GIFT City IFSC Setup: A Guide for Foreign Financial and Fund Companies

By March 2025, over 864 entities have been registered inside GIFT City’s International Financial Services Centre. More than 25,000 professionals are employed there. GIFT IFSC continues to improve its position in the Global Financial Centres Index, reflecting its growing importance as an international financial hub. GIFT City IFSC setup The Finance Act, 2025, expanded the availability of tax incentives for eligible IFSC units, while subsequent Budget 2026 proposals further extended the sunset dates and enhanced the deduction period under Section 80LA of the Income-tax Act, 1961. The IFSCA (Fund Management) Regulations 2025 replaced the earlier framework with something cleaner and more permissive for foreign fund managers. The pitch most advisors make is built around tax. That pitch is not wrong. It is just incomplete. A Japanese asset manager, a UAE family office, and a Singaporean fund management company each have a different answer to whether GIFT City makes sense for them specifically. Tax alone does not determine that answer.

What Is GIFT City IFSC, and Who Regulates It?

GIFT City IFSC setup operates inside a designated SEZ in Gandhinagar, Gujarat, regulated by the International Financial Services Centres Authority under the IFSCA Act 2019. IFSCA replaced the fragmented oversight of RBI, SEBI, IRDAI, and PFRDA for IFSC activities. Entities operate in foreign currency, and transactions with non-residents are treated as cross-border transactions, not domestic ones. One regulator, one application window, one compliance relationship. In mainland India, combining banking, fund management, and insurance activities means three separate regulators and three separate inspection regimes. In GIFT City, IFSCA covers the entire stack. The IFSC is technically inside India. Although geographically located in India, IFSC units operate under a distinct legal and regulatory framework and are eligible for specified regulatory, foreign exchange, and tax benefits under the IFSCA Act, the SEZ Act, FEMA, and the Income-tax Act. A fund registered in GIFT City investing in Indian equities through an FPI registration in accordance with the SEBI (Foreign Portfolio Investors) Regulations, 2019, FEMA and the applicable IFSCA regulations. . That is not a fiction. That is the statutory design.

What Entities Can Be Set Up Through GIFT City Company Registration?

GIFT City IFSC setup/ registration is available for five principal categories: IFSC Banking Units for foreign currency banking, Fund Management Entities regulated under the IFSCA (Fund Management) Regulations, 2025, capital market intermediaries under the IFSCA (CMI) Regulations 2021, insurance offices, and fintech entities. Each requires a separate IFSCA licence with different capital and compliance requirements.

Entity Type	Who It Suits	Minimum Net Worth
IFSC Banking Unit	Foreign banks wanting FX operations in India	Eligibility and capital requirements are governed by the IFSCA (Banking) Regulations and applicable IFSCA circulars
Fund Management Entity (FME)	Foreign fund managers, family offices	vary by category under the IFSCA (Fund Management) Regulations, 2025
Capital Market Intermediary	Brokers, advisers, research analysts	Category dependent
Insurance Office	Foreign insurers and reinsurers	Eligibility is governed by the applicable IFSCA (Insurance) Regulations, including prescribed requirements for the foreign insurer or reinsurer
Fintech Entity	Payment providers, regulatory sandboxes	Activity dependent

For most foreign financial companies evaluating GIFT City IFSC setup, the FME and the IBU are the two structures that matter. The FME launches AIF-equivalent funds. The IBU offers dollar-denominated lending, freely convertible foreign currencies and trade finance to Indian corporates and foreign entities without a full Indian banking subsidiary.

What Changed Under the IFSCA Fund Management Regulations 2025?

The 2025 Regulations replaced the 2022 framework with three tiers: Registered FME for funds up to USD 3 million per scheme with USD 5,00,000- 10,00,000  minimum net worth, Authorised FME for institutional-scale operations with USD 75,000 net worth, and Sponsored FME. The Family Investment Fund framework for UHNW family offices was introduced, and the first-close timeline extended from six to twelve months. Before the FIF framework, a UAE or Japanese family office setting up a fund in GIFT City had to use the AIF structure, designed for institutional fund managers. The FIF is lighter in governance, simpler in reporting, and built for family wealth management rather than third-party capital. For setting up a fund in GIFT City, minimum corpus is USD 3 million per scheme. The twelve-month first-close window addressed the most persistent complaint from smaller managers who needed more marketing time.

What Are the GIFT City Tax Benefits Under Section 80LA?

Section 80LA provides a 100% income deduction for the first ten consecutive assessment years. MAT applies at 9% against the standard 15% for mainland companies. GST is exempt on most international financial services as they qualified as zero rated supply. STT does not apply to IFSC exchange transactions. Capital gains on offshore fund relocation to GIFT City are tax neutral.

Tax Item	GIFT City IFSC	Mainland India
Corporate tax (Section 80LA)	0% years 1 to 10	Approx. 25.17% effective
MAT	9%	15%
GST on financial services	Exempt for most international services	18%
STT	Exempt	0.1% on equity delivery
Capital gains on fund relocation	Tax neutral	Standard capital gains

These benefits require genuine physical presence in GIFT City, income from specified eligible activities, and Form 10CCF filed with the income tax return..

How Does GIFT City Compare With Singapore and Mauritius?

For India-focused funds with 80% or more India allocation, GIFT City offers direct domestic market access, may reduce treaty-related considerations, but the applicability of the Principal Purpose Test (PPT) depends on the relevant tax treaty and facts of the transaction , and costs significantly less. Office space runs USD 1.5 to USD 4 per square foot per month versus three to five times more in Singapore. For multi-jurisdictional mandates, Singapore retains advantages in legal infrastructure, arbitration, and LP familiarity. Mauritius has faced increasing FATF and MLI scrutiny. Indian tax authorities actively examine Mauritius-originated structures. GIFT City may eliminates treaty shopping concerns entirely. The cost differential between Mauritius and GIFT City has narrowed to the point where GIFT City is the better answer for most India-focused capital today. An IFSC Banking Unit is regulated by the IFSCA, and certain RBI CRR and SLR requirements do not apply in the same manner as they do to domestic banks The offshore banking unit in GIFT City operates outside CRR and SLR requirements, serves non-resident clients in foreign currency, and is the lowest-friction route for foreign banks wanting dollar lending to Indian infrastructure or trade finance to Indian exporters.

What Is the GIFT City Company Registration Process?

GIFT City company registration follows six steps: confirm entity type and IFSCA licence category, secure physical office in GIFT City, incorporate under MCA with IFSC in the company name, apply for IFSCA licence, execute the Bond-cum-Letter of Undertaking with the Development Commissioner, and complete banking and PAN/TAN setup. Typical timeline from incorporation to operational readiness is six to twelve weeks. The company name must include IFSC. At least one Indian resident director is required. Foreign directors need apostilled documents and DSC procurement as with any Indian incorporation. IFSCA licence applications take 30 to 60 days in standard cases. The BLUT is a non-negotiable final step

Conclusion

GIFT City IFSC setup is past the experimental stage. Around eight  hundred entities, a unified regulator, a redesigned fund management framework, and Budget-backed tax incentives make it a serious jurisdiction for foreign financial companies with meaningful India exposure. The honest qualifier remains: Singapore still leads on legal infrastructure, arbitration, and LP familiarity for managers with multi-jurisdictional mandates. For Japan-based managers or UAE family offices whose mandate is entirely India-focused, GIFT City is the better answer on cost, market access, and treaty risk. Corporate Legit Consulting LLP advises foreign financial companies on GIFT City IFSC setup, IFSCA licence applications, FME incorporation, BLUT coordination, Section 80LA structuring, offshore banking unit setup, and ongoing IFSCA compliance. Reach out before selecting the entity structure.