Quick Answer
GIFT City IFSC is India’s only international financial services center, regulated by a single authority the IFSCA. Businesses set up here to access India-linked international finance with tax incentives, foreign-currency operations, and a unified licensing regime. Fund managers, insurers, and financial services firms use it as an onshore alternative to Mauritius, Singapore, and Cayman.
GIFT City has moved from concept to operating reality. The Corporate Laws Amendment Bill 2026 now lets IFSC units keep their books, issue share capital, and file financial statements in foreign currency, a genuinely new provision that removes a long-standing friction for foreign-facing entities. This guide covers what GIFT City is, how the IFSCA regulates it, the exact steps to set up an entity, the 2026 amendment provisions, tax benefits, and the fund and insurance structures available.
What Is GIFT City and the IFSC?
GIFT City – Gujarat International Finance Tec-City is a planned business district in Gandhinagar, Gujarat. Inside it sits India’s first and only International Financial Services Center (IFSC).
An IFSC is a jurisdiction that provides financial services to non-residents and residents in a currency other than the Indian rupee. For regulatory and tax purposes, a unit in the IFSC is treated as a non-resident. It operates in foreign currency, serves cross-border clients, and sits outside much of India’s domestic financial regulation.
The IFSC exists to bring back to Indian shores the international financial business that Indian firms and clients previously routed through offshore centers. Trading, fund management, banking, insurance, and aircraft and ship leasing all operate here.
IFSCA: The Unified Regulator
The International Financial Services Centres Authority (IFSCA), established under the IFSCA Act, 2019, is the single regulator for all financial services in GIFT City IFSC.
Before the IFSCA, four separate regulators governed IFSC activity:
- RBI: banking
- SEBI: securities and funds
- IRDAI: insurance
- PFRDA: pensions
The IFSCA now replaces all four for IFSC entities. One authority issues your license, sets your compliance obligations, and supervises your operations. You deal with a single regulator instead of four this is the structural advantage GIFT City offers over operating across India’s fragmented domestic regime.
This unified model matters when you compare GIFT City to offshore centers. You get a single Indian regulator, Indian legal recourse, and a domestic time zone, without the multi-regulator complexity of onshore India.
Setting Up an Entity in GIFT City: Process
Setting up in GIFT City involves four stages. You register a company, obtain IFSCA authorization for your activity, and clear SEZ compliance, because the IFSC sits inside a Special Economic Zone.
Step 1: Determine the Business Activity and Applicable IFSCA Framework
Identify your activity first. The IFSCA regulates each activity under its own framework – banking, capital markets, fund management, insurance, bullion, and finance company activity each have distinct regulations and capital requirements.
Your activity determines which license you need, your minimum capital, and your ongoing compliance load. Fix this before incorporation, because it shapes every later step.
Step 2: Incorporate the Entity
Incorporate the entity under the Companies Act, 2013, through the Ministry of Corporate Affairs. A foreign parent can hold the shares directly. If you are structuring foreign ownership into an Indian entity for the first time, our Foreign Company Incorporation guide covers the base incorporation route, and our FDI guide covers the inbound investment rules that apply.
The entity can be a new company, a branch, or a subsidiary, depending on your structure and the activity you selected in Step 1.
Step 3: Obtain IFSCA Registration/Licence
Apply to the IFSCA for registration or a license under the framework that governs your activity. The application specifies your activity, your capital, your key management, and your compliance setup.
The IFSCA reviews the application against the relevant activity regulations and issues the registration or license. You cannot begin regulated operations until this is granted.
Step 4: SEZ Compliance
The IFSC operates within a Special Economic Zone, so the SEZ Act, 2005 applies as an overlay. You need a Letter of Approval (LoA) from the Development Commissioner of the SEZ.
The LoA authorizes your unit to operate inside the SEZ and unlocks the SEZ-linked tax and duty benefits. IFSCA registration and the SEZ LoA are separate approvals you need both.
Foreign Currency Accounts and Share Capital: 2026 Amendment Bill Provisions
The Corporate Laws Amendment Bill 2026 introduces a provision that directly benefits IFSC units. Under the amendment, an IFSC unit may:
- Maintain its books of account in a foreign currency
- Issue share capital in a foreign currency
- Prepare and file its financial statements in a foreign currency
This is new. Until now, companies incorporated in India worked in Indian rupees for statutory accounting and capital, even when their entire business ran in dollars or euros. That mismatch created conversion friction, accounting complexity, and reporting distortion for foreign-facing IFSC units.
The 2026 provision aligns the statutory framework with commercial reality. A dollar-denominated fund or a euro-denominated leasing unit can now keep its capital, its accounts, and its statements in the currency it actually trades in. For foreign investors and parent companies, this removes a real operational barrier to using GIFT City.
Verify the Bill’s final form and commencement date before you rely on it amendment bills change between introduction and enactment.
Tax Benefits for IFSC Units
GIFT City IFSC units access a set of tax incentives designed to make the center competitive with offshore jurisdictions. The core benefits include:
- 100% profit-linked deduction for a defined number of years within an initial period, for eligible IFSC units
- Exemptions on specified capital gains for certain instruments traded on IFSC exchanges
- Reduced or exempt rates on interest income for non-residents
- GST relief on services provided to IFSC units and by IFSC units to offshore clients
Tax incentives for IFSC units are revised periodically through the annual Finance Act. The exact deduction rate, eligibility window, and exemptions change from year to year. Confirm every tax position against the current Finance Act and the notifications in force for the relevant assessment year before you structure around it.
The combination of a single regulator, foreign-currency operations, and these tax incentives is what positions GIFT City as a real alternative to routing business through offshore centers.
Fund Management and Insurance Structures in GIFT City
Two activities drive most inquiries about GIFT City: fund management and insurance. Both operate under dedicated IFSCA frameworks.
Fund Management Entities (FMEs)
A Fund Management Entity (FME) is the IFSCA-regulated vehicle for running funds from GIFT City. The IFSCA Fund Management Regulations govern FMEs and the schemes they operate.
The FME framework is positioned as an onshore alternative to Mauritius, Singapore, and Cayman. A foreign fund manager can register an FME in GIFT City and run a fund from India instead of from an offshore center. The FME structure offers:
- A single Indian regulator for the fund and its manager
- Foreign-currency fund operations
- Access to IFSC tax incentives for eligible schemes
- Indian legal recourse and a domestic operating base
Choose a GIFT City FME over an offshore center if Indian legal recourse, a domestic time zone, and proximity to India-linked deal flow matter more to you than the established track record of Mauritius or Singapore. For funds whose investors demand a familiar offshore wrapper, the offshore route may still fit evaluate against your investor base.
Insurance and Reinsurance
Insurance and reinsurance operate under the IFSCA’s insurance framework. Insurers, reinsurers, and intermediaries can set up IFSC insurance offices to write international and cross-border business in foreign currency.
The structure suits insurers and reinsurers seeking an Indian base for offshore risk, and intermediaries placing international business. As with every activity, the IFSCA’s insurance regulations set the capital, licensing, and compliance requirements fix your activity classification in Step 1 before you proceed.
Set Up in GIFT City with Altacit Global
GIFT City works when the activity classification, the IFSCA license, the SEZ approval, and the tax position are designed together from the start. Altacit Global advises fund managers, insurers, and financial services firms on IFSC entity setup, IFSCA registration, and GIFT City tax structuring, from offices in Chennai, Bangalore, and Hyderabad. To structure your GIFT City entry correctly, contact Altacit Global at info@altacit.com.
Frequently Asked Questions: GIFT City IFSC Legal
Q1: Can a foreign fund manager set up a fund in GIFT City instead of Mauritius or Singapore?
Yes. A foreign fund manager registers a Fund Management Entity (FME) with the IFSCA and runs the fund from GIFT City. The FME framework is built as an onshore alternative to Mauritius, Singapore, and Cayman. It offers a single Indian regulator, foreign-currency operations, IFSC tax incentives for eligible schemes, and Indian legal recourse. Choose GIFT City when domestic legal certainty and India-linked deal flow outweigh the established track record of the traditional offshore centers.
Q1: Is a GIFT City IFSC entity subject to Indian income tax?
An IFSC unit is subject to Indian income tax law, but it accesses specific incentives that reduce or eliminate tax on eligible income. These include a 100% profit-linked deduction for a defined period for eligible units, capital gains exemptions on specified IFSC-traded instruments, and relief on certain non-resident interest income. The exact positions are set by the Finance Act and change annually. Confirm the current rates and eligibility for the relevant assessment year before you structure.
Q1: Does an IFSC entity need separate RBI approval in addition to IFSCA registration?
No. The IFSCA replaced the RBI, SEBI, IRDAI, and PFRDA as the single regulator for IFSC entities. You obtain your registration or license from the IFSCA under the framework for your activity, plus a Letter of Approval from the SEZ Development Commissioner. You deal with the IFSCA as your financial services regulator, not the RBI. This unified structure is the core advantage GIFT City offers over operating across India’s separate domestic regulators.
Q4: Is Madrid Protocol filing cheaper than filing directly in each country?
For most multi-country filings, yes. One international application through WIPO uses a single fee structure and removes the need for a local agent in every country at the filing stage. Direct national filing means separate national fees plus local agent fees in each country. The Madrid route also saves on the back end: one centralized renewal every 10 years and one point for recording changes, instead of separate renewals and change filings per country. The saving grows with the number of countries. For a single-country filing, direct national filing may cost the same or less; the Madrid advantage scales with the size of the portfolio.
