Gujarat International Finance Tech-City (GIFT City) or GIFT City of Gujrat is an ambitious project envisioned to create a global financial and IT services hub in India. It strives to be a vibrant ecosystem offering world-class infrastructure, regulatory flexibility, and attractive incentives to attract businesses and investors. Among these incentives, the Goods and Services Tax (GST) benefits play a crucial role in making GIFT City an attractive destination.

Understanding GIFT City

GIFT City is a multi-service Special Economic Zone (SEZ) located near Gandhinagar, Gujarat. It comprises various zones catering to different financial services, including banking, insurance, capital markets, and IT-ITiS. The city boasts state-of-the-art infrastructure, including high-speed connectivity, advanced security systems, and a sustainable building environment. No doubt it is going to be the lucrative hub for global business.

GST Benefits in GIFT City

GIFT City offers several significant GST advantages for businesses operating within its SEZ framework. These benefits are primarily applicable to International Financial Services Centre (IFSC) units, but some extend to other SEZ units as well. Let's delve into the key GST benefits:

1. Exemption from GST on Supply of Services

Within IFSC: Services provided by one IFSC unit to another are exempt from GST. This exemption fosters a collaborative and cost-effective business environment within the IFSC.

To IFSC Units: Services supplied to IFSC units from anywhere in India are exempt from GST. This attracts international businesses by minimizing their tax burden.

By IFSC Units: Services provided by IFSC units to clients outside India are also exempt from GST. This makes IFSC units competitive in the global market.

2. No GST on Transactions in IFSC Exchanges

Financial Transactions: Transactions conducted on IFSC exchanges, such as trading of securities, currencies, and commodities, are exempt from GST. This attracts investors and traders seeking a tax-efficient platform.

3. GST on Transactions with Domestic Tariff Area (DTA)

Reverse Charge Mechanism: When an IFSC unit provides services to a client in the DTA, the recipient is liable to pay GST under the Reverse Charge Mechanism (RCM). This ensures compliance while maintaining the tax neutrality of the IFSC.

4. GST Rates on Specific Supplies

Interest on Long-Term Bonds: Interest income on long-term bonds issued before July 1, 2023, by IFSC units, is taxed at a concessional rate of 4%. For bonds issued after this date, the rate is 9%.
Dividend Income: Dividend income received by non-residents from IFSC units is subject to a concessional tax rate of 10% plus applicable surcharge and cess.

Additional Benefits

Exemption from other indirect taxes: Businesses in GIFT City enjoy exemptions from various other indirect taxes like customs duty, stamp duty, and securities transaction tax.
Simplified regulatory framework: GIFT City provides a streamlined and efficient regulatory environment for businesses to operate.

GIFT City's GST benefits create a compelling value proposition for businesses seeking an international financial and IT hub with tax advantages. With its world-class infrastructure, supportive regulations, and diverse financial services ecosystem, GIFT City is poised to become a significant player in the global financial landscape.