Recent Compliance Relaxations for IFSC Units: Key Changes Explained

Overview of Recent Compliance Relaxations for IFSC Units

The Central Board of Direct Taxes (CBDT) has recently announced important modifications to compliance requirements for units functioning in International Financial Services Centres (IFSCs). As per the Notification dated 16th October 2023, units operating in IFSCs are now exempt from filing Form 15CA and Form 15CB for payments made to non-residents (NRs) that are not liable for tax under Indian domestic laws.

Exemption from Transactional Filings

• IFSC units are no longer required to submit Form 15CA and Form 15CB for payments to non-residents that do not incur tax under Indian tax legislation.
• This exemption significantly simplifies compliance, enhancing the ease of doing business within these financial centres.

Quarterly Reporting Obligations via Form 15CD

Despite the exemption from transactional filings, IFSC units must still provide a quarterly statement using Form 15CD. This form must contain:

• Details of all remittances sent to non-residents.
• Information regarding remittances not subject to tax under Indian tax laws.

Due Date for Submission

• The Form 15CD must be filed within 15 days following the conclusion of each quarter.

Effective Date of Amendments

These provisions will take effect from 1st January 2024.

Implications of the Amendment

• The changes are intended to lessen the compliance burden on IFSC units, enabling them to concentrate more on their financial activities without the need for continuous filing.
• The introduction of Form 15CD ensures that tax authorities continue to obtain necessary disclosures in a structured format.
• This aligns with the government's objective to make IFSCs more appealing to global financial institutions by streamlining tax processes.

For businesses operating in GIFT City and other IFSC zones, these changes represent a positive shift towards a more efficient and conducive tax environment.