Tax bounty for Gift IFSC firms

The Union budget has doubled the tax holiday period for companies operating from the International Financial Services Centre (IFSC) in Gujarat and reduced their payable tax rate after the break, bringing relief and certainty to entities in the global financial hub.

- Srushti Vaidya & T. Surendar

They can now enjoy tax-free operations for 20 years as against the previous 10, and pay 15% tax on profits after the tax holiday, compared to earlier rates of 25-35%.

The move immediately assuages concerns of IFSC entities worried about tax sops running out too soon, making their operations uncompetitive as compared with other tax-efficient IFSCs like Singapore or Dubai.

The extension of the tax holiday comes at an opportune time, as the first IFSC entities were set up in 2015, meaning their original tax holiday would have expired in 2025.