How to Start a Business in GIFT City, International Financial Services Centre Gujarat India
GIFT City, Gujarat is situated on the banks of the Sabarmati River and is located in Gandhinagar, the capital city of Gujarat. The city is a collaborative project between the Government of Gujarat and Infrastructure Leasing & Financial Services (IL&FS). It was conceived with the aim of creating an international financial center and a smart city and operates as a Special Economic Zone, offering various incentives and benefits to businesses operating within its boundaries. It provides a conducive environment for financial and IT/ITES companies.
The total area for the development of GIFT City is 886 acres out of which the SEZ (Special Economic Zone) constitutes 261 acres. The project area under development can hence be classified under the SEZ area and the Non-SEZ area (also known as the Domestic Tariff area or the DTA)
GIFT City focuses on various verticals, including banking, insurance, capital markets, asset management, and offshore services. It aims to be a hub for financial services in India. The city boasts world-class infrastructure and modern amenities. It features state-of-the-art office spaces, residential complexes, educational institutions, healthcare facilities, hotels, and recreational areas. It has its own regulatory authority, the International Financial Services Centre Authority (IFSCA), which regulates and governs financial services activities within the city. It aims to create a robust and business-friendly regulatory framework.
What is the Goal of GIFT City, Gujarat
Well-connected with major domestic and international destinations and direct air connectivity to major cities in India, makes it a perfect connectivity to various global financial centers. GIFT City houses India’s first International Financial Services Centre (IFSC) and has an international stock exchange viz the Gujarat International Finance Tec-City International Financial Services Centre (GIFT IFSC) Exchange. It provides a platform for global companies to raise capital and trade in various financial instruments. GIFT City is committed to sustainable development practices and it aims to provide a world-class ecosystem for businesses and contribute to India’s growth as a global financial powerhouse.
TAX Benefits to Setup Business in GIFT City, Gujarat
Being India’s first international financial services center (IFSC), govt. of Gujarat and the Indian government has declared various tax incentives to attract foreign and domestic investment in GIFT city. GIFT city was declared a multi-service Special Economic Zone (SEZ) in 2015 and the Union Budget 2016-17 provided it with a competitive tax regime.
Here is the list of TAX benefits you will get in GIFT City if you establish a business there
Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT) are not applicable to companies in IFSC opting for a new tax regime.
100% tax exemption for 10 consecutive years out of 15 years.
MAT / AMT @ 9% of book profits applies to the Company/others set up as a unit in IFSC. MAT is not applicable to companies in IFSC opting for the new tax regime
From 01 April 2020, dividend income distributed by Company in IFSC is to be taxed in the hands of the shareholder.
Long Term Bonds & Rupee Denominated Bonds listed on IFSC exchanges are taxable at a lower rate of 4%
Tax holiday for capital gains for aircraft leasing companies, tax exemption for aircraft lease rentals
State subsidies such as 100 percent reimbursement of stamp duty and registration fee, 100 percent reimbursement of electricity duty and Rs. 1 subsidy on power tariff for five years, 100 percent reimbursement of employer’s provident fund contribution, and lease rental subsidy for every 50 sq ft per employee
National/foreign exchanges set up under IFSC have total tax exemption from Security Transaction Tax (STT), Commodity Transaction Tax (CTT), Dividend Distribution Tax (DDT), Long Term Capital Gain (LTCG), Short Term Capital Gain (STCG).
No GST on services received by the unit in IFSC
GST applicable on services provided to DTA
No GST on transactions carried out in IFSC exchanges
Points to Consider Before Setting up a Business in Gift City, Gujarat
Gift City can be an exciting venture with numerous opportunities. Consider and navigate through these processes.
Legal and Regulatory Environment: Gift City operates under an SEZ framework, which provides various incentives and benefits to businesses. This is designed to promote ease of doing business and attract foreign investment.
Financial Services Hub: Gift City offers a wide range of financial products and services. It hosts India’s first International Financial Services Centre (IFSC), which provides a favorable ecosystem for banking, insurance, capital markets, and other financial activities.
Infrastructure and Connectivity: Accessible modern infrastructure facilities, including office spaces, residential areas, social amenities, and recreational facilities. It has well-planned roads, reliable power supply, advanced telecommunication services, and high-speed internet connectivity. The city is connected to major cities in Gujarat and other parts of India.
Tax Benefits: The IFSC in Gift City operates as a separate jurisdiction with its own tax and regulatory framework, providing advantages such as lower corporate tax rates and exemptions from certain duties and levies.
International Business Opportunities: Gift City aims to attract international businesses by providing a platform for offshore banking, international trade, and cross-border financial transactions. It also offers opportunities for global companies to set up offices or subsidiaries.
Regulatory Bodies and Institutions: Several regulatory bodies and institutions operate within Gift City to ensure compliance and facilitate business operations – including the International Financial Services Centre Authority (IFSCA), the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI) etc.
Skill Development and Talent Pool: Gift City focuses on developing a skilled workforce to support the growing business ecosystem. It offers training and skill development programs to create a talent pool specialized in finance, technology, and related sectors.
Business Support Services: Provides a range of business support services, including legal, accounting, consulting, and advisory services. Several professional service firms have set up offices in the city to cater to the needs of businesses operating there.
Collaboration and Networking: Gift City hosts various industry events, conferences, and networking platforms to foster collaboration and knowledge sharing among businesses, opportunities for business expansion, partnerships, and access to market insights.
Sustainability and Smart City Features: Gift City emphasizes sustainability and smart city features to create an environmentally friendly and technologically advanced business environment. It incorporates green building practices, efficient waste management systems, and digital infrastructure to enhance operational efficiency and reduce the ecological footprint.