NEW DELHI: The Income Tax Department has issued new rules on the calculation of tax-exempt income of offshore banking units set up in an international financial services center.
The 2022 Income Tax (First Amendment) Rules, released on Friday, establish the formula for calculating the income of a fund created by the investment division of an offshore banking unit, which is eligible for income tax. tax exemption.
It includes income from the transfer of a fixed asset to a recognized stock exchange located in an international financial services center (IFSC) and when the consideration for this transaction is paid in convertible currencies. It also includes income from disposal of securities other than shares of an Indian resident company. Income from securities held by these funds issued by non-resident entities and any income from a securitization trust chargeable under the heading “business or professional profits and gains” are also exempt from tax.
The new rules will apply from April 1, 2022. Offshore banking units are entities created by domestic or foreign banks within the IFSC. The government has granted concessions to units of India’s first IFSC based in Ahmedabad to develop the city as a global financial center like Singapore or London. The idea is to help build a robust financial services industry in India and capture some of the financial services market that India has lost to other hubs around the world.
The new rules also set conditions for benefiting from the tax relief. Qualifying investment divisions of offshore banking units will be required to maintain separate accounts, have them audited and file an annual return.
Never miss a story! Stay connected and informed with Mint. Download our app now!!
Comments are closed.