One of the prolonged demand from the foreign investor community was to relax the compliance burden while investing in Gujarat International Finance Tec-City International Financial Services Centre (GIFT IFSC).
The Government has released a Notification No. 42/2021 on May 04, 2021, relaxing the requirement for obtaining the Tax identification number i.e Permanent Account Number (PAN) for foreign investors in the International Financial Services Centre (IFSC).
As per the said Notification, the requirement of PAN is exempted to the “eligible foreign investor” making investment in specified capital asset listed on a recognised stock exchange located in any IFSC and the consideration on transfer of such capital asset is paid or payable in foreign currency subject to satisfaction of the prescribed conditions like:
Last year, the Government had prescribed exemptions from the compliance of tax return filings in India for non-residents investors subject to certain conditions such as they only have income arising / accruing from investment in an investment fund set up in IFSC and where tax is withheld at a concessional rate etc.
The anomaly was that even though the waiver from filing of tax returns is granted, such investors were still required to obtain a PAN. Now with the aforesaid notification, the Government has accepted the long pending demand from such investors.
The Finance Act, 2021 has anyways granted tax exemption on gains arising from transfer of specified assets including investments made in India other than shares by SEBI registered Category-III AIF.
This relaxation of obtaining PAN, will surely pave the way for giving impetus and much provided kick to the investment activities in IFSC.
The waiver of compliance burden will also put back in focus for the Fund Managers to think to shift the fund management activities in IFSC.
The Indian Government has been time and again addressed all the possible apprehensions and cleared the hurdles and relaxed the burden of compliance to make Indian IFSC as a preferred destination to access Indian capital markets.
Author: CA. Ritesh Podar, Mumbai, Maharashtra. He can be reached at [email protected] or 9833014637.
(The views expressed are personal.)