A new tax-friendly regime to boost India’s shipping tonnage is gaining traction in a short span with the Ripley Group, Bothra Group, Star Matrix, Alphard Maritime Group and Propel Shipping, among the eight that have registered under the International Financial Services Centre (IFSC) Authority in Gujarat, seeking to tap this avenue to access Indian cargo.
“IFSC is a very good regime,” said an executive with one of the country’s top fleet owners. “They have made a structure which is equal to or better than Singapore for tax, especially for accessing Indian cargo,” the executive said, adding that his company was “exploring the possibility of setting up a unit in IFSC to see if it makes sense”.
“We are exploring because it is at a very nascent stage. If it makes sense, we will put vessels there also,” he added.
Being treated as an offshore special economic zone in India, IFSC has tax and regulatory benefits – the goods and services tax (GST) does not apply for import of vessels, entities operating from IFSC are considered non-resident from FEMA perspective facilitating ease of doing business and ECB norms are not applicable to IFSC entities, making borrowings easier.
The most attractive feature, though, is the ten-year tax holiday available to IFSC companies.
“IFSC entities can take a tax holiday in any ten of the first 15 years. After that they can stay in the IFSC as a tonnage tax company and enjoy the same tax benefits that are currently available to fleet owners operating in the domestic tariff area (DTA) regime,” the executive stated.
