GIFT City is India's only International Financial Services Centre, with its own regulator, its own currency rules and a genuine tax holiday. It is also widely misunderstood as a cheaper place to run an ordinary Indian business, which it is not. The honest first question is whether what you do is on the permitted list at all.
The permitted list is specific: banking units, insurance offices, fund managers and AIFs, exchanges, depositories and clearing corporations, broking and merchant banking, aircraft and ship leasing, bullion, finance companies, ancillary services and global in-house centres.
It is a deduction on qualifying income, not a blanket exemption. You still file a return, you are still audited, non-qualifying income is taxed normally, and the claim needs an accountant's certificate.
You choose which ten consecutive years out of the fifteen to claim. Because the fifteen run from registration rather than from first profit, registering long before you trade quietly burns the window.
Authorisation from IFSCA for the activity, unit approval and a letter of approval on the special economic zone side, and then the entity itself. Sequence matters and the activity determines the order.
An IFSC unit transacts in freely convertible foreign currency, with the rupee permitted only for limited purposes. That shapes your banking, your invoicing and your accounting from day one.
Managing offshore money from India.
Where the leasing regime is the whole point.
Serving group entities abroad.
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💬 Get my quote →GIFT City, at Gandhinagar in Gujarat, contains India's only International Financial Services Centre. An IFSC is a distinct regulatory perimeter inside India that is treated as offshore for many purposes: it has a single unified regulator in the International Financial Services Centres Authority, its own set of permitted activities, and it operates in freely convertible foreign currency rather than in rupees. It exists so that business Indian institutions would otherwise do from Singapore or Dubai can be done from India.
A deduction of 100% of the unit's income for any ten consecutive assessment years, chosen by you, out of a fifteen-year window. The fifteen years run from the assessment year relevant to the year in which registration under the IFSCA Act was obtained. The income has to come from approved IFSC activities and is generally required to be received in convertible foreign exchange, and the claim is supported by an accountant's certificate. Note what it is not: it is a deduction on qualifying income, not an exemption from the tax system. You still register, file, and get audited, and any income outside the approved activities is taxed in the ordinary way.
Almost certainly not, and this is the most common misunderstanding we are asked about. The regime is built for specified financial and related activities serving largely offshore clients. An Indian consulting firm, a domestic trading company, an e-commerce business or a software company selling to Indian customers does not become an IFSC unit by taking an address there. If your customers are in India and your revenue is in rupees, this is the wrong structure and no amount of paperwork makes it the right one.
Banking through an IFSC Banking Unit, insurance and reinsurance offices, fund management including alternative investment funds, stock exchanges, depositories and clearing corporations, broking and merchant banking, aircraft and ship leasing, bullion market participants, finance companies, a range of ancillary services such as legal, accounting and administration, and global in-house centres serving group entities abroad. The list is set by IFSCA and is extended from time to time, so an activity that was outside it a year ago is worth re-checking.
Yes — global in-house centres are a permitted IFSC activity, which makes the regime worth comparing against an ordinary subsidiary if the centre serves group entities outside India. The comparison is not automatic in the IFSC's favour: an ordinary captive is remunerated on cost plus a markup and taxed at the domestic rate, while an IFSC unit may claim the deduction but must operate in foreign currency, satisfy the IFSCA conditions and sit in Gandhinagar. Where the talent has to be is often what decides it.
Favourably, for the business the regime is designed for. Services supplied to offshore clients and, broadly, transactions within the IFSC receive beneficial treatment, and trades on an IFSC exchange are outside the securities transaction taxes that apply on domestic exchanges. As always the treatment follows the specific supply rather than the address, so the position for a particular revenue stream should be confirmed rather than assumed from the regime's reputation.
Three tracks that have to be sequenced: authorisation from IFSCA for the activity you intend to carry on, unit approval and a letter of approval on the special economic zone side, and the entity itself — a company, an LLP or a branch depending on the activity. The IFSCA application is the long pole and the timeline depends heavily on the activity: a fund management entity is a different exercise from an ancillary services unit. Anyone quoting you a fixed number of weeks before knowing which authorisation you need is guessing.
An IFSC unit sits in a different position from an ordinary domestic company under the exchange-control rules, which is the structural reason the regime can work in foreign currency at all. The precise treatment varies by activity and by the transaction in question, and it is one of the points most worth getting confirmed in writing for your specific case rather than taken from a summary — including this one. It affects how you fund the unit, how you bank and how money moves in and out.
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