Imagine a place where Non-Resident Indians (NRIs) and Overseas Citizens of India (OCI) can enjoy significant tax benefits, access to world-class financial services, and the comfort of doing business in a rapidly growing economy of India. Sounds too good to be true? Gujarat International Finance Tec-City, popularly known as GIFT City—a visionary project that is turning this dream into a reality. But what exactly is GIFT City, and why should NRIs sit up and take notice?
Today, we will unravel the unique tax advantages that GIFT City offers to NRIs, and why this emerging global financial hub is set to become a magnet for international investors. Stay with us as we dive deep into the numbers, policies, and opportunities that make GIFT City a financial utopia for NRIs.
What is GIFT City?
GIFT City is India’s first operational smart city and international financial services centre (IFSC), strategically located between Ahmedabad and Gandhinagar in Gujarat. With the aim of making India a global financial powerhouse, GIFT City has been designed to provide a seamless ecosystem for financial services, technology, and innovation. This futuristic city is not just about skyscrapers and cutting-edge infrastructure; it is a special economic zone (SEZ) with its own set of regulatory frameworks, offering unparalleled tax incentives to individuals and businesses alike.
The Allure of Tax Benefits: What’s in it for NRIs and OCIs?
One of the most compelling reasons NRIs are flocking to GIFT City is the attractive tax regime. Here’s a breakdown of the tax benefits that NRIs can enjoy:
Dividend Income: For NRIs investing in GIFT City, dividend income is taxed at a preferential rate of 10%. This is notably lower compared to the 20% tax rate applicable to dividends received from companies outside GIFT City in mainland India. For example, if an NRI receives a dividend of INR 100,000 (Subject to exempt till INR 5000) from a company based in GIFT City, the tax liability would be INR 5,000, compared to INR 10,000 if received from a company in mainland India.
Capital Gains on IFSC-Listed Shares and Derivatives: Capital gains from investments in IFSC-listed shares and derivatives are taxed at a concessional rate of 9% if the bond is issued on or after July 1, 2023, and listed on a stock exchange within GIFT City. In contrast, if these bonds were listed on a stock exchange in mainland India, the tax rates will be subject to the income slab, depending on the holding period and type of gain. This is a significant advantage, especially for NRIs who actively trade or invest in Indian markets.
Income from Category-III Alternative Investment Funds (AIF) and Portfolio Management Services (PMS): Income accrued from Category-III AIFs and PMS investments, when earned in foreign currency and invested outside India, is exempt from tax in India. This incentive allows NRIs to benefit from international investment opportunities without worrying about additional tax liabilities in India. For example, if an NRI invests USD 50,000 in a Category-III AIF that yields a return of USD 5,000, this income is free from Indian tax, although the NRI may be subject to taxes in their country of residence.
Interest Payable by a Unit in GIFT City: Interest income earned from units in GIFT City is completely exempt from tax in India. This includes interest on fixed deposits, bonds, and other financial instruments offered within the city. For instance, if an NRI invests INR 5,00,000 in a fixed deposit with a GIFT City-based financial institution and earns an interest of INR 25,000, this income is not subject to Indian tax, maximizing the effective return on investment.
Are you ready to take advantage of the remarkable opportunities that GIFT City offers? Whether you’re an NRI investor looking for tax savings, a professional seeking lucrative career prospects, or an entrepreneur ready to launch your next big venture, GIFT City is your gateway to unparalleled growth and success.
The Bigger Picture: Why GIFT City Matters
GIFT City is more than just a tax haven—it represents a strategic move by India to position itself as a global financial hub. For NRIs, this is not just about saving on taxes; it’s about being part of a larger movement that is shaping the future of global finance. GIFT City offers a unique blend of opportunities that are hard to find elsewhere—whether it’s the promise of higher returns on investments, the ease of doing business, or simply the joy of contributing to India’s growth story.
The world is watching as GIFT City continues to rise as a global financial hub, and the window of opportunity is wide open. So why wait? Dive into the possibilities that GIFT City offers, and let your investments grow in a way that is both profitable and purposeful.
The question is, will you seize this opportunity, or will you let it pass you by?
