Capital gains tax waiver at GIFT City

New Delhi: The government has exempted units of investment trusts and ETFs issued by entities based in GIFT City or traded in exchanges there from capital gains tax.

The Central Board of Direct Taxes (CBDT) notified the exemption from capital gains tax any unit of investment trust; a unit of a scheme; and a unit of an Exchange Traded Fund (ETF) launched under the International Financial Services Centres Authority (Fund Management) Regulations, 2022. Gujarat International Finance Tec-City (GIFT)-IFSC is being promoted as a tax-neutral enclave for the financial sector. Nangia Andersen LLP Partner-Financial Services Sunil Gidwani said currently, the law provides for exemption from capital gains tax on various securities either trading on the stock exchanges in GIFT city or securities issued by entities set up in GIFT city.

“The new fund regime provides for funds to be set up as investment trusts. Hence, the law required the inclusion of units issued by such trusts for the purpose of exemption from capital gains. Similarly ETF listed and trading on the stock exchanges in GIFT city would now qualify for capital gains tax exemption. These changes would further expand the scope of incentives available for funds and stock market trading in IFSC,” Gidwani added.