LI Network
Published on: 24 July 2023 at 12:26 IST
In a significant move to bolster the aviation industry and attract more business to the Gujarat International Finance Tec-City (GIFT City), the Central Board of Direct Taxes (CBDT) has announced an exemption from tax deducted at source (TDS) for dividend payments made by an International Financial Services Centre (IFSC) unit engaged in aircraft leasing to another IFSC unit within the GIFT City. This exemption is set to take effect from September 1, 2023.
The decision, as per industry experts, is expected to enhance the competitiveness of GIFT City in the global aircraft leasing market by aligning it with the concessions available in other international financial hubs.
It is also seen as a strategic move to boost the aircraft leasing business and strengthen India’s position as an attractive destination for aviation investments.
Aircraft leasing has emerged as a lucrative business worldwide, enabling airlines and other aviation entities to access modern aircraft without the substantial upfront costs of purchasing them outright. GIFT City, as India’s first IFSC, has been actively working towards creating a conducive ecosystem for various financial activities, and the latest exemption for aircraft leasing will further bolster the aviation sector within the city.
The exemption from TDS for dividend payments between IFSC units engaged in aircraft leasing is set to provide significant financial benefits to lessees and lessors alike. By facilitating the flow of funds and reducing the tax burden, the move is expected to attract more aviation companies to set up their operations within GIFT City.
To avail of the exemption, the payee will be required to furnish a statement-cum-declaration to the tax department, confirming their eligibility for the tax benefit. This requirement ensures transparency and compliance with the tax regulations while allowing businesses to take full advantage of the exemption.
The recent amendment in the Finance Act, 2023, which introduced the exemption for dividend income earned by aircraft leasing businesses within IFSCs, demonstrates the government’s commitment to fostering growth in the aviation sector and promoting GIFT City as a global financial hub.
Industry experts and stakeholders have welcomed the move, citing it as a game-changer for the aviation industry in India.
By providing tax benefits and aligning with international practices, GIFT City aims to become a preferred destination for aircraft leasing transactions and other financial activities in the aviation sector.
With the exemption set to take effect in a few months, aviation companies and investors are closely monitoring the developments and opportunities that will arise within GIFT City.
The positive outlook towards the aviation sector, combined with the strategic advantages of operating within an IFSC, is expected to drive a surge in interest and investments in aircraft leasing businesses at GIFT City.
As the Indian economy continues to recover and soar to new heights, the move by CBDT to exempt aircraft leasing from TDS at GIFT City is seen as a progressive step that will propel the growth of the aviation sector and strengthen India’s position in the global financial landscape.
