In recent years, India has emerged as a major hub for global financial services. Gujarat International Finance Tec-City (GIFT City) has contributed significantly in making that possible. Designed to rival international financial centers like Dubai, Singapore, and London, GIFT City is India’s first International Financial Services Centre (IFSC) and offers a host of tax and regulatory benefits to companies operating within it. Let’s understand all about GIFT City through this article.
What is GIFT City?
GIFT City (Gujarat International Finance Tec-City) is a smart city project located in Gandhinagar, Gujarat. It is home to India’s first and only International Financial Services Centre (IFSC), regulated by the International Financial Services Centres Authority (IFSCA).
Having a special economic status, GIFT City offers a range of relaxations, incentives, and tax benefits to businesses. It is specially designed to attract both foreign and domestic financial players. Thus, welcoming innovation and growth in the financial sector.
Why Consider Tax Free Company Registration in GIFT City?
Setting up a company in GIFT IFSC provides unparalleled advantages, including:
- 10-year tax holiday under Section 80LA of the Income Tax Act
- No GST on services provided to offshore clients
- No securities transaction tax (STT)
- No capital gains tax on certain transactions
- No dividend distribution tax (DDT)
- No commodity transaction tax (CTT)
- Relaxed foreign exchange regulations and 100% foreign ownership
- Lower minimum capital requirements for certain business categories
These incentives make GIFT City a tax haven-like jurisdiction for legitimate businesses focused on global markets.
Permissible Business Activities in GIFT City IFSC
The IFSCA makes it possible for businesses to provide a broad range of financial and related services in GIFT City. Some of the most important permissible business activities in GIFT City are as follows:
1. Banking
- Offshore banking units (OBUs)
- Trade finance
- External commercial borrowings (ECBs)
2. Capital Markets
- Stock broking
- Derivatives trading
- Investment advisory
- Asset management
3. Insurance
- Reinsurance business
- Captive insurance
- Insurance intermediaries
4. Fund Management
- Alternate Investment Funds (AIFs)
- Portfolio management
- Mutual funds
5. FinTech and Innovation
- Regulatory sandbox initiatives
- Blockchain-based services
- Cross-border payment solutions
6. Other Services
- Accounting & legal services
- Global In-house Centers (GICs)
- Ancillary support services
GIFT City continues to expand the list of permitted activities to attract global talent and capital.
Tax Benefits under Section 80LA of the Income Tax Act for Businesses in GIFT City
GIFT City is offering one of the lucrative advantages that is tax incentive under Section 80LA of the Income Tax Act, 1961. It is believed to be a game-changer for financial institutions and businesses that work within IFSC.
The tax benefits offered for businesses in GIFT City are as follows:
- 100% tax exemption on business income for any 10 consecutive years out of the first 15 years of operation.
- Applicable to multiple types of businesses
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- Units of an International Financial Services Centre
- Specified banks and financial institutions
- Fund management entities
Conditions to Claim 80LA Benefits:
- The unit must be registered with the IFSCA
- The income should be from business activities permitted under IFSC regulations
- A chartered accountant’s audit report must be submitted along with the tax return
Thus, all these benefits and eligibility criterias reduce the tax liability for companies and make it one of the most strategic tax planning tools available today in India.
Stepwise Process to Obtain IFSC License / Registration
Registering a company and obtaining a license in GIFT City is streamlined and overseen by the IFSCA. The steps that you need to follow are:
Step 1: Identify the Type of Entity
Choose the appropriate structure:
- Company (Private Limited Company / Public Limited Company )
- LLP
- Branch Office or Representative Office
- Foreign company setup
Step 2: Choose the Business Activity
Ensure your proposed activity is allowed under the IFSC framework (see list above). This is crucial for eligibility.
Step 3: Apply to IFSCA
Visit the official IFSCA portal.
Depending on your business type (e.g., banking, insurance, capital markets), select the relevant registration application. You will need to provide the following:
- Business plan
- KYC of promoters/directors
- Net worth statement
- Regulatory compliance details
- Capital adequacy documents (if required)
Step 4: Company Incorporation
If you don’t have company registration you will also need to incorporate your company with the Registrar of Companies (RoC), GIFT City, through the MCA portal.
Step 5: Obtain Regulatory Approvals
The IFSCA may seek additional details or conduct an interview before granting the registration/license. Hence, seeking a professional’s assistance is recommended.
Step 6: Start Operations
Lastly, after scrutiny, you will get approval and your unit can commence business in GIFT City and claim relevant tax exemptions.
Conclusion
GIFT City is India’s gateway to global finance. It offers multiple benefits such as tax-free company registration, world-class infrastructure and a business-friendly environment. So, it doesn’t matter if you are a startu or a multinational, you must know about IFSC Registration and get it done as soon as possible to reap all the benefits that it offers. To simplify the process, you can consult our team of experts at: 8881-069-069.
Moreover, If you want any other guidance relating to IFSC Registration, IFSC license, please feel free to talk to our business advisors at 8881-069-069.
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