Module: | MODULE A: INTERNATIONAL BANKING
Q213: Consider the following statements regarding the aircraft leasing and financing ecosystem established in the GIFT City International Financial Services Centre:
Statement 1: To develop the nation as a global aviation financing hub, the government has officially notified aircraft leasing, which includes operating leases, financial leases, and hybrid leases, as a recognized financial product.
Statement 2: To protect domestic tax revenues, non-resident financiers who earn interest income from leasing units based in the centre are subject to a mandatory withholding tax.
Statement 2: To protect domestic tax revenues, non-resident financiers who earn interest income from leasing units based in the centre are subject to a mandatory withholding tax.
✅ Correct Answer: A
The aircraft leasing framework was created to capture a market previously dominated by foreign jurisdictions like Ireland.
Statement 1 is correct.
Recognizing the massive capital outflow caused by offshore aircraft leasing, the government officially notified aircraft leasing as a financial product, paving the way for a comprehensive regulatory framework to onshore this business.
Statement 2 is incorrect.
To make the centre highly competitive with established global aviation hubs, the government provides significant tax exemptions.
Specifically, interest earned by non-resident financiers from units located in the centre is entirely exempt from tax in India.
Furthermore, there is an absolute exemption from withholding tax on lease rentals paid by an Indian airline operator to a leasing entity located within the centre.
Statement 1 is correct.
Recognizing the massive capital outflow caused by offshore aircraft leasing, the government officially notified aircraft leasing as a financial product, paving the way for a comprehensive regulatory framework to onshore this business.
Statement 2 is incorrect.
To make the centre highly competitive with established global aviation hubs, the government provides significant tax exemptions.
Specifically, interest earned by non-resident financiers from units located in the centre is entirely exempt from tax in India.
Furthermore, there is an absolute exemption from withholding tax on lease rentals paid by an Indian airline operator to a leasing entity located within the centre.