Module: | MODULE A: INTERNATIONAL BANKING
Q214: Consider the following statements regarding the relocation of existing offshore investment funds to the GIFT City International Financial Services Centre:
Statement 1: The capital markets regulator permits a one-time off-market transfer of securities held by a Foreign Portfolio Investor to facilitate the direct relocation of an offshore fund into a newly established Alternative Investment Fund within the centre.
Statement 2: The relocation of offshore funds to a fund based in the centre is classified under the Income Tax Act as a tax-neutral transition, preventing any adverse capital gains tax liabilities for the original offshore fund and its underlying investors.
Statement 2: The relocation of offshore funds to a fund based in the centre is classified under the Income Tax Act as a tax-neutral transition, preventing any adverse capital gains tax liabilities for the original offshore fund and its underlying investors.
✅ Correct Answer: C
To encourage the onshoring of the offshore asset management industry, Indian regulators have created a highly streamlined transition path for funds currently domiciled in foreign jurisdictions like Mauritius or Singapore.
Statement 1 is correct.
The Securities and Exchange Board of India allows a one-time off-market transfer of securities held by a Foreign Portfolio Investor directly to a qualifying Alternative Investment Fund located within the centre.
Statement 2 is also correct.
Complementing the regulatory ease, the Finance Act amended the Income Tax Act to ensure this corporate relocation is completely tax-neutral.
This structural guarantee means the transfer of underlying assets does not trigger any capital gains tax for the original offshore fund, the newly established fund in the centre, or the individual investors holding units in those funds.
Statement 1 is correct.
The Securities and Exchange Board of India allows a one-time off-market transfer of securities held by a Foreign Portfolio Investor directly to a qualifying Alternative Investment Fund located within the centre.
Statement 2 is also correct.
Complementing the regulatory ease, the Finance Act amended the Income Tax Act to ensure this corporate relocation is completely tax-neutral.
This structural guarantee means the transfer of underlying assets does not trigger any capital gains tax for the original offshore fund, the newly established fund in the centre, or the individual investors holding units in those funds.