International Financial Service Centre

 Relocation of Funds

Section 47(viiad)exempts capital gains in case where there is transfer of assets by an offshore fund(fulfilling prescribed conditions) or their unit holders to a Cat I, II or III AIF located in International Financial Services Centre – known as relocating of fund to IFSC. The sunset date for this exemption was 31 March 2023. This has been extended to 31 March 2025 to continue to facilitate this transfer and give boost toAIFs to locate in IFSC.

This would also result in transfer of units held by unit holders. The same is also exempt and the new sunset date will apply

• Further exemption from tax to NR Holders of ODI

With effect from FY 2023-24 (AY 2024-25), additional tax exemption is provided to NR holders of Overseas Derivative Instruments(“ODI”) entered with an offshore banking unit of an IFSC which fulfils prescribed conditions under Section 80LA(1A). Such ODI holders were exempt from tax on transfer of the ODI. It is now proposed to exempt them from tax on distribution of income to them by the offshore banking unit, to the extent that the distributed income is taxed in India under Section 115AD in the hands of the offshore banking unit.