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A Step-By-Step Guide to Incorporating Your Business in GIFT City IFSC

by InCorp Advisory

Reading Time: 4 minutes

With the rise of globalization and the growing importance of international finance, setting up a business in a well-established and business-friendly environment has become crucial. The Gujarat International Finance Tec-City (GIFT City), located in Gujarat, India, has emerged as a prime destination for businesses looking to tap into the country’s financial markets.

In order to capitalise on India’s potential in the international financial services sector, the entity may undertake following steps to incorporate their business in GIFT City.

Brief Process:

The procedure for establishing IFSC Unit in GIFT City is as follow:

Procedure for Establishing IFSC Unit in GIFT City

Related Read: A Complete Overview Of IFSC Gift City And Tax Benefits

CLICK HERE

Steps To Incorporate Your Business in GIFT City IFSC

If you are considering establishing an IFSC unit in GIFT City, this guide will walk you through the process step-by-step.

Step 1: Identification of suitable Office Space in GIFT SEZ

The initial step involves identifying and selecting office space within the GIFT SEZ. This includes entering into an agreement with the developer or co-developer of GIFT SEZ. The chosen office space will serve as the location for establishing your business operations within the SEZ.

Step 2: Obtain Provisional Letter of Allotment (PLOA)

After finalizing the agreement with the developer, it is necessary to obtain a Provisional Letter of Allotment (PLOA). This letter officially confirms the allocation of the chosen office space within the GIFT SEZ for your entity. The PLOA serves as a crucial document for initiating the establishment of your business operations in the SEZ.

Step 3: Application in FORM F to SEZ Authorities

The entity needs to prepare and submit FORM F along with the following annexures:

  • Demand Draft of Rs 5,000/-
  • Provisional Letter of Allotment issued by the Co-Developer.
  • Detailed Project Report, including projections for the next five years.
  • Entity ID documents such as License, PAN Card, IEC Code, etc.
  • Self-certified copies of Memorandum of Association and Articles of Association.
  • Self-certified copies of Board Resolution for setting up an office in GIFT IFSC.
  • Certificate of Incorporation.
  • List of Directors with their identity proofs.
  • Last 3 years’ audited financial statements and IT returns of the entity or directors.
  • Brief presentation covering the entity profile and scope of activities in GIFT IFSC.
  • AFFIDAVIT

Prepare three sets of the above documents and submit them as follows:

  • Original set to the Office of the Development Commissioner.
  • Second set to the developer (GIFT SEZ) to facilitate the submission of NOC from the developer to the Office of the Development Commissioner.
  • Third set for the entity itself.

Related Read: Benefits Of Setting Up A Business Entity At GIFT City

CLICK HERE

Step 4: Unit Approval Committee (UAC) Meeting

The Development Commissioner will contact the entity for a meeting with the Unit Approval Committee (UAC) after receiving the FORM F. During the hearing, the entity’s authorised representative will present the case on their behalf.

Step 5: Letter of Permission / Approval (LOA)

The Development Commissioner will give the entity a Letter of Permission / Approval (LOA) if the UAC is pleased with the entity’s presentation.

Related Read: Why GIFT City Is The Better Destination For Stockbrokers

CLICK HERE

Step 6: Letter of Acceptance

Within 45 days of the LOA’s issuance, the entity must deliver a Letter of Acceptance to the Development Commissioner expressing acceptance of the LOA’s terms and conditions.

Step 7: Execution of Lease Deed

The entity must sign a lease deed with the co-developer of GIFT SEZ within six months of getting the LOA and submit it to the Development Commissioner.

Step 8: SEZ License and Registration with NSDL Portal

After the issuance of the SEZ License, the entity needs to obtain registration with the NSDL portal for SEZ Online Registration. This registration allows for reporting and other services related to import, procurement, and services.

Step 9: Bond Cum Legal Undertaking

The organisation must prepare and sign a Bond Cum Legal Undertaking with the Development Commissioner and GIFT SEZ’s Specified Officer before submitting it.

Step 10: Obtain Registration Certificates and Exemption Eligibility

The entity must proceed to obtain various registration certificates such as GST, RCMC, IEC, etc. Additionally, it should apply for eligibility certificates for exemption from various taxes from the Central and State Government.

Step 11: Registration with IFSCA

Before commencing business operations, the entity must obtain a Certificate of Registration from the International Financial Services Centres Authorities (IFSCA). The entity should prepare and submit an application along with the required fees to the IFSCA.

Step 12: Commencement of Business Operations

After completing all the necessary steps, the entity becomes eligible to commence its business operations (export of services). It is mandatory to inform the Office of the Development Commissioner about the date of the first export of services through an application titled “Commencement of business operations” and provide supporting evidence such as a tax invoice. A copy of the application should also be marked to the GIFT SEZ developer.

Related Read: GIFT City vs Singapore: Why GIFT City Is The Better Destination For Stockbrokers

CLICK HERE

Conclusion

In conclusion, thorough adherence to the recommended measures and compliance with regulatory criteria are required when opening an office in the GIFT SEZ. Businesses may successfully navigate the procedure and take advantage of the opportunities and benefits offered within the GIFT SEZ by following this thorough guidance. This strategic step lays the way for success and development in a dynamic corporate ecosystem and aids India’s expansion in the field of international financial services.

Why Choose InCorp?

At Incorp, we understand the complexities of setting up an Insurance Intermediary Office in GIFT City IFSC. That’s why we offer specialized advisory services to guide you through the process, from initial planning to ongoing compliance. Our expertise can help your organization navigate international regulations and leverage the significant opportunities of GIFT City IFSC, such as access to global markets and a business-friendly environment.

Contact us today to learn how Incorp can assist in successfully establishing your Insurance Intermediary Office in this prestigious international financial center.

FAQs

Need help with navigating the rules and regulations in Gift city?

Get in touch with us right away!

Benefits Of Setting Up A Business Entity At GIFT City

by InCorp Advisory

Reading Time: 4 minutes

The Government of India (GoI) had launched India’s first International Financial Service Centre (IFSC) in Gujarat at GIFT City in April 2015. With the launch of the IFSC at GIFT City, the GoI had taken the first step to bring financial services transactions which are relatable to India, back to India. International Financial Services Centre (IFSC) is an initiative by the government of India (GoI) intended to encourage foreign capital to participate in India’s growth journey.

IFSC provides an opportunity to global businesses at GIFT City to set up wide variety of business verticals in Aircraft Leasing, Ship craft leasing, Banking, Insurance, Stock Exchange ,AIF etc by setting company/LLP/Subsidiary in GIFT City.

Benefits of setting up a business entity at the GIFT City

GIFT City IFSC offers a range of infrastructural, operational, fiscal & tax benefits which make it an attractive destination for businesses and investors, fostering growth and development. The various benefits are listed as under:

A) Infrastructure and Administrative benefits in GIFT City IFSC

1. Ease of doing business: By providing single window clearance, IFSC units can take all necessary approvals under one umbrella (allotment/planning/construction/occupancy) which is useful for IFSC units to set up business in an easy manner.

2. Duty relaxation: Exemption from stamp duty and registration charges provided by IFSC for setting up business entity at GIFT City.

3. Incentives: Development incentives offered by Gujarat Government like Capital Subsidy, employment generation incentives etc to encourage the business setup in GIFT City.

4. Setting up: Plug & play infrastructure, facilitating quick and hassle-free business setup.

5. Cost efficiency: Sustainable development model with a potential 20% reduction in operating costs.

6. Gujarat IT/ITeS Policy incentives: EPF reimbursement, lease rental subsidy, power subsidy, etc.

Related Read: A Complete Overview Of IFSC Gift City And Tax Benefits

CLICK HERE

B) Fiscal Benefits in GIFT City IFSC

1. Income tax benefits:

For Units in IFSC:

  • 100% tax exemption for 10 years out of a 15-year block period
  • IFSC Unit has the flexibility to select any 10 years out of 15 years block
  • Minimum Alternate Tax (MAT) or Alternate Minimum Tax (AMT) at 9% of book profits applies to IFSC Companies /other setup as a unit in IFSC (Not applicable to IFSC companies in GIFT city opting for new tax regime)
  • Dividend paid to shareholders of company in IFSC: From 01 April 2020, dividend income distributed by Companies in IFSC to be taxed in the hands of the shareholder.

For Investors:

  • Interest income paid to non-residents on money lent to IFSC units in GIFT city is not taxable, and long Term or rupee-denominated bonds listed on IFSC exchanges are taxable at a lower rate of 4%.
  • Transfer of specified securities listed on IFSC exchanges by non-residents is not treated as a transfer, and gains arising from such transfers are not taxable in India.

Related Read: Why GIFT City Is The Better Destination For Stockbrokers

CLICK HERE

2. Goods and Services Tax (GST) benefits:

For Units in IFSC:

  • No GST on services: (i) received by unit in IFSC. (ii) provided to IFSC / SEZ units, Offshore clients.
  • GST applicable on services provided to Domestic Tariff Area

For Investors:

  • No GST on transactions carried out in IFSC exchanges

3. Other taxes and duties:

For Units in IFSC:

  • State subsidies are available for IFSC units like lease rentals, provident fund contributions, and electricity charges.

For Investors:

  • Exemption from Security Transaction Tax (STT), Commodity Transaction Tax (CTT), and stamp duty for transactions carried on IFSC exchanges.

C) Operational Benefits in GIFT City

1. Exemption from currency control regulations for IFSC units:

  • Units in the IFSC are treated as non-residents, enjoying the benefits of a non-resident under exchange control provisions.

2. Liberalized currency control regime for Indian residents:

  • Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 (“ODI Regulations”) restrict investment by an Indian resident into an overseas firm in the financial services sector.
  • To enable, Indian residents to set-up and invest funds in GIFT City, RBI, vide its Circular dated May 12, 2021, has permitted sponsor contribution from a sponsor Indian party in an Alternative Investment Fund (AIF) established overseas, including IFSC.

Related Read: How To Incorporate AIF In GIFT City- IFSC?

CLICK HERE

Conclusion

Setting up a business entity at GIFT City and capitalizing on these benefits, businesses and investors can harness the immense potential and growth opportunities available at IFSC, GIFT City. Benefits from fiscal, operational, tax make GIFT City an attractive destination for setting businesses. By leveraging these benefits, businesses can unlock growth opportunities and thrive in the dynamic ecosystem of GIFT City.

Why Choose Incorp?

At In. Corp, our team will help you with setting up IFSC units in GIFT and other services at GIFT City:

Setting up IFSC entities at GIFT City, Gujarat: Incorp can help to setup IFSC units at GIFT City within the regulatory framework. These includes selection of appropriate structure, incorporation of the entity, services from identification of office space to incorporation of units and advice on different services offered by IFSCA Authority.

Obtaining SEZ & IFSCA approvals: Incorp will liaison with SEZ & IFSCA Authority for applying, preparing documentation required, obtaining necessary licenses to operate from GIFT City as IFSC unit.

Other regulatory compliances: Incorp will assist you to obtain various initial registrations under Income Tax Act, GST Law, IEC, RCMC etc. and can provide assistance in the various regulatory compliance.

FAQs

Need help with navigating the rules and regulations in Gift city?

Get In Touch With Us Today

Insurance Intermediaries in GIFT City IFSC: Eligibility & Activities

by InCorp Advisory

Reading Time: 3 minutes

Insurance intermediaries, including agents, brokers, and other entities, facilitate the insurance process between insurers and customers. In GIFT City IFSC (International Financial Services Centre), these intermediaries are regulated by the International Financial Services Centre Authorities (IFSCA) and adhere to stringent guidelines to ensure customer transparency, safety, and security.

This article will delve into the significance of insurance intermediaries in GIFT City IFSC, their eligibility criteria, permissible activities, capital requirements, fees, and essential compliance regulations.

What do we mean by Insurance Intermediaries?

Insurance intermediaries act as the bridge between insurers and customers. Their primary objective is to assist clients in comprehending their insurance needs and providing advice on the most suitable insurance policies available in the market. In GIFT City IFSC, insurance intermediaries are crucial in facilitating the sale of insurance products. By offering access to a diverse range of insurance products and services, these intermediaries empower customers to make informed decisions regarding their insurance requirements.

Related Read: A Complete Overview Of IFSC Gift City And Tax Benefits

CLICK HERE

What is the Eligibility for Setting up IFSC Insurance Intermediary Office?

Individuals or entities interested in establishing an IFSC Insurance Intermediary Office (‘IIIO’) in GIFT City, Gujarat, must fall under the following categories:

  • Insurance Broker
  • Corporate Agent (‘C.A.’)
  • Surveyor and Loss Assessor (‘SLA’)
  • Third-Party Administration (‘TPA’) 

What are the Permissible Activities for IIIO in Gift City?

An IIIO registered as IFSC unit in GIFT City, Gujarat, can undertake the following activities:

  • Insurance Brokerage
  • Corporate Agency
  • Third-party Administration
  • Surveying and loss assessment

Additionally, IIIOs can conduct these activities within the IFSC, from other Special Economic Zones (SEZs), and even from outside India, as permitted by the authorities. However, the Insurance Act of 1938 provisions must be strictly adhered to for any business transactions carried out in mainland India.

Related Read: Benefits For Stock Brokers Registered In IFSC GIFT City

CLICK HERE

What are the Minimum capital / Net worth requirements for setting up in GIFT City as IIIO?

Category  Capital/ contribution
requirement  		 Net Worth
requirements  
Direct Insurance broker  USD 100,000  USD 80,000 
Reinsurance Broker  USD 550,000  60% of min capital requirement 
Composite broker  USD 675,000  60% of min capital requirement 
Surveyor and Loss Assessor
 		 NIL  NIL 
Third Party Administrator  USD 550,000
 		 USD 150,000 
Corporate agent
 		 USD 75,000  USD 75,000 

Related Read: Why GIFT City Is The Better Destination For Stockbrokers

CLICK HERE

What are the fees to set up as IIIO in Gift City?

IFSCA specifies the following fee structure for IFSC Insurance Intermediary Offices (IIIO’s):

Type of Application   Fees  
Application (one time)  USD 500 
Registration (one time)  USD 1,000 
Annual Fee  USD 1,000 

Conclusion

Insurance intermediaries play a vital role in the insurance process within GIFT City IFSC. These intermediaries act as facilitators between insurers and customers, providing valuable guidance and assistance in understanding insurance needs and selecting suitable policies. The regulatory framework established by the International Financial Services Centre Authorities (IFSCA) ensures transparency, safety, and security for customers.

Why Choose InCorp?

At Incorp, we understand the complexities of setting up an Insurance Intermediary Office in GIFT City IFSC. That’s why we offer specialized advisory services to guide you through the process, from initial planning to ongoing compliance. Our expertise can help your organization navigate international regulations and leverage the significant opportunities of GIFT City IFSC, such as access to global markets and a business-friendly environment.

Contact us today to learn how Incorp can assist in successfully establishing your Insurance Intermediary Office in this prestigious international financial center.

FAQs

Need help with navigating the rules and regulations in Gift city?

Get in touch with us right away!

Budget 2023-24: Major Boost And Benefits For GIFT City IFSC

by InCorp Advisory

Reading Time: 5 minutes
Union Budget 2023-24, presented by the Honourable Finance Minister, Ms Nirmala Sitharaman, hopes to build on the foundation laid in the previous Budgets. GIFT City – IFSC (Gujarat International Finance Tec-City – International Financial Services Centre) continues to be a focus area for the Government with key policy announcements being made in this Budget 2023-24 as well.

Introduction

Union Budget 2023-24 aims to provide the necessary support and infrastructure to help GIFT City – IFSC attract more international financial services and companies, thereby contributing to the country’s economic growth and development. Budget 2023-24 amendments and policies emphasise the government’s commitment to creating a favourable business environment for companies operating in the IFSC, with a focus on simplicity, transparency, and stability.

Announcements will play a critical role in furthering the government’s goal of making India a hub for international finance and a global financial market leader. We have covered the announcements in the following 3 parts:

Policy Announcements For GIFT City IFSC

1. Acquisition financing proposed to be permitted by banking units of foreign banks in IFSC

Background

  • Acquisition financing is a type of financing used by businesses to purchase other businesses or assets
  • As per present regulations, foreign banks having its unit/ operations in IFSCs are permitted to finance the acquisition of assets/businesses outside India by Indian Corporates
  • Currently, overseas branches of Foreign Bank were funding such acquisitions and not those units are in IFSC

Proposal

  • IFSC regulations to be amended to allow foreign banks through their IFSC banking units for finance merger & acquisition

Impact

  • This is an appropriate measure to facilitate Corporates for achieving a reduction in the cost of financing outbound mergers & acquisitions

2. Setting up data embassies in IFSC (Countries looking for digital continuity solutions)

Background

  • A ‘data embassy’ is a concept for ensuring digital continuity for a country, where a nation’s critical data and digital infrastructure are stored in a secure location outside of its physical borders
  • ‘Digital continuity solutions’ means solutions for ensuring the continuous and secure operation of digital systems, even in the event of a disaster or other disruption
  • Any country would prefer to establish these data embassies in areas with a supportive legal and regulatory climate, as well as robust physical security measures

Proposal

  • IFSC regulations to be amended to allow foreign banks through their IFSC banking units for finance merger & acquisition

Impact

  • IFSC regulations to be amended to allow the setting up of Data Embassies
  • Participating countries will be able to take advantage of IFSC in form of favourable legal & tax regulations, lower operating costs, and supportive infrastructure facilities resulting in cost-effectiveness

3. Proposed to set up a subsidiary of EXIM bank for trade refinancing in IFSC

Background

  • Export-Import (EXIM) bank’s subsidiary may provide trade financing solutions, such as working capital loans, export credit insurance, and supply chain financing, to businesses operating in the IFSC and beyond
  • The subsidiary would aim to support businesses in accessing the financing they need to grow their international trade activities and to promote economic growth and competitiveness

Proposal

  • A subsidiary of the EXIM Bank of a country is proposed to be set up in IFSC for trade refinancing, would offer trade financing services to support international trade and commerce

Impact

  • By setting up in the IFSC, the subsidiary of the EXIM Bank can take advantage of the favourable legal and regulatory environment, as well as enjoy secured and efficient trade financing solutions
  • It will encourage participation in emerging sectors such as Aircraft leasing, ship leasing etc

Rationalization Of Policies For GIFT City IFSC

1. IFSCA is set to be empowered with the powers of a Special Economic Zone (SEZ) authority to avoid dual regulation

Background

  • According to the current GIFT city regulations, the applicant must submit the Gift City-IFSC registration application to both the IFSC and the SEZ authority
  • Applicant is required to represent its business activity and project viability report to both the authority parallelly
  • The process would take a relatively long time due to duplication of work and resources as both regulators were involved

Proposal

  • IFSCA has empowered SEZ authority to enhance its scope as a single-point regulator

Impact

  • Single point regulator will be streamlining the registration process and avoid duplication of time, efforts & resources
  • The amendment also includes assigning powers to IFSC about a specific power of SEZ such as arbitration, ancillary services etc

2. Single window registration and approval system for IFSCA, SEZ authorities, IRDAI, GSTN, RBI, and SEBI

Background

  • A ‘data embassy’ is a concept for ensuring digital continuity for a country, where a nation’s critical data and digital infrastructure are stored in a secure location outside of its physical borders
  • ‘Digital continuity solutions’ means solutions for ensuring the continuous and secure operation of digital systems, even in the event of a disaster or other disruption
  • Any country would prefer to establish these data embassies in areas with a supportive legal and regulatory climate, as well as robust physical security measures

Proposal

  • Setting up an ecosystem wherein single window registration and approval system for all approvals under IFSCA, SEZ authorities, IRDAI, GSTN, RBI, and SEBI

Impact

  • This system will streamline and reduce the time involved in the process of obtaining approvals and registrations by bringing together multiple regulatory agencies

3. Offshore derivative instrument (ODI) proposed to be considered as a valid contract

Background

  • Currently, International Banking Unit (IBU) and other entities were unable to issue the ODI as they were not recognised under the law due to which branches of foreign banks were unable to issue ODI from IFSC and were therefore unable to move their trading desks to IFSC.
  • These instruments are covered under Securities Contract (Regulation) Act (SCRA)

Proposal

  • It is proposed that an Offshore derivative instrument would be considered a valid contract to clarify the position of ODI in IFSC banking units

Impact

  • Overall, clarifying offshore derivative instruments as valid contracts would avoid ambiguity
  • Amendments in IFSC regulations have pave way for participatory notes instruments

Related Read: How To Incorporate AIF In GIFT City- IFSC?

CLICK HERE

Tax Announcements For GIFT City IFSC

1. Extension of tax benefit period for relocation of AIFs to new find location in GIFT City – IFSC to 31st March 2025

Background

  • AIFs, which are financial vehicles that pool funds from multiple investors to invest in alternative assets such as private equity, real estate, hedge funds etc
  • IFSC has already notified the framework for setting up and its permitted activities for Alternative Investment Funds (AIF)

Proposal

  • The extension of the tax benefit period for relocation of AIFs to a new location in the GIFT City- IFSC which has now been extended until 31st March 2025 (earlier 31st March 2023)

Impact

  • AIFs can enjoy an extended period to continue receiving all tax benefits while they are in the process of relocating within IFSC

2. Any income of non-resident Offshore Derivative Instruments (ODI) holder distributed by an offshore banking unit located in IFSC shall be exempt

Background

  • Currently, as per existing regulations, there was no clarity on ODI transaction was a valid contract or not
  • Taxation on ODI held in IFSC was unclear

Proposal

  • Income of non-resident ODI holders distributed by offshore banking units located in IFSC shall be exempt if the income is chargeable to tax in the hands of the IFSC Banking Unit

Impact

  • Since, ODI is treated as a valid contract, in line with the Budget 2023-24 amendment, there was a consequential amendment required regarding clarity on the taxation of ODI

Related Read: A Complete Overview of IFSC Gift City and Tax Benefits in Gift City

CLICK HERE

Conclusion

GIFT City – IFSC is quickly becoming a preferred jurisdiction for international financial services. Recognizing the growing importance of IFSC, the Global Financial Centres Index, London Report (March 2022) ranked GIFT City’s IFSC first among 15 global centres. Government has set its sights on transforming GIFT City into a thriving financial hub with an international character and innovative solutions for financial issues. Ongoing changes, amendments, clarifications, and regulations are expected to be introduced in pursuit of this long-term objective. 

Why Choose InCorp?

At Incorp, we have the expertise and skills to guide you through the entire nuance of processes and Gift city. We are here to ensure peace of mind, from setting up your company in Gift City to staying compliant and efficiently managing your taxes on time.

Need help with navigating the rules and regulations in Gift city?

Talk to our expert today!

A Complete Overview of IFSC Gift City and Tax Benefits in Gift City

by InCorp Advisory

Reading Time: 5 minutes

Gujarat International Finance Tec-City (GIFT City) is a planned business district in Gujarat, India. It is the new business destination offering competitive edge to Financial services and Technology related activities.

This article helps you understand GIFT city’s structure, permissible services, and tax benefits.

What Is GIFT City?

GIFT City is a multi-service Special Economic Zone (SEZ) with an International Financial Services Centre (IFSC) and a local financial centre. It is India’s first operational greenfield smart city and international financial services center, promoted by the Government of Gujarat as a greenfield project.

With the creation of an International Financial Services Centre, the goal is to create a world-class smart city that will become a worldwide financial hub. The government is also attempting to bring financial services and transactions to India that are now carried out in offshore financial centres by local corporate entities and overseas branches or subsidiaries of financial institutions (FIs).

GIFT City is equipped with some of the latest technology known to man. From the latest public transport, state-of-the-art infrastructure to automated waste collection to an efficient district cooling system, Gift City is an ideal environment for you to set up your business.

Related Read: GIFT City – An Overview and Tax Incentives Announced In The Budget

CLICK HERE

What Is IFSC at Gift City?

International Financial Service Centre (IFSC) is a multi-service SEZ in Gift city. IFSC is India’s first Offshore financial center. Currently, there are more than 125 licensed financial entities in IFSC. The key institutions permitted to set up an IFSC unit are the Banking sector, Insurance sector, and Capital Markets.

International (IFCs) or offshore Financial Centers are financial centres that serve consumers from countries other than their own (OFCs). All of these centres are ‘international’ in the sense that they deal with the cross-border flow of money and financial products and services.

An IFSC is thus a jurisdiction that delivers world-class financial services to non-residents and residents in a currency other than the domestic currency (Indian rupee) of the area where the IFSC is located, to the extent permissible under present legislation.

The IFSC allows Indian corporate businesses and overseas branches/subsidiaries of Financial Institutions (such as banks, insurance firms, and other financial institutions) to bring financial services and transactions that are now carried out in offshore financial centres back to India.

It provides a commercial and regulatory environment that is comparable to London and Singapore, two of the world’s top international financial centres.

IFSCs are designed to give Indian corporations easier access to global financial markets while also complementing and promoting the development of India’s financial markets.

The Gujarat International Finance Tec-City in Gandhinagar, Ahmedabad, Gujarat, has become India’s first IFSC. It is the only IFSC in India that has been authorised.

Related Read: How To Incorporate AIF In GIFT City- IFSC?

CLICK HERE

What If Gift City SEZ?

  • SEZ is an area designated in Gift city where you may set up units to carry specific manufacturing and trading activities and provide certain services.
  • It is considered a foreign territory which means that you need to treat the goods and services going into SEZ as exports and goods and services coming from the SEZ as imports.
  • An SEZ aims to boost the economy by exporting certain goods and services.

What are The benefits in GIFT city?

Government of India along with Government of Gujarat have provided a slew of benefits to the entities setting up the GIFT City. These incentives range from exemption of registration fee and stamp duties to tax benefits. Details of the benefits in Gift City are set out herein below:

Related Read: Union Budget 2023-24 – GIFT City IFSC

CLICK HERE

Fiscal Benefits to IFSC units:

1. Income Tax Benefits

Units in IFSC:

    • 100% tax exemption for 10 years out of 15 years
    • IFSC Unit has the flexibility to select any 10 years out of 15 years block
    • MAT / AMT @ 9% of book profits applies to Company / others setup as a unit in IFSC – MAT not applicable to companies in IFSC opting for new tax regime
    • Dividend paid to shareholders of company in IFSC: From 01 April 2020, dividend income distributed by Company in IFSC to be taxed in the hands of the shareholder.

Investors:

    • Interest income paid to non-residents on: (i) Money lent to IFSC units not taxable. (ii) Long Term Bonds and Rupee Denominated Bonds listed on IFSC exchanges taxable at a lower rate of 4%
    • Transfer of specified securities* listed on IFSC exchanges by a non-resident not treated as transfer – Gains accruing thereon not chargeable to tax in India

2. Goods and Services Tax (GST) Benefits

Units in IFSC:

    • No GST on services: (i) received by unit in IFSC. (ii) provided to IFSC / SEZ units, Offshore clients.
    • GST applicable on services provided to Domestic Tariff Area

Investors:

    • No GST on transactions carried out in IFSC exchanges

3. Other Taxes and Duties

Units in IFSC:

    • State Subsidies – Lease rental, PF contribution, electricity charges.

Investors:

    • Exemption from Security Transaction Tax (STT), Commodity Transaction Tax (CTT), stamp duty in respect of transactions carries out on IFSC exchanges.

Operational Benefits:

1. Exemption from currency control regulations to IFSC Units:

Under SEZ Act, a unit set up in IFSC is treated as a non-resident. Even under Foreign Exchange Management Act, 2002 (“FEMA“) units in IFSC enjoy the benefits of a non-resident under exchange control provisions.

2. Liberalized currency control regime for Indian residents:

Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 (“ODI Regulations”) restrict investment by an Indian resident into an overseas firm in the financial services sector. To enable, Indian residents to set-up and invest funds in GIFT City, RBI, vide its Circular dated May 12, 2021 has permitted sponsor contribution from a sponsor Indian party in an Alternative Investment Fund (AIF) established overseas, including IFSC

What are the services rendered in GIFT city?

Gift City was established to facilitate business in the banking and insurance sector as well as capital markets. The following services are rendered:

  • To raise funds for individuals, corporations, and governments.
  • Asset management and global portfolio diversification are undertaken by pension funds, insurance companies, and mutual funds.
  • Global tax management.
  • Corporate treasury management operations.
  • Risk management operations such as insurance and reinsurance.
  • Merger and acquisition activities among multinational corporations.

Related Read: Benefits For Stock Brokers Registered in IFSC GIFT City

CLICK HERE

Conclusion

IFSC reinforces India’s strategic position as a global business hub for financial services. The city has a lot of economic and fiscal advantages. It has been meticulously planned and structured to lure foreign investors and institutions. The Government of India has made significant efforts to promote the establishment of the IFSC, Gift City. The aim is to be on par with other leading financial centers such as Dubai, Singapore, and London.

Why Choose Incorp?

At Incorp, we have the expertise and skills to guide you through the entire nuance of processes and Gift city. We are here to ensure peace of mind, from setting up your company in Gift City to staying compliant and managing your taxes on time with ease.

FAQs

Need help with navigating the rules and regulations in Gift city?

Get In Touch With Us Today
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