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FM proposes to cut withholding tax to boost listing of bonds at IFSC exchange

The move will attract more international investors at IFSC exchange.

PTI|
Last Updated: Feb 01, 2020, 04.48 PM IST
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The country's only International Financial Services Centre (IFSC) is in GIFT City near Ahmedabad in Gujarat.
With an aim to boost listing of bonds at IFSC exchange, the government has proposed to reduce the withholding tax rate to 4 per cent from 5 per cent on interest payment on bonds listed on its bourse.

The move will attract more international investors at IFSC exchange.

"In order to incentivise listing of bonds at IFSC exchange, I propose to further reduce the withholding rate from 5 per cent to 4 per cent on interest payment on the bonds listed on its exchange," Finance Minister Nirmala Sitharaman Sitharaman said in her Budget speech in Parliament.

India International Exchange (India INX) MD and CEO V Balasubramaniam said that the budget announcement by the government to reduce the withholding tax from 5 per cent to 4 per cent for IFSC exchange listed bonds will be "an immense boost to all issuers and will immensely help them in attracting more international investors".

Withholding tax is levied by countries on interest or dividends paid to a person who is resident outside that country.

India INX has already listed medium-term note (debt) program worth $47 billion dollars (about Rs 3.33 lakh crore) with drawdown of $18.5 billion dollars till date.

"This announcement should greatly incentivise issuers to choose India INX as the preferred platform for listing their international bonds and masala bonds," he added.

The country's only International Financial Services Centre (IFSC) is in GIFT City near Ahmedabad in Gujarat.

GIFT City is an emerging global financial and IT services hub, a first of its kind in India, designed to be at par with globally benchmarked business districts. It is supported by state-of-the-art infrastructure encompassing all basic urban infrastructure elements along with an excellent external connectivity.

Companies from financial services, technology and all other services sector are targeted as potential occupants within the city.
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