New Delhi: The finance ministry has recently made a strategic move by notifying four key financial services—book-keeping, accounting, taxation, and financial crime compliance—that can now be provided through units operating in IFSC (International Financial Services Centre) or GIFT City (Gujarat International Finance Tec-City). What’s the buzz around this decision, and how does it impact the financial landscape in the country? Let’s dive in.
Tax Benefits Galore:
In a significant development, the finance ministry has opened the door to tax benefits for entities offering specific financial services in IFSC or GIFT City. The designated services include bookkeeping, accounting, taxation, and financial crime compliance. This move is poised to bring about a paradigm shift in how financial services are rendered and received in the country.
Target Audience and Operational Framework:
One key stipulation in the notification is that these services must be provided to non-residents whose business is not established by reorganizing existing operations in India. This sets the stage for these services to cater specifically to international clients, aligning with the global nature of IFSC and GIFT City.
Understanding Financial Crime Compliance:
The notification sheds light on the inclusion of “financial crime compliance services,” encompassing activities related to anti-money laundering (AML), countering the financing of terrorism (CFT) measures, Financial Action Task Force (FATF) recommendations, and other related compliance endeavors. This not only underscores the commitment to global financial standards but also positions GIFT City as a hub for stringent financial regulatory compliance.
Boost for Big Four Firms:
Industry experts predict that this decision will provide a significant boost to major financial consultancy firms, often referred to as the “Big Four.” With the opportunity to offer services through units in GIFT City, these firms can leverage the tax benefits and contribute to the growth of India’s only operational international financial services center.
Expanding the Scope:
Currently, entities in GIFT City are permitted to operate in various financial domains, including banking, capital markets, asset management, insurance, aircraft leasing, fintech, and stock and commodity exchanges. The inclusion of these key financial services further diversifies the offerings available, making GIFT City a comprehensive hub for international financial activities.
Conclusion:
In conclusion, the finance ministry’s move to allow specific financial services with tax benefits in IFSC and GIFT City is a strategic step towards bolstering India’s position in the global financial arena. It opens new avenues for financial service providers and aligns with the evolving dynamics of the international financial landscape. As GIFT City continues to evolve, the potential for growth and collaboration in the financial sector is undoubtedly rising. Stay tuned for further updates on this exciting development shaping the future of finance in India.