IFSCA Regulations 2024 for BATF

On June 7, 2024, the International Financial Services Centers Authority (IFSCA) has recognized the key BATF services to be provided to both BFSI and non-BFSI clients within its International Financial Service Centre –IFSCA at GIFT City. This decision offers the outsourcing industry an opportunity to deliver the following services:

? Taxation services

? Accounting services

? Financial crime compliance services

? Bookkeeping services

???????????????? ????????????????: Taxation services refer to the range of professional services provided by tax experts or firms to individuals, businesses, and organizations to ensure compliance with tax laws and regulations, minimize tax liabilities, and maximize tax benefits. These services typically include tax planning, preparation of tax returns, tax advisory, representation in tax audits and disputes, as well as assistance with tax compliance matters such as filing requirements and reporting obligations.

???????????????????? ????????????????: Accounting services involve the systematic recording, analysis, interpretation, and reporting of financial transactions and information of individuals, businesses, or organizations. These services are essential for maintaining accurate financial records, assessing financial performance, making informed business decisions, and ensuring compliance with accounting standards and regulations. Accounting services may include bookkeeping, financial statement preparation, budgeting and forecasting, internal controls implementation, financial analysis, and advisory services.

?????????????????? ?????????? ???????????????????? ????????????????: Financial crime compliance services are specialized services provided by professionals or firms to help businesses and financial institutions prevent, detect, and mitigate risks associated with financial crimes such as money laundering, fraud, terrorist financing, and bribery, corruption, and sanctions violations. These services involve implementing robust anti-money laundering (AML), know your customer (KYC), and anti-fraud programs, conducting due diligence on customers and transactions, monitoring for suspicious activities, training staff on compliance requirements, and ensuring adherence to regulatory standards and best practices to safeguard against financial crime threats

?????????????????????? ???????????????? involve recording, categorizing, and organizing financial transactions for individuals or businesses. Tasks include recording transactions, categorizing them into relevant accounts, reconciling accounts, generating financial reports, and maintaining organized financial records. These services are essential for monitoring financial performance, fulfilling tax obligations, and ensuring compliance with accounting standards and regulations.

Form and Manner for Seeking Registration (Circular rolled out on 03/07/2024): The International Financial Services Centers Authority (IFSCA) has outlined specific procedures for entities seeking registration under the IFSCA (Book-keeping, Accounting, Taxation and Financial Crime Compliance Services) Regulations, 2024. To register, entities must submit an application in the prescribed form along with necessary documents that demonstrate their capability to provide the intended services in compliance with the regulations. The application must include details about the entity's structure, management, financial stability, and expertise in the relevant fields.

Entities must ensure they meet all criteria laid out by the IFSCA, including the capability to maintain high standards of service quality and regulatory compliance. The registration process also involves a thorough review by the IFSCA to verify the entity's adherence to these standards.

Fee Structure (Circular rolled out on 03/07/2024): The fee structure for entities undertaking or intending to undertake permissible activities under the IFSCA (Book-keeping, Accounting, Taxation and Financial Crime Compliance Services) Regulations, 2024, is designed to cover various administrative and regulatory costs associated with the registration and ongoing supervision. The fees are categorized based on the type of services offered and the scale of operations.

Initial registration fees and annual renewal fees are required, with amounts varying according to the entity’s size and scope of activities. There may also be additional charges for specific services or regulatory approvals. This fee structure ensures that the IFSCA can effectively oversee and support the entities operating within the International Financial Services Centre (IFSC).

???????????????????????? ????????????????????- Regulation 9

The applicant shall ensure that their business in IFSC is not set up either by –

(1) splitting up of business already in existence in India;

(2) reconstructing of business already in existence in India; or

(3) reorganizing of a business already in existence in India.

While complying with conditions on splitting up, reconstruction and reorganization of any

business already in existence in India, the applicant shall adhere to the following requirements:

?????????????????? ??????????????????????: The number of employees transferred/relocated from group entities in India as at the end of the financial year should not exceed 20% of the total employees actually engaged in BATF Service Provider in IFSC.

????????:

a) An employee shall be considered as a new employee if he/she was not employed by any of the group entities in India for a period of 12 months immediately preceding his/her joining date.

b) The condition(s) specified above shall be complied with every year for ten consecutive financial years from the date of issuance of certificate of registration.

c) The compliance of the aforesaid requirement shall be examined at the end of the first full financial year.

(ii) ?????????? ??????????????????????: There should not be any transfer of assets from any of the group entities in India to the BATF Service Provider

(???????????????????? ????)

Contracts or work arrangement between a BATF Service Provider with its service recipients shall be construed as “transferring or receiving of existing contracts or work arrangements from their group entities in India”, in the following scenarios:

a) Transferring of existing contract or work arrangements in India: When an existing contract or work arrangement, by whatever name called, between any of the group entities of BATF Service Provider in India with its non-resident client is shifted or transferred to the BATF Service Provider during the subsistence of such contract or work arrangement.

b) Termination of existing contract or work arrangements in India: When an existing contract or work arrangement, by whatever name called, between any of the group entities of BATF Service Provider in India with its non-resident client is prematurely terminated and a new contract or a work arrangement is signed between BATF Service Provider and the same service recipient, directly or indirectly.

c) Other scenarios as may be specified by IFSCA, from time to time.

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.

?????? ????????????????:

??????% ?????? ??????????????????: Business profits are fully exempt for 10 years out of the first 15 years of operation.

?????????????? ?????????????????? ?????? (??????): Reduced MAT rate of 9% for IFSC units.

??????:- Nil GST on services received by unit in IFSC or services provided to IFSC/SEZ units or Offshore clients