Banks and insurance companies have pushed for major tax breaks to operate in Gujarat International Finance Tec-City (GIFT), the country’s ambitious International Finance Centre (IFSC) coming up near Ahmedabad.
Top bankers and insurers told the officials of the finance ministry and regulatory bodies in a closed-door meeting in Mumbai on Wednesday that “it doesn’t make sense to start operations in the IFSC without enough tax incentives”.
The ministry has called another meeting in Delhi in the next 10 days to get the IFSC in GIFT City running.
“We need tax concessions to operate in the IFSC. If we have to attract business going to Dubai or Singapore, the government should come out with a favourable structure. We need more clarity on the tax front,” the chairman of a public sector insurance company said at the meeting.
Currently, there’s a minimum alternate tax (MAT)of 18 per cent on projects in special economic zones which incidentally is the lowest tax. However, ministry officials, including Financial Services Secretary Hasmukh Adhia, who were present at the meeting did not give any indication about the tax structure being planned.
A top official who attended the meeting said GIFT has proposed zero corporate tax and less than three per cent MAT in order to become a globally competitive offshore centre. “The government is expected to announce the tax structure in the next Union budget in February 2016. The IFSC will kick off operations in fiscal 2016-17,” he said.
Another participant said the government and the RBI should bring minimal exchange regulations in the IFSC. In short, financial sector players are seeking nothing less than big tax breaks and facilities available in Dubai, Malaysia or Singapore to kick-start operations.