The government has decided to provide exemption in capital gains tax to units of investment trusts and exchange traded funds issued by companies located in GIFT City (Gujarat International Finance Tec-City), Gujarat. Is.
The Central Board of Direct Taxes (CBDT) has issued a notification to exempt from capital gains tax any unit of investment trust and exchange traded fund (ETF) floated under the International Financial Services Center Authority Regulations, 2022. Is of.
Exemption in capital gains tax
Gujarat International Finance Tech-(GIFT) City, established as an international finance services hub, is being promoted as a tax-neutral zone for the financial sector. Sunil Gidwani, partner (financial services), Nangia Anderson LLP, said that under the existing law, exemption from capital gains tax has been provided on various securities. Tax exemption is given on securities traded in stock exchanges in GIFT City or issued by entities established in GIFT City.
What is the new funding system?
Gidwani has said that under the new funding system, there is a provision to establish the fund as an investment trust. Therefore, the law needs to include units issued by such trusts for the purpose of capital gains exemption,” he said, adding that similarly, ETFs listed and traded on the exchange based in GIFT City are now eligible for capital gains tax exemption. Will be eligible for. With these changes, the scope of incentives available for fund and stock market trading in IFSC will further increase.
What is its purpose?
Amit Maheshwari, partner at AKM Global Tax, said the notification is in line with the objective of making IFSC the hub of financial services in the world and encouraging non-resident investors into a recognized stock exchange.
What is capital gains tax?
Let us tell you that the profit made from the sale of capital asset is called capital gain. Capital assets include investments like house, land, stocks, mutual funds, jewellery, trademarks etc. The profit earned from this is considered as income, that is why the government collects tax on it.
