🌐 Thrilled to share that on June 7, 2024, the International Financial Services Centers Authority (IFSCA) officially recognized key BATF services to be provided to both BFSI and non-BFSI clients within its International Financial Service Centre at GIFT City. This landmark decision offers a golden opportunity for the outsourcing industry to deliver services including:
Bookkeeping services
Accounting services
Taxation services
Financial crime compliance services (AML/CFT measures and FATF recommendations)
🚀 This recognition paves the way for outsourcing firms to offer these services to non-resident clients, fostering a robust ecosystem for financial services outsourcing. Notably, units operating in GIFT City cannot transfer existing contracts from group entities in India, ensuring a level playing field.
Key Definitions:
Accounting Services: This includes reviewing annual and interim financial statements or other accounting information without any attestation or assurance, compiling financial statements from client-provided information, preparing financial statements, compiling income statements and balance sheets, analyzing financial statements, and providing related accounting support services. Auditing services are excluded.
Bookkeeping Services: These services involve classifying and recording transactions, including payroll ledgers, in terms of money or other units of measurement in the books of account and related documents. Payroll and taxation services are excluded.
Taxation Services: This encompasses tax consultation, tax preparation, and tax planning, including providing advice on taxes, preparing, and filing tax returns of all kinds. It covers all forms of direct or indirect taxes, cesses, duties, or levies.
Financial Crime Compliance Services: These services are related to compliance with Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT) measures, and Financial Action Task Force (FATF) recommendations, as well as other related activities.
Eligible Entities:
BATF Service Providers must register as companies or LLPs, ensuring that the service recipient is a non-resident and not from a high-risk jurisdiction identified by FATF.
Conditions for Ancillary Service Providers:
Ancillary Service Providers can continue providing BATF services in their existing legal form for three years but must register within this period. They must ring-fence their BATF operations from other existing operations in IFSC and adhere to specific regulations.
Safeguarding Conditions:
Regulation: 9
Businesses in IFSC must not be established by splitting up, reconstructing, or reorganizing existing businesses in India. Adherence to specific requirements outlined in
Under Workforce Requirement: Transfer/relocation of employees from Indian group entities should not exceed 20% of the total employees engaged in BATF Service Provider in IFSC.
Asset Requirement: No transfer of assets from Indian group entities to the BATF Service Provider is permitted.
Regulation: 10
BATF Service Providers are prohibited from offering services through the transfer or receipt of existing contracts or work arrangements from their Indian group entities. Interpretation of "transferring or receiving of existing contracts or work arrangements" is detailed in)
PART B
Scenarios defining "Transferring or receiving of Existing contracts or Work Arrangements include:
a) Shifting existing contracts or work arrangements from Indian group entities to the BATF Service Provider.
b) Premature termination of contracts or work arrangements followed by signing new agreements between the BATF Service Provider and the same service recipients.
c) Additional scenarios as specified by IFSCA. Compliance with these regulations is not just a legal necessity but also pivotal for maintaining the integrity and stability of operations within IFSC. Stay tuned for more updates and insights regarding regulatory compliance in IFSCA!
Fee Structure and Reporting:
The fee structure for BATF services includes:
Application Fee: $1000
Registration Fee: $ 5000
Recurring Annual Fee: based on No Employees on Year Start
Up to 500 then $5000
More than 500 up to 1000 then $7500
More than 1000 Employees then $10000
Reporting must be done in US Dollars, with compliance certified annually by an independent professional.
Tax Benefits:
100% Tax Exemption: Business profits are fully exempt for 10 years out of the first 15 years of operation.
Minimum Alternate Tax (MAT): Reduced MAT rate of 9% for IFSC units.
For more details on tax benefits, visit: Tax Benefits GIFT IFSC.
GIFT City’s expansion into these financial services signifies a major milestone for the outsourcing industry, providing new avenues for growth and innovation in a globally competitive environment.
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