BackTax department issues rules on computing relief for IFSC banking units
The new rules will apply from 1 April 2022. Offshore banking units are entities set up by domestic or foreign banks in the IFSC. The government has been granting concessions to units in the first IFSC in India set up in Ahmedabad to develop the city as a global financial hub like Singapore or London
PremiumNEW DELHI: The Income Tax department has issued new rules on computing tax-exempt income of offshore banking units set up in an international financial services centre.
The Income Tax (First Amendment) rules, 2022, issued on Friday lay down the formula for computing the income of a fund set up by the investment division of an offshore banking unit, which is eligible for tax exemption.
It includes income from transfer of a capital asset on a recognised stock exchange located in any international financial services centre (IFSC) and where the consideration for such transaction is paid in convertible foreign exchange. It also includes income from transfer of securities other than shares in an Indian resident company. Income from securities held by these funds which are issued by non-resident entities and any income from a securitisation trust which is chargeable under the head ‘profits and gains of business or profession' are also exempt from tax.
The new rules will apply from 1 April 2022. Offshore banking units are entities set up by domestic or foreign banks in the IFSC. The government has been granting concessions to units in the first IFSC in India set up in Ahmedabad to develop the city as a global financial hub like Singapore or London. The idea is to help build a robust financial services industry in India and to capture some of the market for these services India has lost to other centres in the world.
The new rules have also set conditions for availing tax relief. Eligible investment divisions of offshore banking units will have to keep separate accounts, get it audited and file an annual statement.
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