#1Gujarat International Finance Tec-City (GIFT City) CA. Vipul Gandhi Director - GIFT City Khandhar Mehta & Shah#2Contents About GIFT City International Financial Service Centre (IFSC) Key Benefits of setting up units in GIFT IFSC Framework for Ancillary Service Providers (Professionals) Process for setting up unit in IFSC / GIFT City Exit Clause GST Aspects - GIFT City Budget 2023 - Highlights and Recent Announcements Q & A Session Khandhar Mehta & Shah | Chartered Accountants 2#3About GIFT City#4Hon'ble Prime Minister of India vision for GIFT City fin "Another special feature of GIFT City is that it is the main pillar of the tri-city approach. Ahmedabad, Gandhinagar and GIFT City, all three are just 30 minutes away from one another. And all three have their own special identity. Ahmedabad boasts of a glorious history. Gandhinagar is the centre for administration and the main hub of policy and decisions. GIFT City is the main centre of the economy. That is, if you go to any of these three cities, then you are only thirty minutes away from the past, present and future. - Hon'ble Prime Minister of India Shri Narendra Modi Khandhar Mehta & Shah | Chartered Accountants 4#5About GIFT City fin A Greenfield Smart City developed on 886 Acres of land "GIFT City IFSC- Gujarat, ranked 1st amongst top 15 Global Financial Centre that will become more significant and 1st in Reputational Advantage" based on the report issued by The Global Financial Centres Index, 28 September 2020 Issue Developed by Government of Gujarat and supported by Govt. of India The financial gateway of India for inbound & outbound investment $ Global Benchmarking Integrated Development Strong Promoters Central Business Hub India's 1st IFSC India's 1st Operational Smart City & IFSC Khandhar Mehta & Shah | Chartered Accountants Government of India operationalized GIFT City as an IFSC in 2015 Ni A State of the Art Infrastructure Strategic Location Ease of Doing business 5#6Strategic Location N.H. BA GANDHINAGAR INFOCITY SHANPUR NIDBRIDGE SHAMP CITY PULSE AIRPORT ROAD VAISHNODEVE CHAR RASTA SARDAR PATEL RING ROAD AHMEDABAD КОВА CIRCLE KALOL KOBA INDIFLA TEEN RASTA GANDHI ROD SARDAR PATEL RING ROAD THALTEJ HELMET CHAR RASTA GIFT OFFICE SARKHEJ CACLE 132FT MONG ROAD SABARMATI RAILWAY STATION SARDAN VALLABHBHA PATEL INTERNATIONAL AIRPORT NARODA KALUPUR ROAD RAILWAY STATION SARDAR PATEL RING ROAD Khandhar Mehta & Shah | Chartered Accountants SABARMATI RIVER Gandhinagar Ahmedabad GIFT SITE NARNADA MAIN CANAL SARDAR PATEL RING ROA EXPRESS HIGHWAY 12 kms from Ahmedabad International Airport (8th Busiest in India). 6 kms for Gandhinagar (Political capital of Gujarat) On the banks of Sabarmati River. Along Delhi - Mumbai Industrial corridor. Metro connectivity to Ahmedabad Bullet Train connectivity between Ahmedabad - Mumbai. MATS BRTS 6 fin#7GIFT City - Integrated City Development Shahpur Bridge Processing area SEZ Non-Processing area SEZ SAGARMATI RIVER Southem Bridge Khandhar Mehta & Shah | Chartered Accountants Bapa sita ram Junction Total -62 Mn Sq Ft BUA Building Use ■Commercial: 67% (42 Mn SqFt) Access Road STATION ▪ Residential : 22% (14 Mn SqFt) ■Social : 11%(6 Mn SqFt) North fin TOWARD AHMEDABAD TOWARD HIMMATNAGAR 7#8GIFT City - Extended City limit (w.e.f. 2-Nov-2022) SHAMPUR Towards Gardne Towards Shahpur Towards Gandhinagar Bypass road Towans 148 Towards Paysan GIFT City is being expanded from 1065 acres to 3387 acres of surrounding land Towards PDPU Towards GIFT Cay Sabarmat River SHAHPUR VALAD PARA TRATANPUR Khandhar Mehta & Shah | Chartered Accountants GIFT CITY RATANPUR PIROJPUR VALAD LAVARPUR Towards Ahmedabad W E fin Legend GIFT Area & Expansion Zone Boundary GIFT Area Boundary Village Boundary Gamtal Natural growth of Gamtal GUDA Existing Major Road GUDA Proposed Internal Road GIFT Existing Road LAVARPUR GIFT Proposed Road Water bodies / Nala NH 48 Drawing Title: Date: Scale: GIFT Expansion Zone 31.10.2022 NTS 8#9GIFT City: Key Features Why GIFT? • Fast growing Business District • India's first operational smart city • India's first International Financial Services Centre • Multi-Services Special Economic Zone (SEZ) • GOG IT/ITES Policy Incentives • Unique infrastructure (first time in India) • Substantial Reduction in Operational costs • Talent availability • Low attrition ⚫Skill Development & Training • Integrated Development (Commercial, Residential & Social) • Walk to work concept • Quality of life • Single window clearance •Strategic location Khandhar Mehta & Shah | Chartered Accountants fin#10GIFT City: Structure Domestic Tariff Area GIFT City Multi-Service Special Economic Zone (SEZ) Caters to Domestic Economy IT & Finance Hub Notified as India's 1st International Financial Service Centre (IFSC) Export of IT & Other Services Khandhar Mehta & Shah | Chartered Accountants fin 10#11GIFT City: Structure Processing Area GIFT City Non-Processing Area International Financial Service Centre (IFSC) • International Techno Park & International Market Zone • Commodity Exchanges • Global Trading Exchanges • Insurance ⚫ Offshore Banking • IT/ITES • KPO/ BPO Services • Related Commercial and Office Buildings • Service Apartments & Residential Flats • Hostels, Restaurants and Food Court • Business Hotel, Shopping Centre, Retail Stores and Banks • Training Center for Financial Services • Medical Centre • Entertainment Centre / Theatre • Regulators Offices Khandhar Mehta & Shah | Chartered Accountants f in 11#12GIFT City: Implementation Framework Buildings GIFTCL Infrastructure Developers • GIFT SEZ Limited • GIFT District Cooling System Limited • GIFT Water Infrastructure Limited • GIFT Waste Management Services Limited • GIFT Power Company Limited • GIFT ICT Services Limited Khandhar Mehta & Shah | Chartered Accountants fin 12#13Key Benefits of having office at GIFT City 1. Unified Regulator 10. Good living 2. Tax Regime % 3. Cost Advantage GIFT IFSC ° 0° 4. Ease of Doing Business 5. High Quality Talent Khandhar Mehta & Shah | Chartered Accountants 6. Supporting Ecosystem 9. Physical & Social Infrastructure 8. Walk to work concept 7. Proximity to National and International Airport fin 13#14GIFT City: Opportunities in DTA • • Business Opportunities Development of large real estate projects for commercial, residential and social facilities Setting up of Corporate office and Headquarters for domestic operations. Setting up of large IT/ITES operations Setting up of registered and operating office for stock broking activities • Investment opportunities in commercial and residential properties • Incentives Attractive IT/ITeS incentive policy of Govt. of Gujarat ● ● Capex reimbursement- 25% Opex reimbursement- 15% (for 5 years) PF reimbursement New employment generation incentive Reimbursement of Stamp Duty to stock brokers Khandhar Mehta & Shah | Chartered Accountants fin 14#15State of Art Infrastructure GIFT WATER INFRASTRUCTURE LIMITED CAPACITY 3 MLD fin Water Treatment Plant District Colling Plant Utility Tunnel Automated Waste Collection & Segregation Plant Khandhar Mehta & Shah | Chartered Accountants 15#16City Command and Control Centre (C4) GIFT cerational Smart City and fin Khandhar Mehta & Shah | Chartered Accountants 16#17Operational buildings in Domestic Area GIFT One Tower GIFT Two Tower Tower A World Trade Centre Khandhar Mehta & Shah | Chartered Accountants Tower D Prestige Tower fin 17#18Commercial developments in GIFT SEZ - IFSC Signature Tower by Hiranandani Group SIGNATURE SIGNATURE Khandhar Mehta & Shah | Chartered Accountants Welcome St. Way Rupan Hele De Mina Brigade Tower Pragya Tower Savvy - ATS JV fin 18#19Social Facilities GRAND MECUM Brigade Group Hotel-150 Rooms GIFT City Business Club JAMPARAI HARSEE SCHOOL fin Residential Central Park is being developed under 28 acres of land Khandhar Mehta & Shah | Chartered Accountants Jamnabai Narsee School ICSE Board - 1500 students 19#20Upcoming Social infrastructure development bakeri since 1959 Environment is our Attitude SHILP BUILDING EXCELLENCE SHIVALIK BUILDING LANDMARKS SINCE 1998 D*Mart ADB ASIAN DEVELOPMENT BANK Lilavati Hospital GMU GUJARAT MARITIME UNIVERSITY तमसो मा ज्योतिर्गमय Development of International Fintech Institute in-principally approved by DEA and Detailed Project Report under preparation 750+ residential apartments under development Allotment to new 3000+ residentials Allotment for Shopping mall, multi- speciality hospital and university 800 racks capacity data centre available, additionally allotment to new data centre Business Club, Five Star Hotel, ICSE School and affordable housing fully functional Khandhar Mehta & Shah | Chartered Accountants fin 20#21Corporates in DTA fin APEX BANK GSC BANK TATA TATA CONSULTANCY SERVICES (n)Code Solutions e-Safe, e-Secure.e-Sure. 0 GERC Gujarat Electricity Regulatory Commission एसटीपीआई/ ORACLE STP infibeam Shop with a smile M maxim integrated.. बैंक ऑफ़ बड़ौदा Bank of Baroda बैंक ऑफ़ इंडिया Bank of India MCX METAL & ENERGY Trade with Trust TOWER RESEARCH CAPITAL सिडबी भारतीय लघु उद्योग विकास बैंक SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA ΤΑΤΑ TATA CHEMICALS Kennis where sky is not the limit IDBI BANK Friendly ALLES Transportation Khandhar Mehta & Shah | Chartered Accountants 'सिंडिकेटबैंक SyndicateBank HIDE BIG of it herting HDFC BANK ANDHRA BANK केनरा बैंक A Canara Bank LF. CDGROUP 1.1 नेशनल इन्श्योरेन्स National Insurance B पी.एस.बी. 21#22INTERNATIONAL FINANCIAL SERVICES CENTRE (IFSC)#23Vision for IFSC fin ☐ "To enable Indian firms to compete on an equal footing with offshore financial centres" ☐ "Regulations comparable to any other leading international finance centres" ☐ "To become price setter for at least few of the largest traded financial instruments in the world (commodities, currencies, equities....)" ☐ “Companies from Asia, Africa and Europe should be able to raise funds from IFSC" Hon'ble Prime Minister of India January 2017 Khandhar Mehta & Shah | Chartered Accountants 23#24International Financial Service Centre (IFSC) f in An IFSC caters to the customers outside the jurisdiction of domestic economy. Such centers deal with the flow of finance, financial products and services across the borders. What is IFSC? IFSC as envisaged under the Indian context "is a jurisdiction that provides financial services to non- residents and residents (Institutions), in any currency other than Indian Rupee (INR)". ➤ IFSC is set-up to undertake financial services transactions that are currently carried on outside India by overseas financial institutions and overseas branches / subsidiaries of Indian financial institutions. IFSC in India ➤In India, an IFSC is approved and regulated by the Government of India under the Special Economic Zones Act, 2005. ➤ Government of India has approved GIFT City as a Multi Services Special Economic Zone ('GIFT SEZ') and has also notified this zone as India's IFSC. The launch of the IFSC at GIFT City is the first step towards bringing financial services transactions relatable to India, back to Indian shores. ➤ IFSC unit is treated as a non-resident under extant Foreign Exchange Management regulations. Khandhar Mehta & Shah | Chartered Accountants 24#25International Financial Services Centre Authority Reserve Bank of India Securities & Exchange Board of India Insurance Regulatory Development Authority of India International Financial Services Centre Authority (IFSCA) Pension Fund Regulatory & Development Authority of India Khandhar Mehta & Shah | Chartered Accountants fin 25#26Business opportunities at GIFT IFSC 2. Fintech 3. Global In-House Center 1. Banking, Insurance & Capital Market BANK 20% Business opportunities at GIFT IFSC 8. Ship Acquisition, Financing and Leasing 7. Ancillary Services 4. Aircraft Leasing and Financing Khandhar Mehta & Shah | Chartered Accountants 5. International Bullion Exchange 6. Global/Regional Corporate treasury Centre fin 26#27Key Business Activities Capital Markets Activities: Listing and issuance of securities Entities : ▸ Stock/Commodity Exchanges ▸ Clearing Corporation ▸ Depository ▸ Broker Dealer ▸ Trading Members ▸ Segregated Nominee Account Providers ▸ Clearing Corporations, Depositories, other intermediaries Khandhar Mehta & Shah | Chartered Accountants Offshore Banking Activities: ▸ Corporate Banking ▸ ECB Lending Servicing JV/WOS of Indian companies registered abroad ► Factoring / Forfaiting of export receivables Entities: ▸ Indian banks ▸ Foreign banks Finance Cos and NBFCs fin 27#28Key Business Activities Offshore Insurance Activities: ► General / Life Insurance ▸ Co-Insurance ▸ Reinsurance ▸ Captive Insurance Entities : ➤ Indian Insurer ▸ Indian Reinsurer Indian Broker ▸ Foreign Insurer ▸ Foreign Reinsurer Khandhar Mehta & Shah | Chartered Accountants Offshore Asset Management Activities: ▸ Portfolio Management Services ▸ Wealth Management Services ▸ Custodial Services Entities : ▸ Alternative Investment Funds ▸ Mutual Funds ▸ Investment Advisors ► Portfolio Manager fin 28#29Key Business Activities Emerging Activities Global Fintech Hub ▸ Global In-house Centres ▸ International Bullion Exchange ▸ Aircraft Leasing & Financing Ancillary Services ▸ Legal services, Secretarial Services Compliance & ▸ Accounting, Auditing, Bookkeeping & Taxation Services ▸ Professional and Consulting Services Management ▸ Administration, Assets Management Support Services and Trusteeship Services Khandhar Mehta & Shah | Chartered Accountants fin 29#30IFSC Ecosystem and Business Growth Sr No Participants 1 International Stock exchanges and Bullion Exchange 2 IFSC Banking units Brokers & 3 Intermediaries Key business activities and features Dollar denominated products No transaction cost (other than brokerage) Trading 22 hours - External Commercial Borrowing (ECB) Lending Loan syndication and trade finance Broking services Proprietary trading 4 Insurers & Intermediaries 50 Ancillary Service providers 6 Leasing activities Volume and No. of players • India INX and NSE IFSC stock exchange Avg. Daily volume crossed USD 14 Bn+ Bullion vaults 23 IBUS Banking Asset size - USD 22 Bn+ • 50+ brokers, Depository Clearing corporations, Custodian 20+ Insurance and Reinsurance Firms f in Non-life, Reinsurance business • Insurance intermediaries • Sum insured - USD 30 Bn+ Legal & consultancy firm IT companies Aircraft leasing 30+ Accounting, Legal and Consultancy Firms 15+ Firms Alternative Investment Funds • 40+ AIF 20+ Fintech Entities from Ahmedabad Airport, well Social amenities - Business club, school, hotels, residential apartments, etc. 20000+ employees in GIFT City 7 Fund Management 8 IT Dispute resolution - Singapore International Arbitration Centre (SIAC) Fintech Connectivity - 20 min. connected thru public transport Khandhar Mehta & Shah | Chartered Accountants 30#31IFSC Ecosystem and Business Growth Unwrapping GIFT City Business activity in India's offshore financial hub has surged after the IFSCA* took charge as its unified regulator in October 2020 No. of registered firms Employment in GIFT SEZ No. of banks Sep '20 129 Feb 23 450 20,000 8,000 23 14 Asset size of banks (in $ bn) 14 Cumulative banking transactions (in $ bn) 45 *International Financial Services Centres Authority THE KEN Graphic by Adhithi Priya R, 08 Apr 23 Khandhar Mehta & Shah | Chartered Accountants 36 407 fin Source: IFSCA 31#32Key Institutions at GIFT IFSC Banking fin Alternative Investment Funds DSP Deutsche Bank INVESTMENT MANAGERS Standard Chartered HSBC BARCLAYS MOTILAL OSWAL Investment Services KEDAARA ASK INVESTMENT MANAGERS True Beacon Avendus^ Ancillary Services Next is the only level Citi International Exchange NSE NDB bank GIC INDIAINX INDIA INTERNATIONAL EXCHANGE Bank of America. Aircraft leasing and financing SM ACUMEN Khandhar Mehta & Shah | Chartered Accountants KPMG al CATALYST pwc Believe in Yourself... Trust Us! Vman VISTRA ITCL Grant Thornton an cyril amarchand mangaldas ahead of the curve Nishith Desai Associates LEGAL AND TAX COUNSELING WORLDWIDE 32#33Banking Sector Highlights Banking Brochure IFSCA GIFT IFSC BANKING INVEST INDIA 2021 Banking Handbook Banking Ecosystem INTERNATIONAL FINANCIAL IFSCA AUTHORITY The IFSCA Banking Handbook General Directions (GEN) 13 21 Number of Banks 14 24.5 Total Asset Size Upto Sept. 2020 Upto Dec. 2021 fin USD Bn 7 Foreign Banks standard BARCLAYS chartered citibank ☐ Deutsche Bank J.P.Morgan New Development Bank HSBC ◉HDFC BANK We understand your world ICICI Bank ICI FEDERAL BANK YOUR PERFECT BANKING PARTNER बैंक ऑफ़ बड़ौदा Bank of Baroda IndusInd Bank 14 Indian Banks 人 AXIS BANK QSBI YES BANK Ckotak punjab national bank ...the name you can BANK upon! b RBL BANK Kotak Mahindra Bank Khandhar Mehta & Shah | Chartered Accountants 33#34Capital Market Highlights 1 Key Developments Retail Indian Investors provided with opportunity to trade in select US Stocks on NSE IFSC platform via Unsponsored Depository Receipts Microsoft NETFLIX facebook Google T • TESLA NSE IFSC-SGX Connect: amazon Potential to onshore $ 4.9 Bn daily open interest 2 Listing by Special Purpose Acquisition Company (SPACS) Expected to go live by 3rd July, 2023 after the transition of SGX Nifty derivatives to NSE IFSC Market Data Connect established fin India INX Global Axis subsidiary of India INX has been granted approval to access all global markets through international brokers NYSE London Stock Exchange Listing by SMEs and Start-Ups Issuance and Listing of Securities (Regulations) 2021 LUXEMBOURG STOCK EXCHANGE Initial Public Offering (IPO) by Indian & Foreign Cos NSE International Exchange SGX= Multi-product Exchange: Equity, Currency, Commodity, Index and Debt Securities (operates for 22 Hrs/day) NSE International Exchange INDIAINX INDIA INTERNATIONAL EXCHANGE Environmental, Social, and Governance (ESG) Debt Securities Listing of Debt Securities Listing of Depository Receipts (DRs) Khandhar Mehta & Shah | Chartered Accountants 34#35Fund Industry Highlights 20* AIFS Current Status: Funds Ecosystem 25 25 6 Avendus AIFS, PMS & Fund Managers smc Moneywise. Be wise. True Beacon SBI MUTUAL FUND Fund Managers/IAS PMS ADITYA BIRLA GROUP A PARTNER FOR LIFE Dec. 2021 Fund Management Brochure INVEST INDIA NATIONAL INVESTMENT PROMPTION GIFT IFSC FUND MANAGEMENT Khandhar Mehta & Shah | Chartered Accountants Vivriti CAPITAL Nippon india Mutual Fund Wealth sets you free BLUME KEDAARA resurgentindia Debt Equity Advisory TEV Training | Wealth ASK *Including entities who have either applied to IFSCA or obtained SEZ IFSC approval fin " 35#36AIF Structure in GIFT IFSC • Foreign Investors Person resident outside India Non-resident Indian IFSC AIF Manager/Sponsor Provides Management Services Management Fees Invest in foreign currency Permissible investments Indian Investors Subject to outbound investment and LRS norms specified under FEMA Institutional Investor resident in India • Person resident in India IFSC Trustee AIF Trusteeship Fees fin IFSC in GIFT City Offshore securities incl. shares, debt, derivatives, etc. Units of schemes launched by mutual funds (FATF compliant jurisdiction) IFSC securities incl. shares, debt, derivatives, etc. Indian securities incl. shares, debt, derivatives, etc. Units of schemes launched by Indian mutual funds, AIFS, REITs, InvITs, security receipts Khandhar Mehta & Shah | Chartered Accountants 2 36#37AIF Structure in GIFT IFSC AIFs in IFSC - Regulatory Relaxations Borrowing and Leverage - Permission to borrow funds and engage in leveraging activities subject to: Consent of investors Disclosure in PPM - Max. leverage, methodology for calculation of leverage Co-investment Investment Diversification norms • • • - - Comprehensive risk management framework appropriate to the size, complexity and risk profile of the AIF Co-investment through segregated portfolio by issue of separate class of units subject to: Terms not to be more favorable than common portfolio of AIF Disclosure in PPM regarding creation of segregated portfolio AIF in IFSC is permitted to invest in AIF registered with SEBI in India, alongside other permissible investments Restriction with respect to investment up to 10% in single investee company (for Cat III AIF) and 25% (for Cat I and Cat II AIF) to not apply provided: Investments are in line with risk appetite of investors Disclosure in PPM Indian party making sponsor contribution under automatic route Sponsor contribution under automatic route of RBI • Recently, RBI has issued a circular permitting remittance by Indian party towards sponsor contribution to AIF in IFSC • Any sponsor contribution from sponsor Indian Party to AIF in IFSC, as per the laws of host jurisdiction, shall be treated as ODI • Accordingly, Indian Party can set up AIF in IFSC, under automatic route provided it complies with Regulation 7 of the ODI Regulation Conditions prescribed under regulation 7 of the ODI Regulations • Indian party has earned net profit during the preceding 3 financial years from financial services activities • Indian party is registered with the regulatory authority in India for conducting financial services activities • Indian party has obtained approval from regulatory authorities in India and abroad, for venturing into such financial sector activity • Indian Party has fulfilled the prudential norms relating to capital adequacy as prescribed by the concerned regulatory authority in India Khandhar Mehta & Shah | Chartered Accountants fin 37#38Snapshot of key guidelines for AIFs Other conditions like minimum corpus, investment, continuing interest • Like domestic AIFs except that thresholds are designated in USD Overseas Investment Existing conditions on outbound investments by AIF not to apply to AIFs in IFSC Key guidelines for £ AIFs in IFSC € Khandhar Mehta & Shah | Chartered Accountants fin Registration Process • AIF registration can be granted to Trust, . Company, LLP, Body Corporate Existing sponsors / Manager can set up as a branch, company or LLP • New sponsors / Manager need to set up a company or LLP Investment Conditions • FPI, FVCI or FDI routes permitted for investment in India • Investments in units of other AIFs • Any other securities in which a domestic AIF can invest 38#39Financial Ecosystem for AIFs in GIFT IFSC Banking Operations at GIFT City Custodians Khandhar Mehta & Shah | Chartered Accountants Trusteeship services Fund Ecosystem at GIFT IFSC Fund administrator Accounting Firms Legal Firms fin 39#40Aircraft Leasing and Finance: Aircraft Leasing Potential in India: 1. Aircraft leasing activity expected to generate annual lease financing opportunity of $5 Bn 2. Leasing is a preferred choice in India -80% of total fleet size 3. India has the 3rd largest aircraft order book globally 12 Aircraft Lessors* Millennium Mill Mum A ACUMEN Vman Aero Services LLP Aviation Resource Management Advance Stage IndiGo 7 JET SET GO AEROFIN IND INVESTMENTS IFSC PVT. LTD. Akasa Airlines 筒 4 1st Aircraft Leased Brochure IFSCA Aircraft Leasing and Finance gettys ఈ fin INVEST INDIA Report Finance Ministry "Rupee Raftaar" notifies "Aircraft released by Lease" as a MoCA Financial Product Budget announcements on tax incentives for the IFSCA issues "Framework for Aircraft Operating aircraft leasing industry Lease" India Aircraft Leasing Summit 2021 held at New Delhi 1st Aircraft leased from GIFT IFSC arrives in India Target: All Aircraft Leasing requirement of Indian Aviation to be met from GIFT IFSC in next 3 yrs. (Atma Nirbhar Bharat) *Including entities who have either applied to IFSCA or obtained SEZ IFSC approval Khandhar Mehta & Shah | Chartered Accountants 40#41International Bullion Exchange (IBE): 1. Bullion Exchange Regulations, 2020 notified 2. Operating Guidelines for Bullion MIls and Bullion Intermediaries issued 3. Holding Company for IBE incorporated 4. Subsidiary Company for exchange and clearing incorporated 5. CDSL-IFSC, Depository designated as Bullion 6. Pilot run for IBE conducted and IBE ready to go live 7. Satellite vaulting in FTWZ enabled 8. Import of Gold through IIBX by Qualified Jewellers notified 9. Sequel Logistics onboarded as Vault Manager 10. RBI has enabled remittance of Forex for import of Bullion through IIBX Khandhar Mehta & Shah | Chartered Accountants The IBE to emerge as the "Gateway for Bullion Imports into India" MCX METAL & ENERGY Trade with Trust ◆NSE Holding Company Consortium NSDL Technology, Trust & Reach CDSL Your Depository INDIAINX INDIA INTERNATIONAL EXCHANGE fin 41#42fin FinTech Hub in GIFT IFSC: Key initiatives by IFSCA for Development of FinTech Hub: 1. "Regulatory & Innovation Sandbox framework" notified 2. Eight entities approved under the Regulatory Sandbox regime 3. 1st FinTech Accelerator- Finx Labs operational 4. IFSCA-Bloomberg Lab for FinTech innovators set up 5. "I-Sprint' 21" Four FinTech Hackathons. launched: BankTech, Quant Camp, InsureTech & MarketTech. 6. IFSCA FinTech Incentive Scheme 2021 7. IFSCA became member of Global Financial Innovation Network (GFIN) Position IFSC as global laboratory for Next-Gen FinTech Innovation Artificial Intelligence Open Finance GreenTech & Blockchain & RegTech DTL Flagship FinTech Event-2021 Partners Countries: K UK South Africa 8. Inter-Regulatory Cooperation Agreement (Dialogue with 11 Overseas regulators). 9. IORS- IFSCA to become Principal Regulator 10.MoU with Domestic FinTech Hubs underway Indonesia INFINITY FORUM India's beyond-boundaries FinTech event The two-day event was successfully inaugurated by Hon'ble PM on 3rd Dec 2021 and witnessed more than 96,000 registrations from 70+ countries Khandhar Mehta & Shah | Chartered Accountants 42#43Professional Service Providers: Ancillary Framework IFSCA issued Ancillary Services Framework 2021 to enable Professional Services from IFSC fin GIFT IFSC is being developed as a regional hub for specialist Professional Service Providers on the lines of leading International Financial Centres like UK, Dubai, Singapore and Qatar Ancillary services include Legal Service, Asset Managers, Auditing & Accounting Firms, Management Consultancy Service, Trusteeship Services, Secretarial Services, etc. * Consulting Service Trustee Service Our Mission... Your Growth Price Waterhouse&Co LLP CAMS KPMG RBSA Advisors Grant Thornton VISTRA Asset/Fund Administration Basiz Fund Services An Opsglobal Singapore Co Legal Services Nishith Desai Associates LEGAL AND TAX COUNSELING WORLDWIDE Accounting Services CNK Khandwala & ASSOCIATES CHARTERED ACCOUNTANTS Vman Aero Services LLP Aviation Resource Management AXIS TRUSTEE Ohm Dovetail BEACON TRUSTEESHIP Khandhar Mehta & Shah | Chartered Accountants IC UL IC UNIVERSAL LEGAL- Advocates & Solicitors Grant Thornton al CATALYST an Price Waterhouse & CoLLP *Including entities who have either applied to IFSCA or obtained SEZ IFSC approval 43#44GIFT IFSC: Business Highlights $5.9 Bn Stock Exchanges Avg. daily trading volume in Dec 2021 compared to $ 3.4 Bn in Sept. 2020 $ 24.7 Bn Total Banking Asset Size in Dec. 2021 compared to $ 14 Bn in Sept. 2020 $173 Bn Cumulative Derivative transactions by Banks till Dec. 2021 compared to $ 22 Bn in Sept. 2020 $4.6 Bn Total amount committed by Alternative Investment Funds (AIFs) till Dec. 2021 $142 Bn Cumulative Banking transactions till Oct. 2021 compared to $ 45 Bn in Sept. 2020 4500+ *** Employment in GIFT SEZ in Dec. 2021 compared to 2500+ employment in Sept. 2020 Khandhar Mehta & Shah | Chartered Accountants Growth in GIFT IFSC Entities* 90% Rise 129 Upto Sept 2020 270 Upto Dec. 2021 *Including entities who have either applied to IFSCA or obtained SEZ IFSC approval fin 44#45Key Benefits of Setting up units in IFSC#46Competitive Tax Regime - Overview • 100% Tax Exemption (for 10 out of 15 years) • No Capital Gain Tax • Minimum Alternate Tax* @ 9% • No CTT**/STT**/GST**/Stamp Duty fin Withholding tax @4% on interest paid on Debt Instruments • Competitive AIF Tax Regime * MAT provisions not applicable for companies opting for concessional tax rate under Sec. 115 BAA of Income Tax Act, 1961 **CTT- Commodity Transaction Tax, STT- Securities Transaction Tax, GST- Goods and Service Tax Khandhar Mehta & Shah | Chartered Accountants 46#47Competitive Tax Regime - Income Tax Units in IFSC fin ➤ 100% tax exemption for 10 years out of 15 years ➤ IFSC Unit has the flexibility to select any 10 years out of 15 years block ➤ MAT / AMT @ 9% of book profits applies to Company / others setup as a unit in IFSC - MAT not applicable to companies in IFSC opting for new tax regime Dividend paid to shareholders of company in IFSC: From 01 April 2020, dividend income distributed by Company in IFSC to be taxed in the hands of the shareholder. Investors ➤ Interest income paid to non-residents on: (i) Money lent to IFSC units not taxable. (ii) Long Term Bonds and Rupee Denominated Bonds listed on IFSC exchanges taxable at a lower rate of 4% ➤ Transfer of specified securities* listed on IFSC exchanges by a non-resident not treated as transfer – Gains accruing thereon not chargeable to tax in India - Khandhar Mehta & Shah | Chartered Accountants 47#48Competitive Tax Regime – GST - Units in IFSC No GST on services: (i) received by unit in IFSC. (ii) provided to IFSC / SEZ units, Offshore clients. ➤ GST applicable on services provided to Domestic Tariff Area Investors ➤ No GST on transactions carried out in IFSC exchanges Khandhar Mehta & Shah | Chartered Accountants fin 48#49Competitive Tax Regime – Other Taxes & Duties - Units in IFSC State Subsidies - Lease rental, PF contribution, electricity charges fin Investors ➤ Exemption from Security Transaction Tax (STT), Commodity Transaction Tax (CTT), stamp duty in respect of transactions carries out on IFSC exchanges. Khandhar Mehta & Shah | Chartered Accountants 49#50Operational Benefits fin Exemption from currency control regulations to IFSC Units ➤ Under SEZ Act, a unit set up in IFSC is treated as a non-resident. Even under Foreign Exchange Management Act, 2002 ("FEMA") units in IFSC enjoy the benefits of a non-resident under exchange control provisions. Liberalized currency control regime for Indian residents ➤ Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 ("ODI Regulations") restrict investment by an Indian resident into an overseas firm in the financial services sector. To enable, Indian residents to set-up and invest funds in GIFT City, RBI, vide its Circular dated May 12, 2021 has permitted sponsor contribution from a sponsor Indian party in an Alternative Investment Fund (AIF) established overseas, including IFSC Khandhar Mehta & Shah | Chartered Accountants 50#51Government of Gujarat IT/ITES Policy (2022-27) Khandhar Mehta & Shah | Chartered Accountants fin 51#52Benefits to IT/ITeS Units • • Capital subsidy - 25% of Eligible CAPEX (one-time) Upto INR 200 crs with GFCI > INR 250crs (Mega Project) Upto INR 50 crs with GFCI < INR 250crs 15% of OPEX (available for 5 years) Upto INR 40crs with GFCI>INR 250cr Upto INR 20crs with GFCI<INR 250cr Interest subsidy of upto 7% on term loan or actual interest paid, max INR 1cr per annum (5 years) Early mover advantage to first three eligible IT/ITES units - Limit for Mega project reduced to INR 100 crs Atmanirbhar Rojgar Sahay (ARS) - Reimbursement of employer contribution to PF upto 12% (5 years Key Incentives ARS and EGI benefit available even for employees working from home within Gujarat Employment Generation Incentive (EGI) - 50% of one month employment cost to company (one-time) Reimbursement of 100% electricity duty paid (5 years) Khandhar Mehta & Shah | Chartered Accountants Provision of direct benefit transfers of INR 50,000 for courses in information ommunication technology Skill development of students and working professionals through Al schools, COES and digital literacy fin 52#53Incentives under Gujarat IT/ITeS Policy (2022-27) Incentives to IT City/Township, Cloud ecosystem, Data Centres and R&D institutes fin Type of Incentive Nature Incentive IT City/Township CAPEX One time support of 25% of CAPEX subject to maximum of INR 50 crores Facilitating infrastructure OPEX: Rentals on per seat basis First two years: 50% of monthly rentals subject to a maximum of INR 10,000 Cloud ecosystem for CLS CAPEX Data centre projects CAPEX OPEX Establishing R&D institutes CAPEX First three years subsequently: 25% of monthly rentals subject to a maximum of INR 5,000 One-time support of 25% of eligible CAPEX up to INR 20 crores One-time support of 25% of eligible CAPEX up to INR 150 crores Power tariff subsidy of INR 1/ unit One-time support of 60% of machinery cost up to INR 5 crores Policy Implementation: The detailed implementation guidelines are expected to be issued by the Department of Science & Technology. Khandhar Mehta & Shah | Chartered Accountants 53#54Incentives under Gujarat IT/ITeS Policy (2022-27) Non-Fiscal Incentives Sr. Incentive Category No. 1 Facilitation of 2 Description of Support allotment of land Self-certification - Facilitation of allotment of land by the government subject to availability and eligibility criteria - Self-certification without inspections under various acts barring complaints and random checks 3 Investor Facilitation centre - Common platform for industry players 4 Preferential Market Access - fin - 24*7 centralized help desk call centre - Assistance in marketing/promotion Effective implementation of the policy - Knowledge exchange platform - Facilitating access to government sector for opening new market opportunities Preferential access to take part in public tenders for government-owned/funded projects Khandhar Mehta & Shah | Chartered Accountants 54#55Framework for Ancillary Service Providers (Professionals) (Circular No. F. No. 206/IFSCA/Anc.Aux/2020-21 dated 10.02.2021 & F. No. 206/IFSCA/Anc. Aux/2020-21 dated 10.06.2021)#56Permissible Ancillary Services Legal services, Compliance & Secretarial Services Professional and Management Consulting Services Accounting, Auditing, Bookkeeping & Taxation Services £ € Khandhar Mehta & Shah | Chartered Accountants fin Administration, Assets. Management Support Services and Trusteeship Services. 56#57in Permissible Ancillary Services Legal Services ➤ Legal advisory services: f Legal advisory services shall include tendering legal opinions, drafting legal documents including pleadings, representing before IFSCA or entities regulated by it. It shall also include research and other work for the preparation of a non-judicial case (e.g. researching legal documentation, reviewing reports), and the execution of post-litigation work. Legal documentation and certification services: Preparation, drawing up and certification services of legal documents. These services comprise of related legal services including the provision of advice and the execution of various tasks necessary for the drawing up or certification of documents including commercial contracts, business charters, etc. ➤ Other legal advisory and information services: Advisory services to clients related to their legal rights and obligations and providing information on legal matters not classified elsewhere. This includes services such as escrow and settlement services. Bookkeeping Services Bookkeeping services consisting of classifying and recording business transactions in terms of money or some unit of measurement in the books of account. Khandhar Mehta & Shah | Chartered Accountants 57#58Permissible Ancillary Services Compliance & Secretarial Services fin Compliance Services means providing advice, consultancy, assistance or other related services, for fulfilling legal obligations/compliances under various laws for the time being in force; Secretarial services in relation to any applicable law including laws of foreign jurisdictions. Taxation Services ➤ Business Tax Planning and Consulting Services: Advisory services to enterprises to do tax planning. ➤ Business Tax Preparation and Review Services: Services consisting of preparing or reviewing various returns and reports required for compliance with the income tax laws and regulations and representing before the tax authorities. This may also include tax planning and control. ➤ Other Tax Related Services: Services consisting of assisting entities in tax planning and preparing all documentation required by law. Khandhar Mehta & Shah | Chartered Accountants 58#59Permissible Ancillary Services Accounting and Auditing Services ➤ Financial auditing services: fin Examination of the accounting records and other supporting evidence of an organization for the purpose of expressing an opinion as to whether financial statements of the organization present its financial and operational position fairly on a given date, in accordance with generally accepted accounting principles. ➤ Accounting review services: Reviewing services of annual and interim financial statements and other accounting information. The scope of a review is less than that of an audit and therefore the level of assurance provided is lower. ➤ Compilation of financial statements services: This includes compilation of financial statements from information provided by the client. No assurances regarding the accuracy of the resulting statements are provided. This service shall also include the preparation services of business tax returns, when provided as a bundle with the preparation of financial statements for a single fee. ➤ Other accounting services: Other accounting services such as attestations, valuations, preparation services of pro forma statements, etc. Khandhar Mehta & Shah | Chartered Accountants 59#60Permissible Ancillary Services Professional Services Professional Services provided by any of the service provider in relation to the following: fin Advisory Services to entities within IFSC in relation to a financial product or any other advisory services as required in connection with their business in IFSC or their business with an Indian company or an overseas company; Advisory Services to companies/entities outside India in relation to their business or investment activity including in India or in IFSC; Advisory Services to companies/entities in India in relation to their business or investment activities outside India or in IFSC. ➤ Advisory and Facilitation Services to entities in IFSC/outside India in relation to their capital raising activities. outside India. Advisory and Facilitation Services to entities in IFSC/outside India in relation to their merger & acquisition or capital restructuring activities outside India. Financial Management Consulting Services Advisory, guidance and operational assistance services concerning decision areas which are financial in nature, such as working capital and liquidity management, determination of an appropriate capital structure, analysis of capital investment proposals, development of accounting systems and budgetary controls, business valuations prior to mergers and/or acquisitions, etc. Khandhar Mehta & Shah | Chartered Accountants 60#61Permissible Ancillary Services Marketing Management Consulting Services fin ➤ Advisory, guidance and operational assistance services concerning the marketing strategy and marketing operation of an organization. Marketing consulting assignments may deal with one or a combination of analysis and formulation of a marketing strategy, formulation of customer service and pricing policies, sales management and staff training, organization of distribution channels (sell to wholesalers or directly to retailers, direct mail, franchise, etc.), organization of the distribution process, package design and other matters related to the marketing strategy and operations of an organization. General Management Consulting Services Advisory, guidance and operational assistance services concerning business policy and strategy and the overall planning, structuring and control of an organization. More specifically, general management consulting assignments may deal with one or a combination of policy formulation, determination of the organizational structure (decision-making system) that will most effectively meet the objectives of the organization, legal organization, strategic business plans, defining a management information system, development of management reports and controls, business turnaround plans, management audits, development of profit improvement programs and other matters which are of particular interest to the higher management of an organization. Khandhar Mehta & Shah | Chartered Accountants 61#62Permissible Ancillary Services fin Administration Services Offering support services in relation to safeguarding and administering assets consisting of financial products, belonging to another person, or agreeing to do so. Assets Management Support Services Offering support services to Asset Management Companies. Providing services for maintenance of various physical assets belonging to another person / used by other person. Trusteeship Services ➤ Services such as Trusteeship for AIFs, InvIT and REIT, Security Trustee and other related financial services such as escrow agent. Khandhar Mehta & Shah | Chartered Accountants 62#63Framework for Ancillary Service Providers Eligibility Conditions fin The following entities are eligible to act as a service provider so as to provide permissible ancillary services pertaining to activities in relation to financial products, financial services and financial institutions in the IFSC: ➤ Any existing or newly incorporated entity set up in the IFSC or ➤ Any Indian or foreign incorporated entity by establishing a branch or a subsidiary The entity may be set up in the IFSC in the form of a company or a limited liability partnership or a registered partnership firm, their branch thereof or any other form as may be approved by the IFSCA Service Recipients Service providers can provide permissible services to any one or more of the following: ➤ Entity(ies) set up in the IFSC; Entities from foreign jurisdictions for various permissible ancillary services in the IFSCs in India or overseas; Indian entities who propose to open, set up or carry out operations in IFSCS or foreign jurisdiction, provided consideration is received in freely convertible foreign currency. It is to be noted that in IFSC only B2C services are eligible. Entity cannot provide B2B services. Currency for Conduct of Business Service providers shall transact in freely convertible foreign currency only. However, the service providers may defray their administrative expenses in INR by maintaining an INR account. Khandhar Mehta & Shah | Chartered Accountants 63#64Framework for Ancillary Service Providers Submissions of Report / Information (i) Every service provider shall furnish the following information to the IFSCA: a. Annual financial statements for the entity registered. b. Confirmation of compliance with the regulations, circulars, guidelines and/or directions as issued by the International Financial Services Centres Authority from time to time. c. Details of material regulatory action, if any (ii) Every service provider authorized by the IFSCA shall submit the financial information to the IFSCA in US Dollar, unless otherwise specified by the IFSCA. fin (iii) The IFSCA from time to time may call for any information, documents, or records as it may deem necessary from the service provider. Fees IFSC ➤ Application Fee - $ 500 SEZ Authorisation Fee per activity - $ 2000 (For 5 years) Demand Draft of Rs 5000/- in Favour of "REGIONAL PAY AND ACCOUNT OFFICER MUMBAI payable at GANDHIDHAM" Registration Fees - Rs. 25,000/- Khandhar Mehta & Shah | Chartered Accountants 64#65GIFT IFSC - Opportunities for CAs Providing advice, consultancy, assistance or other related services, for fulfilling legal obligations/compliances under various laws for the time being in force; Bookkeeping services consisting of classifying and recording business transactions in terms of money or some unit of measurement in the books of account. Financial auditing services: Examination of the accounting records and other supporting evidence of an organization for the purpose of expressing an opinion on financial statements. Accounting review services: Reviewing services of annual and interim financial statements and other accounting information. Compilation of financial statements services: Compilation of financial statements from information provided by the client. This service shall also include the preparation services of business tax returns, when provided as a bundle with the preparation of financial statements for a single fee. Other accounting services: Attestations, valuations, preparation services of pro forma statements, etc. Advisory Services to companies/entities outside India in relation to their business, capital raising, merger & acquisition or capital restructuring or investment activity including in India, outside India or in IFSC. Asset Management support services to Aircraft & Ship Leasing entities in terms of their leasing agreements, funding, structuring of SPVs. Khandhar Mehta & Shah | Chartered Accountants fin 65#66Process for setting up unit in IFSC / GIFT City#67Process for setting up unit in GIFT City Identification of Office Space with co-developer and executing Letter of Intent (LOI) Issuance of Provisional Letter of Allotment (PLOA) & NOC by Co-Developer Application in "Form F" along with required documents to "The office of Development Commissioner (DC), GIFT SEZ / KASEZ" Presentation before Unit Approval Committee (UAC) Development Commissioner to issue Letter of Allotment (LOA) 45 Days Confirm its acceptance with Terms & Conditions of LOA to DC Reject Decision Approve Incorporation of unit with regulatory authority such as MCA Record Reasons of UAC within As it is or with modifications 15 Days Application to IFSC Authority along with prescribed application Fee Khandhar Mehta & Shah | Chartered Accountants Pay registration Fees as prescribed under SEZ regulations fin Obtain approval from IFSC Authority Pay registration Fees as prescribed under IFSC regulations Enter into lease agreement (min. 9 years) with Co-Developer and submit copy to the office of DC within 6 months of LOA Start Operations 67#68Exit Clause#69Exit from GIFT City / IFSC fin SEZ / IFSC units can exit from SEZ / IFSC scheme. They have to apply for exit from SEZ / IFSC Scheme and remit the funds back to India, however they will be have to follow rules and regulations mentioned in SEZ Act and Rules as well as under RBI SEBI norms for winding up of WOS / JVS abroad. From RBI Perspective Units can disinvest WOS / JVs by way of sale or shares or liquidation or merger subject to RBI norms and other conditions of Write off Investment or No write off investment. From SEZ Perspective Units have two options (1) The Unit may choose to step out of the SEZ with the approval of the DC and such exit shall be subject to payment of applicable duties on the imported or indigenous capital goods, raw materials, components, consumables, spares and finished goods in stock and if the unit has not achieved positive Net Foreign Exchange, the exit shall be subject to penalty that may be imposed under the Foreign Trade (Development and Regulation) Act, 1992. The following conditions shall apply to the unit winding up: - penalty imposed by the competent authority would be paid and in case an appeal against an order-imposing penalty is pending, exit shall be considered if the unit has obtained a stay order from competent authority and has furnished a Bank Guarantee for the penalty adjudicated by the appropriate authority unless the appellate authority makes a specific order exempting the Unit from this requirement. Khandhar Mehta & Shah | Chartered Accountants 69#70Exit from GIFT City / IFSC fin in case the Unit has failed to fulfill the terms and conditions of the Letter of Approval and penal proceedings are to be taken up or are in process, a legal Undertaking for payment of penalties, that may be imposed, shall be executed with the DC. The Unit shall continue to be treated a unit till the date of final exit. ➤ Depreciation shall be allowed in straight line method as specified below:- - for computer and computer peripherals for every quarter in the 1st, 2nd and 3rd year at the rate of 10%, 8% and 5% respectively and for every quarter in the 4th and 5th year at the rate of 1%. - for capital goods other than computer and computer peripherals for every quarter in the 1st, 2nd, 3rd year at the rate of 4%, 3% and 3% respectively, for every quarter in the 4th and 5th year at the rate of 2.5% and thereafter for every quarter at the rate of 2%. For the purpose of computing depreciation for any part of a quarter, the rate applicable to such quarter in full shall be considered. In the event of a gems and jewellery unit ceasing its operation, gold and other precious metals, alloys, gem and other materials available for manufacture of jewellery shall be handed over to an agency nominated by the Central Government at a price to be determined by that agency. Development Commissioner may permit a Unit, as one time option, to exit from Special Economic Zone on payment of duty on capital goods under the prevailing Export Promotion Capital Goods Scheme under the Foreign Trade Policy subject to the Unit satisfying the eligibility criteria under that Scheme. Khandhar Mehta & Shah | Chartered Accountants 70#71Exit from GIFT City / IFSC f in (2) Any unit/developer may also opt out of the SEZ by transferring its assets and liabilities to another person by way of transfer of ownership including sale of SEZ units subject to the conditions stipulated under Rule 75A of the SEZ Rules:- a. unit has held a valid LOA as well as lease of land for not less than a period of 5 years on the date of transfer, b. the unit has been operational for a minimum period of 2 years as on the date of transfer, c. such sale or transfer transactions shall be subject to the approval of the Approval Committee, d. the transfer fulfils all eligibility criteria applicable to a unit and e. the applicable duties and liabilities, if any, as calculated under rule 74 as well as export obligations of the transferor unit, if any, shall stand transferred to the transferee unit which shall be under obligation to discharge the same on the same terms and conditions as the transferor unit. Validity of LOA LOA is valid for 1 year from date of issue. It is mandatory to Commence Operation within that period Further 3 Year extension may be granted Valid for five years from the date of Commercial Operation LOA is valid for 1 year from date of issue. ➤ It is mandatory to Commence Operation within that period Further 3 Year extension may be granted ➤ Valid for five years from the date of Commercial Operation Khandhar Mehta & Shah | Chartered Accountants 71#72Exit from GIFT City / IFSC Consequences of Cancellation of LOA fin The Approval Committee may cancel the LOA at any time after providing the reasonable opportunity of being heard if it has reason or cause to believe that the unit/developer has persistently contravened any of the terms and conditions or its obligations of LOA. From the date of such cancellation the Unit shall not be entitled to any exemption, concession, benefit or deduction available to it under SEZ Act. Additionally, such unit/developer shall remit, the exemption, concession, drawback and any other benefit availed by him in respect of the capital goods, finished goods lying in stock and unutilized raw materials relatable to his unit, in such manner as may be prescribed. Any person aggrieved by such cancellation, may prefer an appeal before the Board of Approval. Rule 77 of the SEZ Rules (and its amendments), 2006 ("SEZ Rules") provides for detailed consequences of such cancellation including removal of goods from the SEZ unit. Khandhar Mehta & Shah | Chartered Accountants 72#73GST Aspects – GIFT City -#74Builder / Co-Developer and Units in GIFT City GIFT CITY SEZ Area Processing Area SEZ Use Only Non-Processing Area (NPA) Dual Use DTA Area • GST will not be applicable • Income Tax Exemption available •⚫GST will be applicable • Income Tax Exemption not available • Stamp Duty Exemption not available • Stamp Duty Exemption available • Comply with all IFSCA Compliances. • Comply with all IFSCA Compliances. • GST will be applicable • Income Tax Exemption not available Stamp Duty Exemption not available • No IFSCA or SEZ Compliances • Comply with all SEZ Compliances • Comply with all SEZ Compliances Khandhar Mehta & Shah | Chartered Accountants fin 74#75GST Applicability in different scenario in GIFT City # Supplier 1 2 SEZ-Processing 3 4 Recipient SEZ-Processing SEZ- Non Processing (SEZ Only) SEZ- Non Processing (Dual Use) DTA GST Applicability Zero-rated Supply Zero-rated Supply Type of Supply Explanation Interstate (No GST under LuT) Interstate (No GST under LuT) 5 6 SEZ- Non Processing 7 (SEZ Only) SEZ- Non Processing (SEZ Only) SEZ- Non Processing (Dual Use) SEZ-Processing 8 DTA 9 10 SEZ- Non Processing 11 (Dual Use) SEZ- Non Processing (Dual Use) SEZ- Non Processing (SEZ Only) SEZ-Processing Taxable Supply Taxable Supply Zero-rated Supply Taxable Supply Zero-rated Supply Taxable Supply Taxable Supply Zero-rated Supply Interstate Interstate IGST A IGST A Interstate (No GST under LuT) Interstate - IGST A Interstate (No GST under LuT) Interstate IGST A Interstate IGST A Zero-rated Supply 12 13 14 15 16 23456 DTA DTA Taxable Supply Taxable Supply - Interstate (No GST under LuT) Interstate (No GST under LuT) Interstate IGST B B A Interstate or Intrastate A SEZ-Processing Zero-rated Supply Domestic Tariff Area (DTA) SEZ- Non Processing (SEZ Only) SEZ- Non Processing (Dual Use) Zero-rated Supply Taxable Supply Interstate (No GST under LuT) Interstate (No GST under LuT) B B Interstate IGST - A Khandhar Mehta & Shah | Chartered Accountants fin 75#76Taxable Supply: Inter-state/Intra-state Explanation - A As per Section 7 of IGST Act, 2017 Inter-state supply means; Supply of services, where Supply of location of the services, imported into Supply of services - supplier and the territory of India the place of supply are in - As per Section 8 of IGST Act, 2017 Intra-state supply means; Supply of goods imported into the territory of India, till they cross the custom frontiers of India Supply of services, where the location of the supplier and the place of supply are in - Same State; or Same UT Two different States ; Two different UTs ; A State and a UT; When the supplier is located in India and the Place of Supply is outside India ; To or By SEZ Unit or SEZ Developer; or In the taxable territory, not being an intra-state supply#77Zero Rated Supply Explanation - B Zero Rated Supply - Sec 16 of IGST Act, 2017 Export of Goods or Services or both Supply of Goods or Services or both to a SEZ Developer or SEZ Unit • Credit of input tax may be availed for making zero-rated supplies as per GST regulations. • Refund available under either of the following options: Supply of goods or services or both under bond or LUT ; or ➤ Supply of goods or services or both on payment of IGST. Note: Separate GST Registration is required for SEZ unit as per the GST Law. Khandhar Mehta & Shah | Chartered Accountants fin 77#78Summary... Sr. Situation Supply 1 Location of Supplier and Place of Supply in same State Intra State Tax CGST & SGST 2 Location of Supplier and Place of Supply in different States Inter State IGST 3 Import of Goods or Services from outside India Inter State IGST 4 Location of Supplier in India and Place of Supply outside India 5 Supply of Goods and / or Services Exports SEZ Developer or SEZ Unit Zero Rated Zero Rated Khandhar Mehta & Shah | Chartered Accountants f in 78#79Budget - 2023 Highlights (GIFT CITY - IFSC)#80- Key Amendments – Finance Act, 2023 Union Budget 2023 has empowered GIFT IFSC by delegating the registration / approval power that earlier lied with SEZ authorities to the IFSCA. • Detailed guidelines/notifications yet to come A single-window registration system will be in place. • It will simplify the approval process and boost ease of doing business. Detailed guideline/notifications yet to come. Non-applicability of surcharge and cess on certain incomes earned by Specified Fund in International Financial Services Centre (IFSC) fin • Surcharge and cess shall not be applicable while computing advance tax on the prescribed income (i.e. any income other than capital gains) earned by the Specified Fund (specifically defined under the Act). • Applicable only for entities set up as a trust. Funds set up as LLP / Company / body corporate and foreign IBUs (being corporate structure) not covered within ambit of relaxation. Taxability of dividend income received by non-resident from unit in IFSC • Dividend income received by a non-resident from an IFSC (currently taxable at the rate of 20% plus surcharge and cess) shall be taxable at the rate of 10% (plus surcharge and cess). Relaxation of condition prescribed for tax exemption of Offshore Derivative Instrument (ODI) holders • Income distributed on ODIs to NRs will be exempt to the extent such income is chargeable to tax in the hands of the IBU registered as FPI. Concessional tax rate on interest income on specified bonds listed on IFSC stock exchange Presently, interest income received by non-resident from specified bonds issued prior to 1 July 2023 and which are listed only on IFSC stock exchanges are taxed at the rate of 4%. ⚫w.e.f. 01-07-2023, interest income received by non-resident on specified bonds issued on or after 1 July 2023 and listed only on IFSC exchange will be chargeable to tax at the rate of 9%. Khandhar Mehta & Shah | Chartered Accountants 80#81Key Amendments - Finance Act, 2023 Exemption on certain income received by non-resident outside India, in a bank account maintained with IBU in IFSC fin • Currently, exemption is provided to non-resident on income earned from portfolio managed by a portfolio manager in IFSC which was accruing or arising outside India and was received in an account maintained with Offshore Banking Unit in IFSC. • Now, above exemption is extended to such activities carried out by specified persons as may be notified by the Central Government. Expansion of definition of Original Fund in case of relocation • To encourage migration of offshore funds to IFSC, currently, a tax exemption is available to offshore funds (referred to as 'original fund') and its unit holders/shareholders on transfer of capital assets pursuant to relocation. • Definition of Original Fund expanded to include: - Investment vehicle in which Abu Dhabi Investment Authority (ADIA) is direct/ indirect sole shareholder/ unitholder/ beneficiary and it is wholly owned and controlled by ADIA or Government of Abu Dhabi. - Any fund as may be notified by Central Government satisfying the conditions that may be specified. Tax Holiday extension to Offshore banking unit (OBUs) in SEZ • Presently, tax holiday is provided to OBU in SEZ on their income to the extent of: - 100% of the income for 5 consecutive years from the year in which RBI approval for set-up of OBU was obtained; and -50% of the income for next 5 years. • To bring parity in tax for OBUs set up prior to 1 April, 2020, tax holiday of 100% of profits shall be provided to such OBUs for their remaining period of tax holiday out of 10 years. Availability of tonnage tax regime to ship leasing entities in IFSC • Ship leasing entities in IFSC will be able to opt for tonnage tax regime within 3 months from the end of their tax holiday period. Khandhar Mehta & Shah | Chartered Accountants 81#82Key Amendments - Finance Act, 2023 Exemption provided to Aircraft leasing entities in IFSC fin • Sale of equity shares of an IFSC unit engaged in aircraft leasing to a non-resident or another IFSC unit engaged in aircraft leasing shall be exempt provided: - The operations of the domestic company in IFSC shall commence on or before 31 March, 2026; - The capital gains should have arisen within a period of 10 years from the year in which the domestic company has commenced operations or AY 2034-35, whichever is later. • Dividend income received by a unit in IFSC engaged in aircraft leasing from another unit in IFSC also engaged in aircraft leasing shall be exempt. TCS provisions on LRS remittances extended to IFSC • Tax Collected at Source (TCS) on foreign remittances under LRS by resident individuals is increased from 5% to 20% without any threshold, excluding remittances for education and medical treatment. • Further, currently TCS is appliable on remittances made under LRS outside India. It is now expanded the scope of remittance subjected to TCS by covering all remittance made under LRS and not just remittances made "out of India" (thus including remittance to IFSC), with effect from July 1, 2023. Khandhar Mehta & Shah | Chartered Accountants 82#83Recent Announcements GIFT city expansion: 4 villages to be included, to become 3X present size fin The Gujarat International Finance Tec-City, popularly known as GIFT City, will expand by roughly 2,300 acres by incorporating four villages in Gujarat's Gandhinagar district. This is GIFT City's first major expansion since it was conceptualised in 2007, and will expand the project area to more than thrice its existing size, from 1,065 acres to approximately 3,365 acres. GIFT Nifty begins India journey, first day turnover tops $1 billion -The Indian Express, July 4 India's International Financial Services Center (IFSC) in Gujarat International Finance Tec-City (GIFT) achieved a major milestone on Monday with the successful migration of Nifty derivatives contracts traded on the Singapore Exchange (SGX). On day one itself, the GIFT Nifty, earlier referred to as SGX Nifty, clocked trading turnover of more than $1 billion and open interest of over $8 billion. The turnover was expected to rise further as GIFT Nifty contracts are traded for nearly 21 hours, encompassing market hours in Asia, Europe, and the US. - Business Standard, July 3 PM Modi in US: Google to set up its global fintech operations centre at GIFT City: CEO Sundar Pichai Google CEO Sundar Pichai announced that the company will establish its global fintech operation centre in GIFT City, Gujarat, during a meeting with Indian Prime Minister Modi. Pichai also stated that Google will continue to invest in India through its $10 billion India Digitisation Fund. Khandhar Mehta & Shah | Chartered Accountants - Mint, June 24 83#84Q & A Session#85Khandhar Mehta & Shah Chartered Accountants 7th Floor, Devpath Complex, Off C G Road, Navrangpura, Ahmedabad - 380 009 Gujarat - India 1110, Brigade IFC, GIFT City, - 382 355 Gandhinagar Gujarat - India : www.kmsindia.in URL Follow us: f in Member firm of BATGACH, a network approved by ICAI Affiliated offices at | Ahmedabad | Mumbai | Chennai | Delhi | Bangalore | Kolkata | |Trivandrum | Jaipur | Guwahati | Patna Raipur | Indore | Hyderabad The information contained herein is intended for general guidance only. It shall not be used as a substitute of professional advice. Before acting on any matters contained herein, reference should be made to press releases, circulars or any other publications issued by respective authorities. Khandhar Mehta & Shah will not be responsible to any person for any action taken based on this material. Source: URL-GIFT City, IFSCA and Public Domain LLLLLLLLLLLLLL LLU AT WORK AT PLAY LET SAFETY LEADS THE WAY