IFSC Gift City: How to set up Business in Gift City, Gujrat

The International Financial Services Centre (IFSC) is a set up for the help global and domestic financial institution to conduct smooth business related to banking, capital market, insurance, aircraft leasing, fund management, fintech and other services from India.

What is GIFT City?

The Gujarat International Finance Tec-City (GIFT City), is india’s first city located between Ahmedabad and Gandhinagar in Gujarat for IFSC and it is fully operational. The main object of the Gift City is to enable and create idle eco system for both domestic and international financial services in tax friendly environment. It offers cross border financial products and services. The International Financial Services Centres Authority (IFSCA), established in April 2020, acts as the unified regulator for all financial institutions, products, and services in the IFSC.  Through the IFSCA, promotion of ease of doing business and regulatory control becomes very easy. It plays vital role.

IFSC provides many tax incentives and benefit for registered entity in Gift City

Businesses registered under GIFT City enjoy multiple tax incentives, regulatory relaxations, and state subsidies designed to attract global financial players.

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1. Direct Tax Benefits

• 100% tax exemption offered for registered entity for the period of 10 out of 15 years. A flexible opportunity provided to the entity for selecting any 10 consecutive years out of 15 years.

• Lower rate of MAT and AMT available for registered entity.

2. Indirect Tax Benefits

• Units within GIFT IFSC, as well as services providers in GIFT IFSC/SEZ units and offshore clients, are given exemptions/relaxations under the GST and Customs.

•  To ensure the global competitiveness IFSC offers zero rated supply for Import of goods or services into the IFSC

3. State-Level Subsidies and Incentives (Government of Gujarat)

• State government offers 100% reimbursement of stamp duty and registration fees.

• 100 % electricity bill reimbursement offered by state government.

• 100% reimbursement of the employer’s contribution to the Provident Fund (PF) for employees.

• Within the Gift City there are simplified labour law structure and compliances available.

4. Capital Market Incentives

Transactions executed on GIFT IFSC exchanges are exempt from Securities Transaction Tax (STT), Commodities Transaction Tax (CTT), and stamp duty, further enhancing the attractiveness of the centre Who Can Set Up in IFSC?

The permissible businesses are in Gift City:

• Aircraft leasing and financing

• Alternative investment funds

• AML KYC

• Ancillary services

• Banking

• BATF services

• Bullion exchange

• Capital markets

• Committee reports

• Factoring and forfaiting

• Finance company

• Fintech

• Foreign university

• Fund management

• Global in-house centres

• Insurance

• listing regulations

• Market infrastructure institutions

• Payment services

• Ship leasing

• others

Following are the process to setup of business in IFSC.

1. Initial Meeting:  Meeting can be conducted through physically or virtually to present business ideas and alignment with the goal and regulation of IFSC.

2. Identify Office Space:  Identify the office space with developer and obtain primary letter of allotment.

3. Company Incorporation:  Incorporate a company through MCA and file form FC – 1 for foreign branch.

4. Presentation to the Administrator: Presentation to the Unit approval committee and obtain the letter of approval.

5. Submit the LUT: Submit the LUT to the administrator and obtain the complete registration certification. 

Why Choose GIFT City IFSC?

Setting up an entity in GIFT City offers businesses the strategic advantage of global access with Indian cost efficiency. It allows Indian and foreign entities to:

• Operate in a globally competitive regulatory environment.

• Access capital and clients across borders seamlessly.

• Enjoy multi-currency operations and world-class infrastructure.

• Benefit from one of the most favorable tax regimes in Asia.

Conclusion

Gift City provides an opportunity to become an international player from the Indian soil. It provides an opportunity to avail the tax benefit, lower compliances and enjoy the benefit of eco system for all including investors and startups. It is a wider opportunity to expand the business for cross border operations.

Author: Prahalad Kumar, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.