India is rapidly strengthening its position in the global financial services industry, and Gujarat International Finance Tec-City (GIFT City) is at the centre of this transformation. Designed to connect Indian businesses with international financial markets, GIFT City offers a specialised ecosystem for banking, investment management, insurance, capital markets, fintech, aircraft leasing and other cross-border financial services.
For Indian entrepreneurs, foreign investors, financial institutions and multinational companies, GIFT City IFSC presents an opportunity to establish operations within India while accessing an internationally oriented regulatory and business environment.
However, setting up an entity in GIFT City involves more than company incorporation. Businesses must evaluate International Financial Services Centres Authority (IFSCA) regulations, eligibility criteria, tax incentives, capital requirements, operational substance and ongoing compliance obligations.
JJJ & Company LLP provides professional assistance with international taxation, regulatory advisory, company incorporation, FEMA, financial structuring and corporate compliance to help businesses evaluate opportunities in GIFT City.
What Is GIFT City IFSC and Why Is It Important?
GIFT City, located in Gandhinagar, Gujarat, is India’s first operational International Financial Services Centre (IFSC).
It has been developed to bring international financial activities that were traditionally conducted in overseas financial centres into a regulated ecosystem within India.
The GIFT City ecosystem has two important areas:
- Domestic Tariff Area (DTA): The domestic business area operating under applicable Indian laws and regulations.
- Special Economic Zone (SEZ): The designated area that includes the International Financial Services Centre, where eligible international financial activities are carried out under the applicable regulatory framework.
The International Financial Services Centres Authority (IFSCA), established under the IFSCA Act, 2019, acts as the unified regulator for financial products, financial services and financial institutions operating in IFSCs.
For businesses, this means access to a specialised regulatory framework designed for international financial operations.
What Businesses Can Be Established in GIFT City IFSC?
GIFT City is not limited to traditional banking institutions. Its ecosystem covers multiple financial and technology-driven business activities.
Some important opportunities include:
Banking and Financial Services: Eligible domestic and international banks can establish IFSC Banking Units and provide permitted foreign-currency banking services.
Fund Management: Eligible entities can establish fund management operations and manage permitted investment funds, including alternative investment structures.
Capital Markets: Businesses can explore broker-dealer operations, investment banking, custody, clearing, exchange participation and other regulated capital market activities.
Insurance and Reinsurance: Eligible insurance companies and intermediaries can establish operations for permitted international insurance and reinsurance activities.
Fintech Businesses: Technology-driven financial businesses can explore permitted fintech activities and regulatory frameworks.
Aircraft and Ship Leasing: GIFT City offers opportunities for eligible entities involved in aircraft leasing, ship leasing and associated financial activities.
Global In-House Centres: International businesses can explore eligible global in-house and financial support operations within the GIFT City ecosystem.
The suitability of each structure depends on the applicable IFSCA regulations, authorisation requirements and business model.
GIFT City IFSC Tax Benefits: Why Are Businesses Interested?
One of the biggest reasons businesses consider GIFT City is its specialised tax framework.
The Finance Act, 2026 introduced a significant extension to the tax holiday available to eligible IFSC units.
Major Tax Benefits of GIFT City
1. Extended Income Tax Holiday
Under Section 147 of the Income-tax Act, 2025, eligible IFSC units can claim a 100% deduction on qualifying business income for 20 consecutive tax years out of a 25-year period, at the option of the eligible unit.
The period is linked to the relevant year of registration or permission under the applicable provisions.
2. Concessional Tax Treatment After the Tax Holiday
Qualifying business income covered by the relevant provisions is subject to a 15% tax rate after the deduction period expires, subject to applicable conditions.
3. GST Benefits
Eligible supplies of services to offshore clients and qualifying transactions within the SEZ framework may receive zero-rated treatment or other prescribed GST relief. Businesses must satisfy the relevant conditions and documentation requirements.
4. Customs Duty Benefits
Eligible imports into the SEZ may qualify for customs duty exemptions or concessions under the applicable SEZ provisions.
5. Capital Market Transaction Benefits
Specified transactions on recognised IFSC exchanges may qualify for exemptions from Securities Transaction Tax (STT), Commodities Transaction Tax (CTT) and stamp duty, subject to applicable conditions.
6. Foreign Currency Transactions
The IFSC framework supports eligible international financial transactions in foreign currencies, subject to regulatory and operational requirements.
Important: These benefits are not automatic for every company located in GIFT City. Eligibility, approved activities, commencement dates, registration and tax conditions must be examined before claiming any exemption or deduction.
How to Set Up a Company in GIFT City IFSC: Step-by-Step Process
Businesses planning to establish operations in GIFT City should follow a structured registration and approval process.
Step 1: Identify the Business Activity
Determine whether the proposed activity falls under banking, fund management, insurance, capital markets, fintech, leasing or another permitted IFSC category.
Step 2: Select the Appropriate Legal Structure
Evaluate whether a company, LLP or eligible branch structure is suitable under the relevant regulatory framework.
Step 3: Prepare the Business Plan
Develop a detailed business plan covering proposed activities, target markets, ownership, financial projections, operational arrangements and governance.
Step 4: Evaluate Regulatory Requirements
Review applicable IFSCA regulations, eligibility criteria, capital requirements, fit-and-proper conditions, infrastructure and personnel requirements.
Step 5: Incorporation and Regulatory Application
Complete the applicable entity formation and submit the relevant application through the IFSCA Single Window IT System (SWITS), along with prescribed supporting documents.
Step 6: Obtain Authorisation and Establish Operations
Complete the required regulatory formalities, establish the approved operational setup and fulfil applicable conditions before commencing regulated activities.
Step 7: Implement Tax and Compliance Systems
Set up accounting, financial reporting, tax planning, audit, regulatory reporting and internal control systems.
Who Should Consider Establishing a Business in GIFT City?
GIFT City may be particularly relevant for:
- Indian financial institutions planning international expansion.
- Foreign banks and financial service providers entering India.
- Alternative investment fund managers and investment professionals.
- Fintech companies offering eligible financial technology services.
- Insurance and reinsurance businesses.
- Aircraft and ship leasing companies.
- Multinational corporations planning eligible global financial operations.
- Indian promoters exploring international investment structures.
- Businesses seeking a regulated platform for cross-border financial services.
For startups, the key question is whether the proposed activity justifies the regulatory, capital and operational requirements of an IFSC entity.
FEMA, International Taxation and Regulatory Compliance in GIFT City
Although GIFT City operates under a specialised IFSC framework, businesses should not assume that all Indian regulatory and tax obligations disappear.
Important compliance areas include:
- IFSCA registration and ongoing regulatory reporting.
- Companies Act and LLP Act compliance, where applicable.
- FEMA and foreign exchange requirements.
- Income tax returns and applicable audit requirements.
- GST and SEZ documentation.
- Transfer pricing for applicable associated-enterprise transactions.
- Anti-money laundering and KYC requirements.
- Capital adequacy and governance obligations, where prescribed.
- Financial statements, statutory audit and internal controls.
For example, an IFSC fund management entity entering into transactions with an overseas associated enterprise may need to evaluate transfer pricing requirements and maintain appropriate documentation.
Similarly, foreign investment, borrowing, remittances and repatriation must be examined under the applicable regulatory framework.
Is GIFT City Better Than Singapore or Dubai for International Business?
Businesses often compare GIFT City with established international financial centres such as Singapore and Dubai.
However, the right choice depends on the target market, investor base, regulatory requirements, business activity and operational costs.
| Comparison | GIFT City IFSC | Singapore | Dubai |
| Location | India | Southeast Asia | Middle East |
| Regulatory environment | IFSCA framework | MAS and other regulators | Relevant UAE financial regulators |
| Tax framework | Specialised IFSC incentives | Singapore tax regime | UAE tax and free-zone framework |
| Currency operations | Permitted foreign currency transactions | International currency operations | International currency operations |
| India market access | Located within India | Cross-border access | Cross-border access |
| Best suited for | Eligible India-linked international financial activities | Regional and global financial operations | Middle East and international business |
GIFT City may be attractive for businesses seeking India-linked international financial operations. However, tax advantages alone should not determine the location of a business. Substance, regulatory permissions and commercial objectives remain essential.
Common Mistakes Businesses Should Avoid Before Setting Up in GIFT City
A poorly planned setup can create additional costs and compliance difficulties.
Some common mistakes include:
- Assuming every business is eligible for IFSC registration.
- Choosing a legal structure without reviewing regulatory requirements.
- Treating the tax holiday as an automatic exemption.
- Ignoring minimum capital and operational requirements.
- Failing to establish adequate business substance.
- Overlooking transfer pricing and FEMA obligations.
- Ignoring GST and SEZ documentation.
- Starting regulated operations before obtaining the required authorisation.
A proper feasibility assessment can help identify these risks before significant capital is committed.
How JJJ & Company LLP Can Help with GIFT City Business Setup and Advisory
Entering GIFT City requires coordinated planning across company law, international taxation, FEMA, regulatory compliance and financial structuring.
JJJ & Company LLP assists businesses in evaluating their GIFT City opportunities and managing the professional and compliance requirements associated with international business operations.
Our relevant advisory and professional service areas include:
- GIFT City business feasibility and structuring advisory.
- Company and LLP incorporation support.
- IFSCA application and regulatory coordination.
- FEMA and foreign investment advisory.
- International taxation and tax planning.
- Transfer pricing documentation and benchmarking.
- GST and SEZ compliance advisory.
- Accounting, audit and financial reporting.
- Corporate and regulatory compliance.
- Cross-border transaction and India entry advisory.
Whether you are an Indian entrepreneur, a foreign financial institution or an international business exploring GIFT City, the right professional guidance can help you evaluate the structure, understand the regulations and plan your operations effectively.
Connect with JJJ & Company LLP for professional guidance on GIFT City IFSC, international taxation, FEMA, company incorporation and regulatory advisory.
Frequently Asked Questions About GIFT City IFSC
1. What is GIFT City IFSC in India?
GIFT City IFSC is India’s first operational International Financial Services Centre, established to facilitate eligible international financial services within a specialised regulatory and business environment.
2. What are the tax benefits of GIFT City IFSC?
Eligible units can claim a 100% deduction on qualifying business income for 20 consecutive years out of a 25-year period under Section 147 of the Income-tax Act, 2025, subject to applicable conditions.
3. How can a company register in GIFT City?
The business must identify an eligible activity, select an appropriate structure, prepare the business plan, satisfy regulatory requirements and obtain applicable IFSCA authorisation through the prescribed application process.
4. Is IFSCA approval mandatory for GIFT City businesses?
Businesses conducting regulated financial activities must obtain the applicable registration or authorisation. Requirements depend on the proposed activity and regulatory category.
5. Can foreign companies establish operations in GIFT City?
Yes, eligible foreign companies can explore permitted structures and financial activities, subject to IFSCA, FEMA, SEZ and other applicable requirements.
6. Is GST applicable in GIFT City IFSC?
Specified transactions and qualifying supplies may receive GST exemptions or zero-rated treatment under applicable provisions. It is not a blanket GST exemption for every transaction.
7. Can startups establish businesses in GIFT City?
Eligible startups can explore opportunities in fintech, financial services and other permitted activities. They must satisfy the applicable registration, capital, governance and operational requirements.
8. Why should businesses consult a Chartered Accountant before setting up in GIFT City?
Professional advice helps businesses evaluate tax eligibility, entity structure, FEMA implications, accounting, transfer pricing, regulatory filings and ongoing compliance before committing resources.
Conclusion: Is GIFT City the Right Opportunity for Your Business?
GIFT City is creating new opportunities for India’s participation in international financial markets. Its specialised regulatory framework, expanding financial ecosystem and enhanced tax incentives make it an important location for eligible financial institutions, investment managers, fintech businesses and international service providers.
However, successful establishment requires more than incorporating an entity. Businesses must carefully assess eligibility, tax treatment, regulatory permissions, operational substance and ongoing compliance.
JJJ & Company LLP can help businesses navigate the financial, taxation and regulatory considerations involved in exploring GIFT City IFSC, supporting informed decisions and sustainable business expansion.
