While the tax rates have been left unchanged in the interim budget, income tax benefits have been extended by a year in three key areas: startups, Indian units of foreign banks in GIFT City (Gandhinagar, Gujarat) and sovereign funds and foreign pension funds.
Startups: Tax exemption under 80-IAC is extended to 31 March, 2025 extended by a year.
Startups with a turnover of less than ₹100 crore are eligible for a tax holiday of three years, any time in the first ten years of their incorporation.
The deadline for incorporation for applicants was March 2024 until today's extension. Therefore, companies that have been formed in the next one year can apply for the tax break of three years under Section 80-IAC. .
IFSC units under Sec 10 4D, 4F: Tax Exemption Extended by one year to March 31, 20
The Financial Services Centres Authority (IFSCA) was set up in 2020 as a unified regulator for financial entities at GIFT City in Gujarat's Gandhinagar.
The tax benefits for entities under the IFSC include:
Offshore derivative contracts issued by a foreign portfolio investor (FPI) in GIFT City and regulated by the IFSCA shall be legal contracts. This allows Indian units of foreign banks in GIFT city to invest in Indian stock markets.
These units in GIFT City are eligible for a tax exemption for for 10 continuous years (out of 15 years).
In last year's budget, the time for relocation of funds from other countries into GIFT City was extended by two years. This time, it has been extended by another.
A similar extension of one year has been provided for airline leasing finance companies that would like to shift base to GIFT City.
Sovereign Wealth Funds & Pension Funds under Section 10(23FE): Tax Exemption Extended by one year to March 31, 2025
Sovereign wealth funds and pension funds (specified fund) are eligible for a tax break for interests, profits and dividends earned by their unit in GIFT City from the investments made between April 2020 and March 2024.
This exemption, which are subject to certain conditions, is now available for investments made till March 2025.
(Edited by : Sriram Iyer)
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