Thursday, 20 July 2023

Gift City Gyan

 

Big boost coming in the way of those intending to deal in ODI, NDF and OTC from our home ground Gift City.

 

Income generated by Non residents’ through the following instruments by way of transfer or distribution on ODI shall be exempt from double Taxation

 

1.     Non-deliverable forward contracts (NDF) or

2.     Offshore derivative instruments (ODI) or

3.     Over-the counter derivatives (OTC Derivatives).

 

Now, such income would be taxable only at hands of the issuer of these instruments and not at the hands of the Subscriber which was not the case earlier.

 

However, such instruments need to be necessarily issued by an offshore Banking Unit based out of IFSC (such as GIFT City). Also, the subscription can not be done by the India Unit owned by the NR.

 

What is NDF: The NDF provides foreign investors with a method to hedge their currency risk associated with movements in the rupee. Its a cash settled contract.

 

What is ODI: ODI, also known as Participatory notes (p-notes) are instruments used by the foreign investors to invest in India’s securities markets without getting registered with SEBI. ODIs may be issued on shares, bonds and derivatives. However, ODI is a heavily regulated instrument governed by SEBI which means the Issuer has to follow host of compliances.

 

What is OTC Derivative: This is a customised private financial contract between two parties with no intervention of Stock Exchange or SEBI. The underlying can be any asset class.

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