In a significant move to promote financial activities in the Gujarat International Finance Tec-City (GIFT)-IFSC, the Indian Finance Ministry has made a pivotal amendment to the Income Tax Rules. This amendment exempts non-resident individuals and foreign companies from the obligation to furnish a Permanent Account Number (PAN) when opening a bank account within the International Financial Services Centres (IFSC) in GIFT City.
Form 60 Declaration Replaces PAN
Under the newly revised rules, non-residents and foreign companies are now required to file a declaration in Form 60 instead of providing a PAN when establishing a bank account in IFSC Gift City. Importantly, this declaration is subject to the condition that the account holder must not have any outstanding tax liabilities in India. This change simplifies the account opening process for foreign entities, making it more accessible and efficient.
Promoting GIFT-IFSC as a Tax-Neutral Enclave
GIFT-IFSC has been strategically positioned as a tax-neutral enclave for the financial sector. With this exemption from PAN requirements, GIFT City is poised to become an even more attractive destination for foreign companies, non-resident Indians (NRIs), and other non-residents seeking to open bank accounts. This development is expected to have a positive impact on both the liability and deposit aspects of banks operating within GIFT City. Furthermore, it is likely to stimulate growth in the retail banking segment of the IFSC, fostering greater economic activity and investment in this unique financial hub.
Industry Insights
Financial services experts, such as Sunil Gidwani, Partner at Nangia Andersen LLP, have praised this relaxation in regulatory requirements. According to Gidwani, this move is a game-changer for foreign companies, NRIs, and non-residents looking to establish banking relationships within IFSC banks. It is expected to streamline the process, boost confidence, and encourage more entities to take advantage of the unique opportunities available in GIFT-IFSC. In the long term, this change is likely to enhance the financial ecosystem within GIFT City and contribute to its continued growth and success.
