On the direct tax side, we hope the following key areas will be addressed:
* Short Term Capital Gain Tax needs to be done away with for any transaction that is done through IFSC in both derivatives and debt.
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* Last budget it was announced that capital gains arising from transfer of non-derivative securities between two non-residents outside India will not be taxable in India. Extending similar benefits on capital gains arising from transfer of securities between IFSC entities will bring us truly at par with other jurisdictions
* Also, at IFSC in India, the income tax benefit is available for first 10 years as compared to upto 50 years at Dubai
* Long Term Capital Gain Tax should also be done away with for bonds traded at IFSC. This is a pre-requisite to develop a vibrant corporate bond market at IFSC
* For an investor ecosystem to develop, the taxation rates for funds (AIFs) need to be brought at par with other types of IFSC units that are being set up for providing financial services
* Clarity on applicability of double taxation treaty at IFSC as a deemed offshore jurisdiction is important. While the regulator has already allowed FPIs to participate in commodities at IFSC, lack of clarity on applicability of tax treaty has been the deterrent for towards participation
* Today, London and Singapore do not have any withholding tax for issuers who raise funds there. We hope that in the budget, bonds issued at IFSC will be exempted from withholding tax.
The author is MD & CEO of India INX
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