Aircraft leasing at GIFT gets boost

AHMEDABAD: The recently passed finance bill provides exemption from capital gains tax on the sale of shares by an aircraft leasing company to non-residents, establishing the parity required to boost the aircraft leasing ecosystem in India, officials of the International Financial Services Centre Authority (IFSCA) at GIFT City said. They believe the amendments put GIFT City on a par with global aircraft leasing centres and India-based airlines may now consider leasing aircraft through the IFSC.
IFSC sources said, in the recently passed finance bill, two important enablers have been provided by the central government such as exemption from dividend distribution tax to non-residents by the IFSC leasing entity and exemption from capital gains tax on the sale of shares by the aircraft leasing company to non-residents.
Dipesh Shah, executive director of IFSCA, said, “Tax parity with global aircraft leasing centres such as Dublin, provides a great opportunity for offshore leasing activities to come to GIFT. Indian airlines will be able to lease aircraft from the GIFT IFSC as the regulatory and tax regime is in line with global financial centres.”
IFSC sources said Air India and IndiGo may find it more convenient to lease aircraft from GIFT as it provides better tax certainty. The Centre for Asia Pacific Aviation recently said that Air India, IndiGo and similar airlines are expected to place orders for more than 1,000 aircraft.
Regulatory enabling from the IFSCA has already brought about 19 lessors to GIFT IFSC with 29 assets leased from IFSC in India and overseas, covering fixed-wing aircraft, helicopters, engines and ground support equipment. IFSCA expects the number of aircraft leased from GIFT City to see a sharp increase soon because of taxation parity.
An IFSCA official said, “The recent budget announcement covering aircraft leasing from GIFT IFSC brings complete parity with offshore financial centres from where Indian airlines are leasing aircraft. So far, the leasing business and related opportunities such as insurance went overseas as India never had a regulatory structure to encourage such businesses in India.”