GIFT City Services

The various benefits offered to businesses setting up operations in the GIFT City IFSC are as follows:
• Several tax benefits and concessions related to income tax, capital gain tax, and GST levy
• Businesses are exempt from stamp duty and registration charges through various state policy
• Entities in GIFT SEZ enjoy tax benefits such as a 10-year income tax holiday, lower minimum alternative tax (MAT)/ (AMT), and various capital gain tax exemption
• A unified regulatory network and single window clearance from IFSCA require minimal documentation for business setup and for an international benchmark.

Here is the step-by-step process for funds interested in establishing AIFs in the GIFT City: 

• Assessing business and operational benefits: Evaluating business viability along with operational and tax benefits of setting up an AIF. 
• Engaging with GIFT regulator: Understanding specific regulatory requirements under IFSCA regulations and compliances to be followed. 
• Registration process: Obtain approval for launching schemes and allied activities. 
• Documentation: The list of essential documents includes the fund’s investment strategy, fund manager’s details, risk management framework, and disclosure on compliance policies, including Anti-money Laundering (AML) and Counter Financial Terrorism (CFT). 
• Infrastructure requirements: InCorp’s advisory services help you choose suitable office space, HR, and other internal infrastructure. 

Businesses in GIFT City IFSC must comply with IFSCA regulations, which may include but are not limited to complying with Anti-Money Laundering (AML), Counter FinancingTerrorism (CFT) guidelines, Know your Customer (KYC) guidelines and other regulatory frameworks like Income Tax, GST, Labour law, SEZ as applicable. Periodic reporting before various regulators, specific audit requirements as per licenses and statutes as application, and maintaining adequate infrastructure for operations are also mandatory.

Registered entities in GIFT can avail 100% tax deduction for any 10 consecutive years out of the first 15 years of operation on the business profits earned out of activities in IFSC. These business activities include fund management activities and brokerage on IFSC exchanges.

As per notification 28/2024 dated March 7, 2024, there is no withholding tax in case of the specified nature of payout made by any entity to insurance companies, international banking units, custodians, investment advisors, fintech, etc.

Non-resident investors are exempted from taxation on any income earned through investments in funds based in GIFT IFSC. In specified cases, they are neither required to obtain PAN (registration under the Income Tax Act) nor file income tax returns if the necessary taxes are paid at the fund level.

GIFT IFSC has been designed to invite businesses from a wide spectrum of financial services, which includes international banking units, insurance and reinsurance businesses, capital markets – stock brokers, investment bankers, investment advisory and other financial intermediaries like custodians, trusteeships, etc. Further, new regulations have been issued with respect to bookkeeping, accounting and taxation services, foreign universities, remote trading access, etc., to attract more business opportunities.

The International Financial Services Centers Authority (IFSCA) is the unified regulator for entities registered under IFSC at GIFT City. IFSCA oversees banking, insurance, securities markets, fund management and other ancillary service providers. Since entities are operating in the Special Economic Zone (SEZ), they are subject to SEZ regulations. Income Tax, GST, Companies Act (if corporate and incorporated structure), and labor laws also apply to entities registered in GIFT.

IFSC ecosystem offers a favorable business environment for fintech and techfin entities to establish companies and expand their operations to global markets. Fintechs in GIFT IFSC may enjoy various incentives, including tax exemptions, access to global financial markets, a conducive regulatory environment for innovation, grants from IFSCA and exemptions from certain regulatory levies.

Yes, foreign banks can establish branches in GIFT IFSC. They may operate as banking units under the banking regulatory framework provided by the IFSCA, benefiting from a liberalized environment with access to various financial services within the IFSC ecosystem and global markets.