Tax incentives among steps to make India hub of aircraft leasing and financing
The Ministry of Civil Aviation is also trying to push the aviation ecosystem in domestic aircraft manufacturing
The central government is implementing a slew of measures including tax holidays and duty exemptions to make India a hub for aircraft leasing and financing.
In a written reply to a question in Rajya Sabha on Wednesday, Union Minister of State for Civil Aviation VK Singh referred to the exemption from corporate tax for a block period of 10 years within the first 15 years for leasing units.
Exemption from Stamp Duty on documents for such transactions carried out from International Financial Services Centres (IFSC) at GIFT-City was also among the steps being taken to promote India as an aircraft leasing and financing hub.
The other measures outlined by Singh in the reply include:
* Enactment of the International Financial Services Centres Authority (IFSCA) Act providing for a Unified Regulator for the IFSC in India, followed by the announcement of the Unified Regulator for IFSC
* Lease of aircraft or helicopter or engines or any other parts thereof designated as financial product under the IFSC Act
Permission to insurance companies to undertake aircraft insurance and invest in leasing and financing business
* Enabling pension funds and alternate investment funds to participate in aircraft financing
* Enabling re-leasing of aircraft and engines within India at the end of expiry or termination of an existing lease without physical re-export of aircraft
*Granting waivers from Importer Exporter Code (IEC) and from General Remittances (GR) for overseas lessors and financiers
The Ministry of Civil Aviation is also engaging with leading aircraft and component manufacturers to push the aviation ecosystem in domestic aircraft manufacturing.
They are being encouraged to enhance their design, manufacturing, maintenance and warehousing footprint in India. The ministry is also pushing for the manufacturing of aircraft, including regional transport aircraft, trainer aircraft and associated equipment by public and private enterprises in India.
In the Budget Speech earlier this year, Union Finance Minister Nirmala Sitharaman proposed to provide more tax incentives.
This includes tax holiday for capital gains incomes of aircraft leasing company, tax exemptions for aircraft lease rental paid to foreign lessor, tax incentive for re-location of foreign funds in IFSC and tax exemptions to investment division of the foreign banks located in IFSC.
The Union Budget also reduced the duty from 2.5% to 0% on components or parts, including engines, for manufacture of aircraft by Public Sector Units of the Ministry of Defence.