The Finance Minister Nirmala Sitharaman presented the Union Budget 2025 on February 1st, 2025 at 11:00 AM before the Parliament. The FM in her speech highlighted the government’s commitment to develop India’s financial sector. A key highlight of the budget was the extension of tax concessions for entities operating in the International Financial Services Centre (IFSC), aimed at further strengthening India’s position as a global financial hub.
The Finance Minister in her speech announced an extension of tax incentives for various financial activities conducted within the IFSC. These concessions were about to expire in 2025, however they have now been extended until March 31, 2030.
The major tax benefits proposed in the budget are:
Incentives to IFSC units: The cut-off date for newly established units in the IFSC to claim tax incentives has been extended to March 31, 2030. This extension ensures that businesses setting up operations within the IFSC can continue to enjoy tax exemptions on specified financial transactions.
Incentives for Ship Leasing Company: Tax incentives announced to capital gains for non-resident or unit of IFSC on transfer of equity shares of a ship leasing domestic company. The tax exemption also extended to dividends paid by the ship leasing company in IFSC to a unit of IFSC engaged in Ship leasing.
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Relief for Insurance Offices in IFSC: The budget also proposed tax reliefs for insurance companies operating in the IFSC, ensuring their competitive advantage in the global market. These incentives exempt the proceeds received on life insurance policy issued by IFSC insurance company.
Support for Treasury Centers of Global Companies: IFSC group entities set up for undertaking treasury activities will be excluded from the dividend.
Other exemptions: The Income received by a Non resident as a result of transfer of Non-deliverable forward contracts entered into with foreign portfolio investor will be exempted from the tax.
The tax concessions also extended to the transfer of a share or unit or interest held by a shareholder in a original fund in consideration for the share or unit or interest in a resultant fund in a relocation. The proposal stated that transfer will not be regarded for the purpose of calculating capital gains.
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In Conclusion, these tax concessions aim to position the IFSC as a significant destination for international financial transactions. The extended timeline provides certainty to investors and financial institutions, encouraging long-term investments in the sector.
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