Module: | MODULE A: INTERNATIONAL BANKING
Q210: Consider the following statements regarding the tax framework and fiscal incentives currently available to entities operating in the GIFT City International Financial Services Centre:
Statement 1: Units operating within the centre are entitled to a 100 percent income tax exemption on their business income for any 10 consecutive years chosen out of a 15-year block.
Statement 2: Services received by these units, as well as services provided by them to offshore clients, are entirely exempt from the domestic Goods and Services Tax.
Statement 3: To discourage speculative cross-border trading, securities traded on recognized stock exchanges within the centre attract a premium Securities Transaction Tax.
Statement 2: Services received by these units, as well as services provided by them to offshore clients, are entirely exempt from the domestic Goods and Services Tax.
Statement 3: To discourage speculative cross-border trading, securities traded on recognized stock exchanges within the centre attract a premium Securities Transaction Tax.
✅ Correct Answer: A
The fiscal framework for the International Financial Services Centre is designed to onshore the offshore financial services market by providing global tax parity.
Statement 1 is correct because units enjoy a 100 percent income tax holiday for 10 consecutive years out of a 15-year block.
Statement 2 is correct because there is a complete exemption from the Goods and Services Tax for services received by these units and for services they provide to offshore clients or other Special Economic Zone units.
Statement 3 is incorrect.
To ensure global competitiveness against hubs like Singapore and Dubai, transactions executed on recognized exchanges within the centre are completely exempt from both the Securities Transaction Tax and the Commodities Transaction Tax.
There are also no capital gains taxes for non-residents investing in specified securities on these specific exchanges.
Statement 1 is correct because units enjoy a 100 percent income tax holiday for 10 consecutive years out of a 15-year block.
Statement 2 is correct because there is a complete exemption from the Goods and Services Tax for services received by these units and for services they provide to offshore clients or other Special Economic Zone units.
Statement 3 is incorrect.
To ensure global competitiveness against hubs like Singapore and Dubai, transactions executed on recognized exchanges within the centre are completely exempt from both the Securities Transaction Tax and the Commodities Transaction Tax.
There are also no capital gains taxes for non-residents investing in specified securities on these specific exchanges.