Gujarat International Finance Tech (GIFT) City International Financial Services Center (IFSC) is becoming an oasis for NRIs to earn tax free income in India. GIFT IFSC, which is located near Ahmedabad is technically considered as located out of India for taxation and compliance requirements.
Also, on September 12, 2023, Central Board of Direct Taxes (CBDT) added three (3) more investment securities in the list of securities that are exempt from capital gains tax in India for NRIs. Now, capital gain from following investment securities is exempt from tax:
(i) Bond denominated in foreign currency;
(ii) unit of a Mutual Fund;
(iii) unit of a Business Trust;
(iv) Equity shares denominated in foreign currency;
(v) unit of Alternative Investment Fund (AIF),
(vi) Bullion Depository Receipt with underlying bullion
(vii) unit of Investment Trust (REIT / InvITs);
(viii) unit of any Scheme or Fund;
(ix) unit of a Exchange Traded Fund (ETF)
In short, all the investments denominated in foreign currency and listed on any exchange in IFSC or as per IFSC Fund Management Regulation would be exempt from income tax in India. I expect a flood of financial products and investment securities being launched on IFSC exchange luring NRIs for investments in a short time.
It is very important for NRIs to understand the investment product, security, inherent risk, expected return, fund management team, process, experience, expense, fees, loads, lock in period, bank accounts, money transfer requirements, compliance and taxation considerations in home country, investment horizon, effect of investment on overall portfolio, and many more considerations before investing.
Please contact us if you have any questions about investing through GIFT IFSC.
