The government has made the decision to exempt investment trust units from paying taxes. And exchange-traded fund shares issued by businesses based in Gujarat’s GIFT City (Gujarat International Finance Tec-City) from paying capital gains tax. Is. The International Financial Services Centre Authority Regulations, 2022 exempt any unit of an investment trust or exchange-traded fund (ETF) from capital gains tax. This is according to a notification from the Central Board of Direct Taxes (CBDT).
A tax-neutral zone for the financial industry
is being promoted for Gujarat International Finance Tech-(GIFT) City, which was founded as an international finance services hub. According to Sunil Gidwani, partner (financial services), Nangia Anderson LLP, numerous securities are free from capital gains tax under the current law. Tax exemption is provided for traded securities. According to Gidwani, there is an option in the new funding arrangement to set up the fund as an investment trust. For the purpose of the capital gains exemption, the law must thus cover the units issued by such trusts, he continued, adding that in the same vein, ETFs listed and traded on the exchange situated in GIFT City are now also eligible for the capital gains tax exemption. be qualified for. These adjustments will broaden the range of incentives offered for fund and stock market transactions in the IFSC.
What does it accomplish?
The notification, according to Amit Maheshwari, partner at AKM Global Tax, is consistent with the goal of making the IFSC the global center for financial services and attracting non-resident investors to a reputable stock market.
What is taxes on capital gains?
Let us explain that a capital gain is the profit from the sale of a capital asset. Investments such as real estate, stocks, mutual funds, jewels, and trademarks are examples of capital assets. Since the profit generated by this is regarded as income, the government must withhold taxes from it.
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