Market exchange BSE on Tuesday received in-principal approval from the Securities and Exchange Board of India for setting up international exchange & International clearing corporation in GIFT International Financial Services Centre (GIFT City).

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The exchange in a press release said that it plans to operationalise the International Exchange in early 2017. 

International Financial Services Centre (IFSC) outlines were first announced by the Ministry of Finance on March 1, 2015. As per the release, Sebi had announced the IFSC guidelines on March 27, 2015 for capital market. 

Following Sebi, the Reserve Bank of India for International Banking Units on April 1, 2015, and IRDA for Insurance Industry on April 6, 2015 announced the guidelines for IFSC.

Finance Minister Arun Jaitley in his Union Budget speech this year had announced various special economic benefits to the IFSC in the form of exempting Securities Transaction Tax (STT), Commodities Transaction Tax (CTT),  Dividend Distribution Tax (DDT) and also provided a five year Income Tax Holiday with another 50 % reduction in Income Tax for the next five years, the release said.

"Also, the Minimum Alternate Tax applicable in IFSC has been reduced to 9 % vis-à-vis 18.5 %. This was notified in the Finance Bill on May 14, 2016. Indirect taxes like Service Tax and Custom Duty are also not applicable in IFSC. The government of Gujarat has also exempted stamp duty for entities having registered office in GIFT for capital market activities", BSE said.

The BSE Board in its meeting held on May 5 had approved the creation of two wholly owned subsidiary companies for the purpose of setting up the first International Exchange and International Clearing Corporation.