Gift City India: Your New Destination for Tax-Advantaged Aviation & Ship Leasing

The global aviation and shipping industries are experiencing constant growth, demanding innovative and cost-effective financing solutions. Traditionally, established hubs like Singapore and Dublin have dominated the landscape. However, a new player is emerging on the scene – Gift City in India – and it’s attracting the attention of industry experts with its unique set of advantages.

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Why Consider Gift City? A Tax Haven for Lessors

Nestled in the heart of Gujarat, India, Gift City is meticulously designed to become a global financial and IT hub. But beyond its sleek infrastructure, it offers a compelling proposition for aviation and ship lessors: a haven of tax benefits.

Unmatched Tax Breaks: Enjoy a 10-year corporate tax exemption on leasing profits, significantly boosting your bottom line. This stands out compared to established hubs with lower exemption periods or higher tax rates.
Maximized Depreciation: Benefit from a 40% depreciation allowance on aircraft and ship values, maximizing your tax deductions and further enhancing your financial position.
Capital Gains Advantage: Gain a capital gains tax exemption on disposal of qualified assets, providing an additional layer of financial benefit compared to some established hubs with capital gains taxes.

Tax Benefits Compared:

Feature	Gift City (India)	Singapore	Dublin (Ireland)	Hong Kong (SAR)
Corporate Tax Exemption	0% for 10 years on leasing profits	Up to 11.5% for qualifying	12.5% Corporation Tax	16.5% Profits Tax
Depreciation Allowance	40% on WDV of aircraft/ships	Up to 22.5% diminishing balance method (reducing balance)	Accelerated Capital Allowances (ACA) for qualifying aircraft (25% declining balance)	(Aircraft: 20% diminishing balance)
Capital Gains Tax	Exemption on disposal of qualified assets	Exemption with conditions	25% Capital Gains Tax (potentially reduced to 12.5% for certain assets)	No capital gains tax on disposal of qualifying assets

Beyond Taxes: Streamlined Operations & a Growing Ecosystem

Gift City’s allure extends beyond tax breaks, offering additional technical advantages:

Simplified Regulations: Immerse yourself in a streamlined regulatory framework governed by a single regulator (IFSCA), simplifying processes and expediting approvals.
Operational Efficiency: Conduct transactions in freely convertible foreign currency, providing flexibility for international lessors. A forward charge on GST eliminates the risk of unpaid taxes upon repossession, ensuring operational peace of mind.

Gift City’s tax incentives have proven to be a game-changer, simplifying complexities arising from Indian tax laws. Notably, the requirement to pay unpaid Goods and Services Tax (GST) upon aircraft repossession is minimized. By ensuring that GST is paid in advance with lease rentals, Gift City protects lessors from facing outstanding GST amounts during repossession.

The Rise of Gift City

2020: A Pivotal Year: Recognizing aircraft leasing as a financial product opened doors for entities in Gift City to finance and lease aircraft with added flexibility in foreign currency transactions.
Major Players Set Up Shop: Prominent names like Vman Aviation, ModAir Aviation, IndiGo, and Air India have established their presence in Gift City, signifying growing confidence in the hub.

Major Transactions & Landmark Deals

In a groundbreaking move this year, Tata-owned Air India secured the first of six Airbus A350-900 aircraft through its Gift City-based leasing entity.
IndiGo, making headlines, ordered a record-breaking 500 new aircraft in June 2023, with plans to receive its first through its Gift City-based leasing entity. These transactions underscore the growing prominence of Gift City as a hub for high-value and large-scale aviation deals.

Gift City unfolds a unique combination of attractive tax benefits, streamlined operations, and access to a rapidly growing market.

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