Taxation in GIFT City – How India’s Global Financial Hub Offers Tax Benefits

Taxation in GIFT City: Gujarat International Finance Tec-City (GIFT City), located in Gandhinagar, Gujarat, is India’s first operational smart city and International Financial Services Centre (IFSC). Designed to be a global financial hub, GIFT City offers a range of tax incentives and regulatory relaxations that make it a highly attractive destination for financial institutions, fintech startups, global investment firms, and other businesses.

In this article, we explore the various taxation benefits available in GIFT City and understand how they contribute to its positioning as India’s global financial gateway.

What is GIFT City IFSC?

The International Financial Services Centre (IFSC) in GIFT City provides offshore-like benefits while being located onshore in India. It is governed by the International Financial Services Centres Authority (IFSCA), a unified regulator that oversees all financial activities within the zone.

Key Tax Benefits in GIFT City IFSC

1. Income Tax Exemption

• Units set up in GIFT City IFSC enjoy 100% tax exemption for any 10 consecutive years out of 15 years under Section 80LA of the Income Tax Act.
• Applies to financial institutions, fund managers, insurance providers, and fintech firms.

2. MAT/AMT at Reduced Rate

• Minimum Alternate Tax (MAT) or Alternate Minimum Tax (AMT) is applicable at 9% (plus surcharge and cess) instead of the standard 18.5%.
• If a company opts for the new tax regime, MAT/AMT is not applicable.

3. Tax Exemptions for Foreign Investors

• Interest Income: Non-residents investing in IFSC units are exempted from tax on interest income.
• Capital Gains: Exemption from capital gains tax for specified securities listed on IFSC exchanges.
• Dividend Income: Taxed at a concessional rate of 10%, which is lower than standard rates.

4. Goods and Services Tax (GST)

• Financial services provided by IFSC units to non-residents are exempt from GST.
• Domestic services or services rendered to residents may still attract GST based on activity.

5. No Stamp Duty

• Transactions carried out in the IFSC are exempt from stamp duty, which is otherwise a major cost for financial services transactions.

6. No Securities Transaction Tax (STT)

• Trading in securities listed on IFSC exchanges (e.g., India INX, NSE IFSC) do not attract STT.

Who Can Benefit?

• Banks and NBFCs operating in international lending or trade finance.
• Mutual fund and alternative investment fund (AIF) managers.
• Reinsurance companies.
• Fintech and digital asset firms.
• Institutional and retail foreign investors.

Regulatory Simplicity

• A single-window clearance system with IFSCA makes it easier for companies to set up.
• Liberalised foreign exchange regulations apply.
• Access to international markets while staying under Indian jurisdiction.

Comparison: GIFT City IFSC vs Other Indian Zones

Feature	GIFT City IFSC	SEZ	DTA (Domestic Tariff Area)
Income Tax Exemption	100% for 10 years	Limited	None
MAT/AMT	9%	15-18.5%	15-18.5%
GST Exemption	Yes (for eligible services)	Partial	No
Stamp Duty	No	Yes	Yes
STT	No	Yes	Yes

Challenges and Considerations

• Regulatory awareness and evolving policies.
• Need for infrastructure scaling.
• Limited awareness among global players.

Conclusion

GIFT City IFSC offers a compelling package of tax incentives and regulatory support that positions it as India’s response to offshore financial centres like Dubai or Singapore. For businesses aiming to reduce tax burdens, expand globally, or invest in India’s financial ecosystem, GIFT City is a golden opportunity.

FAQs

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