International Financial Services Centre in GIFT City

Overview on International Financial Services Centre in GIFT City

An International Financial Services Centre (IFSC) is a jurisdiction that caters to customers outside the domestic economy, dealing with the flow of finance, financial products, and services across borders. The Gujarat International Finance Tec-City (GIFT City) is India’s first IFSC, located in Gandhinagar, Gujarat.

NRIs and foreign investors enjoy favorable tax rates on investments made in the IFSC this is the basic Benefits for NRIs and Foreign Investors, Numerous AIFs have been established in GIFT City, specifically catering to NRIs, providing them with diversified investment opportunities.

Investing in AIFs in GIFT City offers several benefits, including access to diverse and sophisticated investment products, tax incentives, and the ability to invest in a jurisdiction designed to attract international finance.

NRIs and foreign investors can also engage in derivative trading within the IFSC, benefiting from the regulatory and tax advantages provided by the GIFT City framework.

Resident Indians and the IFSC

Resident Indians do not receive tax breaks for investing through the IFSC. They can remit money to the IFSC through the RBI’s LRS, but investments can only be made in securities issued by entities outside India. Indian residents must report these holdings in the foreign assets schedule of their income tax return. Derivative trading is not permitted under LRS for resident Indians.

Services Provided by an International Financial Services Centre in GIFT City

• Global Tax Management and Cross-Border Tax Liability Optimization Services i.e A business opportunity for financial intermediaries, accountants, and law firms.
• Merger and Acquisition Activities services For trans-national corporations.
• Fund-Raising Services to For individuals, corporations, and governments.
• Asset Management and Global Portfolio Diversification Services for pension funds, insurance companies, and mutual funds.
• Risk Management Operations services Including insurance and reinsurance.
• Wealth Management & Comprehensive wealth management solutions.
• Corporate Treasury Management Operations services Involving fund-raising, liquidity investment and management, and asset-liability matching.

GIFT City’s IFSC provides a conducive environment for international financial activities, benefiting both NRIs and foreign investors with its regulatory and tax incentives. However, resident Indians face limitations and reporting requirements when investing through the IFSC.