Setting up of Finance Company in GIFT IFSC

Bharat Prajapat

About GIFT city:

GIFT City is the only operational green smart city in India, located between Ahmedabad and Gandhinagar on the bank of the river Sabarmati.

GIFT City includes office spaces, residential apartments, schools, colleges, hospitals, hotels, clubs, retail, and various recreational facilities, which makes this city a truly “walk to work” city. Gift City consists of a conducive multi-service SEZ (special economic zone) and an exclusive domestic area.

It is being developed as a multi-service special economic zone and a global financial service hub having a competitive tax regime to attract financial service providers such as banking units, insurance companies, capital market intermediary, Finance company, Fintech and ancillary services providers to provide their services globally and also invite inbound and outbound individuals and corporates around the world to use the quality financial service products at India’s first IFSC platform.

Why Does India Need IFSC ?

• To bring financial service experts sitting offshore back to Indian shores and transform India as a talent hub
• Development like New York, London, Shinjuku, Shanghai, Frankfurt, Tokyo, Hong Kong and Singapore
• India is one of the fastest growing economies in the world and a large scale consumer of IFS
• IFSC a jurisdiction that provides International financial services to non residents and residents
• To realise the vision of the Government of India to emerge as a major economic power by facilitating the development of a strong base of International Financial Services in the country.
• To facilitate the implementation of the Government’s strategy for the development of a financial hub in the South Asian sub-continent.
• To position IFSC as a world-class zone for the long-term provision of office/ service accommodation and high technological, economic and commercial infrastructure.
• The Indian workforce is adept at the requisite knowledge and skillset
• People of Indian origin are often part of the top level management of

KEY Benefits

• State-of-the-art infrastructure at par with other global financial Centres
• Only place in India that allows offshore transactions
• India’s first Bullion Exchanges set up in GIFT IFSC where eligible market participants can import precious metals like gold, silver etc.
• Lower operating costs.
• 100% income tax exemption for 10 consecutive years out of 15 years.
• No GST

– On services or goods acquired by IFSC unit from DTA.

– On services provided by IFSC unit to any other IFSC Units & offshore clients.

• No Minimum Alternate Tax (MAT), if company opted for new tax regime of income tax act.
• Exemption from custom duty for all goods imported in the SEZ used for authorized operations.

Other Fiscal Incentives

Finance Company in GIFT IFSC

IFSCA notified the International Financial Services Centre Authority (Finance Company) Regulations, 2021 (FC Regulations), on 25 March 2021

A finance company (FC) is a financial institution separately incorporated to deal in one or more of the permissible activities in an IFSC without accepting deposits from the public and not registered as a banking unit with the IFSCA.

The FC Regulations have been drafted to enable global financial services companies to set up holding companies, carry out investing/lending activities, undertake global treasury operations and provide various financial services from the IFSC GIFT City.

Permissible activities

Prudential requirements

• Maintain a minimum capital ratio of 8% of its regulatory capital to risk-weighted assets or such percentage as specified by the IFSCA.
• Maintain liquidity coverage ratio (LCR) on a stand-alone basis at all times as determined by the IFSCA; for the finance unit, the parent entity may be allowed to maintain the LCR after obtaining the specific approval of the IFSCA.
• Maintain exposure ceiling: The sum of all exposures to a single counterparty or group of connected counterparties shall not exceed 25% of the available eligible capital base without the approval of the Authority.

Minimum owned capital

Statutory fees to set up Finance Company in GIFT IFSC

Registration of Finance Company with IFSCA