Gift City
Neeraj Agarwal
I Neeraj Agarwal, am a Fellow Member of ICAI, practicing under the banner of M/s AAN & Associates LLP, a firm based out of Banglore Mumbai.
I am also registered under Insolvency and Bankruptcy Board of India as a Registered Valuer for valuation of Security or Financial Assets (Passed in Feb 2020)
I am also holding Bachelor of Commerce (B. Com) degree from Calcutta University (Passed in 2011).
I have corporate working experience in Wipro. After working in Wipro for a short period I started my practice in late 2013 and have been in practice so far for the last 10 years. I have also completed a Certificate Course by ICAI on IND-AS in 2020. I have also cleared Social Auditor Exam conducted by NISM.
I have been inducted as a Special Invitee to the Sustainability Reporting Standard Board, ICAI for the FY 2023-24.
GIFT City is a place where global finance and technology converge. It is India’s gateway to global financial markets. It is India’s first operational smart city and has developed world-class structures and sustainable master planning.
VISION AND MISSION
The vision of GIFT City is to become a leading global financial and technology hub. It aims to drive reforms towards providing a thriving economic ecosystem critical to supporting and expanding businesses.
The mission of GIFT City is to offer top-notch infrastructure and services tailored to financial institutions and companies involved in banking, insurance, capital markets, and asset management. It is poised to become a hub of excellence and compete with the leading centers of the continent.
GIFT City is a project of national importance. It has become an integral part of India’s growth story as it marches towards realizing the dream of becoming a developed nation.
Let’s look into the objectives of GIFT City:
World-Class Zone: The core objective of GIFT City is to develop a world-class zone for the long-term provision of office/service accommodation and high technological, economic, and commercial infrastructure².
Financial and Technological Hub: GIFT City is positioned as a financial and technological hub designed to cater to customers outside the Indian jurisdiction².
Infrastructure: GIFT City offers state-of-the-art connectivity, infrastructure, and transportation access².
Regulatory Framework: Entities operating in GIFT City have access to a regulatory framework, a business-friendly environment, tax exemptions, cross-border transaction services, and currency conversion facilities.
Financial Services: GIFT City hosts banking units of Indian and foreign banks, capital market solutions, and other financial services.
Overview of Gujarat International Finance Tech-City
The GIFT City’s plan is for the 359 hectares (886 acres) of land to have approximately 110 buildings with 62,000,000 sq ft of built-up area, of which around 67% is commercial, 22% is residential, and 11% is social facilities. Currently, 2,000,000 sq ft of commercial space is operational, and another 3,000,000 sq ft is under development.
The proposed utilities for the city are as follows:
Electricity: A 400 MV electrical supply line is proposed to be laid that will reduce the chances of power outages. The cables will be laid in a utility tunnel filled with thick concrete walls in redundant paths.
Telecommunication Services: GIFT City will have state-of-the-art telecommunications systems that will be based on the concept of FTTX (Fiber to home/office). The communications lines will be laid in fault-tolerant, rich architecture to ensure maximum uptime of services.
Piped Gas: Natural gas is distributed to every house and building via pipes, which is cheaper and safer than cylinders. Gas supply to the city is done from the existing gas network of the state-owned company for gas transmission pipelines. Piped natural gas is already in distribution in the nearby cities of Ahmedabad and Gandhinagar.
Solid Waste Management: All waste in the city is collected and taken to the processing plant by vacuum chutes installed on every floor of all buildings. The waste is automatically transported through underground chutes at a high speed of 90 km/h and is being treated through various methods, including plasma gasification.
Transportation: Transportation in GIFT City will consist of the following:
- Metro, Light Rail, and Bus Rapid Transportation System
- Use of electric personal rapid transit systems within the city.
Let us now look into the tax benefits of Gift IFSC (International Finance Service Centre)
GIFT IFSC aspires to become India’s gateway for inbound and outbound requirements of international financial services. Ministry of Finance, Government of India provided a new initiative for undertaking international financial services business in India.
The regulators, namely the Reserve Bank of India (RBI), the Securities & Exchange Board of India (SEBI), and the Insurance Regulatory & Development Authority of India (IRDAI), issued regulations allowing Indian and foreign institutions to open their offices in the IFSC.
Benefits of IFSC:
- Income tax exemption: There is a 100% tax exemption for 10 consecutive years out of 15 years. Surcharge and health and education cess do not apply to certain incomes earned by specified funds in the IFSC.
- Goods and Services Tax exemption: No GST on services: (i) received by unit in IFSC. (ii) provided to IFSC / SEZ units and offshore clients. GST applies to services provided to Domestic Tariff Areas.
- Stamp Duty Exemption: There is an exemption on stamp duty.
- No Withholding Tax (TDS): There is no withholding tax on interest payable to a non-resident by an IFSC unit on overseas borrowings.
- Reduced Withholding Tax: Interest on Long-Term Bonds and Rupee-Denominated Bonds listed only on a recognized stock exchange in IFSC: (1) Issuance before 1 July 2023: Taxable at a lower rate of 4% (2) Issuance on or after 01 July 2023: Taxable at a rate of 9%.
What is GIFT City SEZ?
- SEZ is an area designated in Gift City where you may set up units to carry out specific manufacturing and trading activities and provide certain services.
- It is considered a foreign territory, which means that you need to treat the goods and services going into the SEZ as exports and the goods and services coming from the SEZ as imports.
- An SEZ aims to boost the economy by exporting certain goods and services.
GIFT City’s role in elevating India’s Startup Ecosystem
GIFT City provides startups access to various funding options and a business-friendly environment that prioritizes innovation.
Its advantageous location promotes partnerships and collaborations while ensuring a constant flow of skilled professionals due to its proximity to multiple talent pools.
From a tax standpoint, startups can avail themselves of a 100% tax exemption for any 10 years out of a 15-year period. Additionally, the Minimum Alternate Tax (MAT) for companies, or the Alternate Minimum Tax (AMT) for others set up as a unit in the IFSC, is set at a competitive rate of 9% of book profits.
GIFT City is a beacon of innovation and financial prowess, attracting startups from finance sectors to leverage its unique offerings.
With its unparalleled infrastructure, favorable tax regime, and robust regulatory framework, GIFT City is poised to play a pivotal role in nurturing and propelling India’s startup ecosystem to new heights.
Conclusion
GIFT City is a significant step towards establishing India as a global financial services hub, boosting its competitiveness in the global market. It is a symbol of India’s progress in creating world-class infrastructure and promoting financial and technological growth. It’s a benchmark for smart cities in India and sets an international standard for finance and technology hubs worldwide.
GIFT City is a shining example of innovation and growth, paving the way for a new era of economic development in India. It is a testament to the country’s potential and a symbol of its bright future.
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