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PM Narendra Modi’s GIFT just got a boost from Budget 2016

PM Narendra Modi’s GIFT just got a boost from Budget 2016

MUMBAI: International finance services centres (IFSCs) got a boost in the Union Budget, with finance minister Arun Jaitley announcing a slew of tax exemptions to kickstart such projects.

Gujarat International Finance Tec-City (GIFT), India’s first IFSC being built on 359 hectares (886 acres) of land, will be the chief beneficiary of Monday’s announcements. The Maharashtra government is also planning a centre in Mumbai though it is still on the drawing board. The purpose of GIFT is to ensure that finance and tech firms relocate their operations there from Mumbai, Bengaluru and Gurgaon, among other locations.

Thus, tax breaks announced on Monday may spark the migration of business houses to GIFT. The Budget has waived taxes on transactions in the equity and commodity segments, distribution of pidends and longterm capital gains, while the minimum alternate tax for companies has been halved to 9% from 18%.

All financial transactions in the international financial centre will happen in foreign currencies. Both the BSE and NSE have plans to set up operations in GIFT.

“The government has provided tail winds to the IFSC project in GIFT,” said NSE managing director Chitra Ramkrishna. “Waiver of taxes for IFCS, coupled with recent announcement by Gujarat state government regarding abolition of stamp duty, will prove significant to boost GIFT on the lines of international financial hubs,” BSE managing director Ashish Chauhan said.

BSE officials said the exchange could look to buy real estate at GIFT. The BSE Brokers’ Forum, an organisation of stock brokers in Mumbai, has purchased 3-5 lakh square feet of space at GIFT.

Transaction taxes and stamp duty, along with other levies, form nearly 50% of statutory costs for equity and commodity market participants. The Maharashtra government earned between Rs 50 and Rs 100 crore on stamp duty alone from transactions in the equity and commodity markets.

“It is these clarifications that most brokers were waiting for to buy space in GIFT city,” said Siddharth Shah, chairman, BSE Brokers’ Forum. “The Budget announcement is a welcome move and while all major banks have purchased space at GIFT, brokers too would make a move.”

GIFT is pided into two segments — domestic and international operations. It is the international area that will get all the tax benefits. Brokers will seek to keep their back office operations in the domestic area and set up registered bare minimum offices in the international area to avail of the tax benefits.

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