Section

Incentive to IFSCs

Levy of STT and CTT

The provisions of Chapter VII of the Finance (No.2) Act, 2004 provides for levy of securities transaction tax (STT) on transactions in taxable securities.

The provisions of Chapter VII of the Finance Act, 2013 provides for levy of commodities transaction tax (CTT) on transactions in taxable commodities.

Provisions of Chapter VII of the Finance (No.2) Act, 2004 providing for levy of STT, not to apply to taxable securities transactions entered into by any person on a recognised stock exchange located in IFSC where the consideration for such transaction is paid or payable in foreign currency, thereby exempting such transactions from STT with effect from 1^st June, 2016.

The provisions of Chapter VII of the Finance Act, 2013 providing for levy of CTT, not to apply to taxable commodities transactions entered into by any person on a recognised association located in unit of IFSC where the consideration for such transaction is paid or payable in foreign currency, thereby exempting such transaction from CTT with effect from 1^st June, 2016.

Exemption of income by way of long term capital gains arising from transfer of listed equity shares or listed units of an equity oriented fund or business trust provided securities transaction tax is paid

Second proviso has been inserted in section 10(38) to exempt tax on long-term capital gains in respect of income arising from transaction undertaken in foreign currency on a recognised stock exchange located in an International Financial Services Centre even when securities transaction tax is not paid in respect of such transaction.

Short term capital gains arising from transfer of listed equity shares or listed units of an equity oriented fund or business trust is taxable at a concessional rate of 15% provided securities transaction tax is paid.

Second proviso has been inserted in section 111A(1) to provide that short term capital gains arising from transaction undertaken in foreign currency on a recognised stock exchange located in an International Financial Services Centre would be taxable at a concessional rate of 15% even when securities transaction tax is not paid in respect of such transaction.

In case of a company, if the tax payable on the total income as computed under the Income-tax Act, is less than 18.5% of its book profit, such book profit shall be deemed to be the total income of the company and the Minimum Alternate Tax (MAT) payable by the company for the relevant previous year shall be 18.5% of such book profit.

Sub-section (7) has been inserted in section 115JB to provide that in case of a company, being a unit located in International Financial Services Centre and deriving its income solely in convertible foreign exchange, the minimum alternate tax shall be chargeable at the rate of 9% instead of 18.5%.

Additional incometax@ 15% is attracted on any amount declared, distributed or paid by a domestic company by way of dividends.

Sub-section (8) has been inserted in section 115-O to provide that no tax on distributed profits shall be chargeable in respect of the total income of a company being a unit located in International Financial Services Centre, deriving income solely in convertible foreign exchange, for any assessment year on any amount declared, distributed or paid by such company, by way of dividends (whether interim or otherwise) on or after 1st April, 2017 out of its current income, either in the hands of the company or the person receiving such dividend.