Union Budget 2018- Measures to promote International Financial Services Centre (IFSC)
Section 47 of the Act provides for tax neutrality relating to certain transfer.
In order to promote the development of world class financial infrastructure in India, it is proposed to amend the section 47 of the Act so as to provide that transactions in the following assets, by a non-resident on a recognized stock exchange located in any International Financial Services Centre shall not be regarded as transfer, if the consideration is paid or payable in foreign currency:—
(i) bond or Global Depository Receipt, as referred to in sub-section (1) of section 115AC; or
(ii) rupee denominated bond of an Indian company; or
(iii) derivative.
This amendment will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.
Section 115JC of the Act provides for alternate minimum tax at the rate of 18.50 percent. of adjusted total income in the case of a non-corporate person.
In order to promote the development of world class financial infrastructure in India, it is further proposed to amend the section 115JC so as to provide that in case of a unit located in an International Financial Service Center, the alternate minimum tax under section 115JC shall be charged at the rate of 9 percent.
Consequential amendment in section 115JF is also proposed to be made.
This amendment will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.
Extract of Clause 17, 36 & 37 of Finance Bill 2018
Clause 17 of the Bill seeks to amend section 47 of the Income-tax Act relating to transactions not regarded as transfer.
The said section provides that certain transfers of capital assets are not to be regarded as transfer for the purposes of section 45 of the Income-tax Act.
It is proposed to insert a new clause (viiab) in the said section so as to provide that any transfer of a capital asset, being bond or Global Depository Receipt referred to in sub-section (1) of section 11 5AC or rupee denominated bond of an Indian company or derivative, made by a non-resident on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in foreign currency, shall not be regarded as transfer.
It is further proposed to define certain expressions used therein.
This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-2020 and subsequent years.
Clause 36 of the Bill seeks to amend section 115JC of the Income-tax Act relating to special provisions for payment of tax by certain persons other than a company.
The said section provides that where in the case of a person, other than a company, the regular income-tax payable for any previous year is less than the alternate minimum tax payable for such previous year, the adjusted total income shall be deemed to be the total income of that person for such previous year and the assessee shall be liable to pay income-tax on such total income at the rate of eighteen and one-half per cent.
It is proposed to amend the said section so as to provide that for the assessee being a person which, is a unit located in an International Financial Service Centre and derives its income solely in convertible foreign exchange, the rate of tax shall be nine per cent.
This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-2020 and subsequent years.
Clause 37 seeks to amend section 115JF of the Income-tax Act relating to interpretation in this Chapter.
It is proposed to amend the said section so as to provide that the assesse being a person other than a company, is a unit located in an International Financial Service Centre and derives its income solely in convertible foreign exchange, the rate of tax minimum alternate tax shall be nine per cent.
It is further proposed to define certain expressions used therein.
These amendments will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-2020 and subsequent years.
