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Incentives To GIFT City in Union Budget 2019 Could Encourage Financial Activities

Jul 13,2019 / By / No Comment
Gift_City

Incentives To GIFT City in Union Budget 2019 Could Encourage Financial Activities

 

Overview:

Gift City, located in the north on the banks of river Sabarmati and is a financial Central Business District between Ahmedabad and Gandhinagar in Gujarat. Gift City (Gujarat International Finance Tec-City) is a business district developed by the Govt. of Gujarat through a joint venture company. It is India’s first operational smart city and International Finance Service Centre is our PM Narendra Modi’s dream to create a financial hub like Singapore or Hong Kong in his home state. The idea for GIFT City was developed during the Vibrant Gujarat Global Investor Summit 2007. East China Architectural Design & Research Institute and Fairwood Consultants India were chosen for the planning of the city. 3 phases of 4 years each is planned for the development of the project. On the other hand, GIFTCL planned to develop an area of 85 million sq ft. to make sure that the city has its world-class facilities for connectivity, technology, communication, societal services, etc. for an upgraded living and work experience. The city is strategically located and well connected to the cities of Ahmedabad and Gujarat which is located at a distance of 26.6 km and 11.2 km respectively via Gandhinagar-Ahmedabad Road and Gujarat SH 71. Features of this project include an underground utility tunnel, a district cooling system, and automated vacuum waste collection. Many of these features are being introduced in India for the first time. Shah Pur, Lavarpur, Ratanpur, Pirojpur, Raysan Valad, Mahavirpuram are its neighbouring localities.

India’s only International Financial Service Centre (IFSC), at GIFT City, Gandhinagar, is one of the most challenging efforts of the Government for making foreign financial transactions to the Indian region. At present, financial sector performers such as banks, insurance companies, insurance brokers, stock exchanges, depositories, mutual funds, alternative investment funds (AIFs), and other SEBI-registered agents are allowed to establish shop at IFSC. Over the past few years, the Government has shifted its minds consistently towards it to make a commercial function for global financial professionals to relocate their operations to IFSC. It will be important to justify the taxation structure in IFSC so that it balances the tax structure in other global financial markets.

In February, the NDA government had presented in Rajya Sabha the International Financial Services Centres Authority Bill, 2019. The Bill plans for the establishment of an authority to support and control the financial services market in the International Financial Services Centres business in Special Economic Zones in India.

 

GIFT CITY IFSC Project Status:

GIFT One Tower in DTA, GIFT Two Tower in DTA, Jamnabai Narsee International School in DTA, TCS Tier 4 Data Centre in DTA, Hiranandani Signature Tower IN IFSC, Aspire One & Two – Incubation Centre in IFSC, Domestic Tariff Area, International Finance Service Centre (Finance & IT/SEZ) are completed and operational.

World Trade Center GIFT City – 4 towers under construction, Janaadhar Mangala, Brigade Tower in IFSC, Brigade IBIS Styles Hotel in DTA, Gift International Center, Savvy ATS tower in IFSC are all under-construction and full pace.

 

Gift City Features:

All the electricity cables will be underground and its power grid will be designed by ABB Groups of Switzerland.

Gas supply to the city will be provided by the existing gas Network of GSPL for gas transmission pipelines.

The cooling system will be provided by District Cooling System in GIFT City which will reduce the operational cost by 30-40% and avoids the capital cost of implementing coolers in each building.

All waste of the city will be treated through plasma gasification which will be automatically sucked through underground pipes.

 

Proposed and Planned Infra under GIFT City:

There is a plan to run a multimodal mix of the transport systems such as MRTS/LRTS/BRTS, etc for both intercity transport (to Ahmedabad, Airport, and Gandhinagar) and Intra-city transport.

They are also a plan to use Walk-to-walk concept between private and public transport.

GIFT City will have its own metro stations.

There is also a design for the use of electric personal rapid transport system in the city.

 

Look at how tax SOPs in the budget 2019 will offer impetus to Indian IFSC at GIFT City:

Union Budget 2019 introduced by Hon’ble Finance Minister Nirmala Sithraman unfolded floodgates of incentives for India’s first IFSC known as Hiranandani Signature located at GIFT city, Gandhinagar, Gujarat. With a view to improving infrastructure and development of a world-class financial hub, some tax benefits have already been given to various businesses operated out of IFSC like Banking and Financial Services, Insurance and Reassurance etc. The Union budget 2019 revealed plenty of extra tax SOPs with an aim to produce a positive environment for Indian as well as global financial service professionals to work from Indian IFSC. The idea is to give much-required incentive to the Indian International Financial Service Centre as a flourishing financial hub competing with the global members like London, Dubai, Singapore etc.

 IFSC international business is around $56 billion holding around $22 billion by the banking and $30 billion by insurance units. Over the next few years, GIFT IFSC alone could add $1 trillion to Indian industry and infrastructure and support to reach the $5-trillion GDP target over the next few years. To reach this challenging target, the Finance Minister awarded lucrative tax relief and a holiday which will bring more competing businesses to be operational at GIFT IFSC.

In her budget speech, Nirmala Sitharaman said that the government will trigger the execution of appropriate law to form an International Financial Services Centre (IFSC) authority that will define an up-to-date regulatory architecture for such world-class financial hubs and government is bound to put all required regulations and infrastructure in place to develop IFSC.

The government has proposed to provide several direct tax incentives to an IFSC. This would include extending income tax waiver of up to 10 years from 5 years, 100% profit-linked deduction under section-80LA in any 10-year block within a 15-year period, exemption from dividend distribution tax from current and accumulated income to companies and mutual funds, exemptions on capital gains to Category-III AIF and interest payment on the loan is taken from non-residents.

Apart from tax aspects, the major challenge includes fixing the uncertainties in the regulatory structure for IFSC and increasing the expertise of doing business. It is expected that these financial year incentives, guided by the establishment of a consolidated financial controller, will definitely contribute the much-needed push for IFSC to become a success in India.

Image Sources: Google

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What Real Estate Sector Expecting from Union Budget 2019

Jul 2,2019 / By / No Comment
Budget 2019

What Real Estate Sector Expecting from Union Budget 2019

After the Interim Budget of February 2019, people are expecting a number of announcements from the Union Budget 2019 that is going to be held on 5th July 2019 by Finance Minister Nirmala Sitharaman. A common man always hopes that the Union Budget will have announcements that will impact their lives positively by improving their income and helping them to get jobs. In a similar fashion, the real estate sector too hopes that the upcoming budget will ease their major problems and encourage industry growth.

Below are the few major expectations of the industry:

Indian real estate industry, which is facing the pressure of liquidity crisis and slip in homebuyer’s confidence, expecting that the Narendra Modi-led NDA government will continue to come up with reforms and at the same time address the demands of real estate sector to reduce their difficulties.

To a great extent, Indian Real estate Developers failed to see much of the promised during the entire tenure of Narendra Modi-led NDA government that lasted from 2014 to 2019. All the reformatory changes initiated by the government earlier were for long-term benefits for the realty sector these include RERA, GST, the insolvency code, Benami Property Act, etc.

Real estate developers want the Modi government’s attention in deduction on the principal repayment of housing loans, REIT, affordable housing and most importantly liquidity crisis.

The Central Bank and government have taken significant steps to ease the pressure in the real estate sector by executing 3-successive repo rate cuts and justifying the Goods and Service Tax (GST) regime.

Many are expecting that the government will announce more gifts for first-time homebuyers and address policies to support affordable housing. The Credit Linked Subsidy Scheme (CLSS), which has a deadline of 31st March 2020, may get a further extension, and the tax benefits on home loans may be increased for the first time home buyers.

Apart from that, many home buyers are also expecting a piece of news for the addition of stamp duty into goods and services tax ambit. If this addition happens, lead to more savings for the homebuyers who currently need to pay two taxes individually, as a result, it increases their expenses.

The real estate sector is also expecting more relaxation in the GST rates. People have recommended to cut the corporate tax and increase the SEZ program. There is worry that if the tax incentive for SEZs is removed or switched, it could seriously knock the job creation capacity of the sector.

It further expecting the government to make easier ECB (External Commercial Borrowing) rules to assure a constant inflow of capital from foreign investors. Furthermore, the introduction of housing bonds, giving special status to HFCs (housing finance companies), according to that the banking sector will further help in providing the much-needed incentive to the housing sector across all businesses.

At the present time, there are limitations on tax benefits, if the seller of a residential property makes the sales returns for buying a commercial property. Real estate analysts are expecting that the government will take the action in this regard to allow the use of sale gains of residential property to purchase commercial property.

The Finance Minister Nirmala Sitharaman should also concentrate on an integrated plan for infrastructure and housing development, in the external or peripheral locations and tier-2 and tier-3 cities. Boosting infrastructure sector will not only benefit the real estate sector but also it will help other industries and will create large scale employment that will be a major boost for the Indian economy.

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Union Budget 2019 Highlights

Feb 1,2019 / By / No Comment
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Union Budget 2019 brings reason to cheers for Real Estate

  1. TDS threshold on rental income raised from Rs.180000 to Rs.240000

  2. The benefit of rollover of capital tax gains to be increased from investment in one residential house to that in two residential houses, for taxpayers having capital gains up to 2 crore rupees, can be exercised once in a lifetime.

  3. Benefit under Sec 80 (i) BA being extended for one more year, for all housing projects approved till the end of 2019-20.

  4. Income tax relief on Notional Rent from unsold houses extended to 2 years.

  5. Moreover, the GST council will take

  6.  steps to reduce the tax burden on home-buyers.

  7. A notional rent is applicable to the second house if someone has more than one house, has been waived off, considering the needs of citizens.

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For the common man, industrialist, and farmers

  1. Businesses with less than Rs.5 crore annual turnover, comprising over 90% of GST payers, will be allowed to return quarterly returns.

  2. Individual taxpayers with annual income up to Rs.5L rupees to get a full tax rebate. This will provide tax saving of up to Rs 12,500 for all taxpayers.

  3. 2% interest subvention on loan of Rs.1Cr for GST registered MSME (The Micro Small & Medium Enterprises) units.

  4. 2% interest subvention to farmers pursuing animal husbandry and fisheries.

  5. Mega pension Yojna, namely Pradhan Mantri Shram Yogi Mandhan, to provide assured monthly pension of Rs.3000 per month, with a contribution of Rs.100 per month, for workers in the organized sector after 60 years of age.

  6. Under Pradhan Mantri Kisan Samman Nidhi, Rs.6000 per year for each farmer, in three installments, to be transferred directly to the farmer’s bank account, for farmers with less than 2 hectares landholding.

  7. Individuals with gross income up to Rs.6.5L will not need to pay any tax if they make an investment in Provident Funds and prescribed equities.

  8. Standard tax deduction for a salaried person raised from Rs.40000 to Rs.50000. A standard deduction of Rs.40000 for the salaried class. This additional deduction was proposed in lieu of existing deductions of Rs 15000 for medical reimbursement and Rs 19200 for transport.

  1. In a relief for the common man, most daily-use items are now under 0-5% tax slab under GST.

  2. Gratuity limit increased from Rs 10 lakh to Rs 30 lakh.

  3. 75% of woman beneficiaries under PM MudraYojana, 26 weeks of maternity leave and Pradhan Mantri Matritva Yojana, are all empowering women.

  4. In place of rescheduling of crop loans, all farmers severely affected by severe natural calamities will get 2% interest subvention and additional 3% interest subvention upon timely repayment.

  5. The 22nd AIIMS will be set up in Haryana soon.

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