The government might reportedly come up with a policy that will allow companies whose domiciles are in the GIFT City to list on the National Stock Exchange and the BSE.
The forthcoming Union Budget might enable foreign-domiciled Indian startups to relocate their corporate headquarters back to India, specifically to the special economic zone of GIFT City, with minimal tax repercussions. This is as per a report by MoneyControl.
To position Gujarat International Finance Technology City (GIFT City) as a competitor to global financial hubs like Dubai and Singapore, the Indian government has been offering tax incentives and other benefits to attract companies to the city.
The government might even reportedly come up with a policy that will allow companies whose domiciles are in the GIFT City to list on the National Stock Exchange and the BSE. Along with being able to shift their domicile back to India with ease, this initiative will also help start-ups such as Meesho and Razorpay explore the retail investment market in the country.
As per the report, a source said, "The eligibility criteria for the scheme might include riders like the company should have been started by Indian citizens, it should be unlisted, and the substantial value of the company’s shares is derived from assets or businesses in India.”
Under the scheme, the shift to GIFT City for domicile start-ups might be made tax-neutral. The source added, “Just as Budget 2021 had announced a repatriation scheme for foreign funds to redomicile to GIFT IFSC in India in a tax-free manner, a similar provision can allow startups to redomicile to India.”
Several start-ups have been planning to shift their domiciles to India. However, the cost of the same is high. For example. Walmart-based PhonePe had to pay Rs 8,000 crore in taxes while shifting their domicile to India. During a YouTube live session in January 2023, PhonePe cofounder Sameer Nigam said, “I hope things will get easier. If you want to move from any other market to India as a domicile, it is treated as a capital gains event for existing investors, so they have to make a fresh mark to market valuation, and you have to pay tax on the delta.”