mumbai, Oct. 22 -- The regulator of GIFT City, short for Gujarat International Finance Tec City, has relayed a key demand from fund companies operating there to the Union finance ministry that tax collected at source, or TCS, be exempted on investments made by Indians in the international financial services centre (IFSC). GIFT City, India's first IFSC, is considered an offshore jurisdiction and whenever an Indian investor sends money to a fund registered there, the transfer attracts TCS like any other overseas transfer. TCS for investments is levied at a rate of 20% for amounts exceeding Rs.10 lakh. The International Financial Services Centre Authority, or IFSCA, as the GIFT City regulator is named, has not got any commitment from the finance ministry on the same, said an official with direct knowledge of the matter. All demands from entities in GIFT City are first discussed with the regulator, which then takes it ahead to the respective authority. In the case, the authority is the finance ministry. In July, funds operating in GIFT City had approached IFSCA for removal of TCS on money remitted from the rest of India to GIFT City for investments, executives at multiple funds told Mint. Indians are allowed to send up to $250,000 abroad per individual for various reasons like travel, education, investing in global markets, medical treatment. The TCS varies depending on the end-use of the remittance and amount. Emails sent on 17 October to the finance ministry, IFSCA, and the Reserve Bank of India (RBI) on the request from GIFT-registered fund companies to rescind TCS on investments remained unanswered. Fund managers aver that the imposition of TCS adds friction in the investing process and effectively reduces the money investors would have invested in GIFT City outbound funds. The demand from the industry is to allow the full $250,000 for investments-whether into equity, funds, private equity, or debt markets, said Rohit Agarwal, chief executive officer of the funds business at Dovetail Capital, a provider of integrated capital services to institutional and high net worth individuals. Removing TCS, managers added, could channel more funds into GIFT City instead of other offshore jurisdictions. High net worth Indian residents typically use mature jurisdictions such as Singapore, Mauritius, or Dubai, among others. To be sure, TCS is applied even if the funds are sent to such jurisdictions but if TCS is removed on GIFT City investments, Indian investors might prefer the Indian IFSC. "Investors can claim TCS refunds through tax filings, but the process adds friction-requiring coordination with CAs and tracking deductions. Removing TCS would simplify compliance and make it easier for resident Indians to route investments through GIFT City instead of offshore centres," the executive added....