Gujarat Urban Development Company Limited.
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