India is steadily making its mark on the global financial map, and at the center of this transformation is GIFT City (Gujarat International Finance Tec-City). Located between Ahmedabad and Gandhinagar, GIFT City is India’s first operational smart city and international financial services center (IFSC), built with the vision of becoming a world-class financial and IT services hub.
What is GIFT City?
GIFT City is a futuristic business district that brings together finance, technology, and urban infrastructure under one roof. Developed by the Government of Gujarat in collaboration with the Government of India, it is designed to rival established global financial centers like Dubai, Singapore, and Hong Kong.
Key Features of GIFT City
- International Financial Services Centre (IFSC):
GIFT City hosts India’s first IFSC, enabling global and domestic institutions to offer financial services outside the purview of standard Indian regulations—making it a gateway for international finance in India. - Special Economic Zone (SEZ):
The city includes a multi-service SEZ offering benefits like tax exemptions, simplified regulatory procedures, and a business-friendly environment for companies in finance, IT, and more. - State-of-the-Art Infrastructure:
From underground utility tunnels and district cooling systems to automated waste collection and smart surveillance, GIFT City is built with cutting-edge infrastructure and sustainability in mind. - Walk-to-Work Concept:
Designed for seamless living, GIFT City promotes the walk-to-work lifestyle by integrating office spaces, residential complexes, schools, and social zones within the same ecosystem.
India’s first International Financial Services Centre (IFSC), offers several taxation benefits to attract global and domestic financial institutions, fintech firms, and related services. Here are the key tax benefits available in GIFT City, especially under the IFSC framework:
1. Income Tax Benefits
For Units in IFSC:
- 100% income tax exemption for 10 consecutive years out of 15 years under Section 80LA of the Income Tax Act.
- Units can choose any 10 years out of the 15-year block for claiming this exemption.
- No Minimum Alternate Tax (MAT) for companies opting under the new tax regime (Section 115BAA).
- MAT at 9% (instead of 18.5%) applies for companies under the old tax regime.
2. Securities Transaction Tax (STT), Commodity Transaction Tax (CTT), Stamp Duty
- No STT, CTT, or stamp duty on transactions undertaken on IFSC exchanges (e.g., India INX, NSE IFSC).
3. Goods and Services Tax (GST)
- Supply of services to or by IFSC units is treated as zero-rated supply (like exports), meaning:
- No GST payable; and
- Input tax credit (ITC) is available and can be claimed as a refund.
4. Capital Gains Tax
- Exemption from capital gains tax for certain securities transactions undertaken by non-residents on IFSC exchanges.
5. Transfer Pricing & Safe Harbour
- Easier fund movement, FEMA exemptions for certain capital account transactions.
6. Other GIFT City Taxation Benefits
- State Subsidies: Units in IFSC can avail of state subsidies on various expenses, including lease rentals, provident fund contributions, and electricity charges, further reducing their operational costs.
- Transaction Tax and Stamp Duty Exemptions: Investors benefit from exemptions on specific transaction taxes and stamp duty on trades executed on IFSC exchanges.
- Reduced Withholding Tax on Interest: For overseas borrowings by IFSC units, the withholding tax on interest payments is reduced to 9% for long-term or rupee-denominated bonds listed on an IFSC stock exchange, compared to the standard withholding tax rate.
7. For Individuals:
- Non-residents (including NRIs) investing in IFSC units may enjoy tax exemptions on certain incomes, like:
- Interest income on foreign currency loans
- Specified capital gains
Fintech Opportunities in GIFT City
Gujarat International Finance Tec-City (GIFT City) is emerging as a premier global financial hub, offering a wealth of opportunities for fintech companies. Here are some key advantages and prospects:
1. Strategic Regulatory Environment
- IFSC (International Financial Services Centre): Operates under a unified regulator (IFSCA), offering relaxed and progressive regulations tailored for innovation.
- Sandbox Facilities: Ideal for testing fintech products in a controlled environment with regulatory support.
2. Tax Incentives
- 100% income tax exemption for 10 consecutive years out of 15.
- No securities transaction tax, commodity transaction tax, or long-term capital gains tax for IFSC units.
3. Access to Global Markets
- GIFT City allows fintechs to serve both domestic and international clients, especially in cross-border payments, remittances, wealth tech, and crypto/blockchain services.
4. Infrastructure & Ecosystem
- State-of-the-art physical and digital infrastructure.
- Co-location with major global banks, insurance firms, and capital market players fosters collaboration.
5. Growth Areas for Fintechs
- Digital Banking & Neo-banking
- Cross-border Payments & Remittances
- Blockchain & Crypto Solutions (regulated)
- Insurtech & Wealthtech
- RegTech & Compliance Automation
- Green and Sustainable Finance Platforms
GIFT City is positioning itself as India’s answer to Singapore and Dubai for international financial services. For fintech startups and scale-ups looking to expand or innovate, it offers a high-growth, low-friction environment.
Global Participation and Recent Developments
- Major Institutions:
GIFT City is already home to top financial giants like JPMorgan, HSBC, and the Bombay Stock Exchange (BSE)’s international exchange. - India International Bullion Exchange (IIBX):
It also houses India’s first international bullion exchange, further strengthening its position in global trade. - Foreign Investments:
In October 2024, Abu Dhabi Investment Authority (ADIA) launched a $4–5 billion fund based in GIFT City, highlighting growing international confidence in the hub. - Global Education:
Australian universities opened campuses here in late 2023, signaling a future where GIFT is not just a financial but also an educational and innovation center. - Regulatory Support:
The Reserve Bank of India continues to broaden GIFT City’s scope by expanding foreign currency account usage and simplifying compliance for global investors.
Life in GIFT City
While GIFT City is still evolving in terms of residential and entertainment infrastructure, the foundation is strong. It offers clean, green surroundings, world-class roads, and emerging lifestyle amenities—making it attractive not just for businesses but also for professionals and families looking to relocate.
Conclusion
GIFT City is more than just a smart city—it’s a symbol of India’s ambition to become a leader in global finance and innovation. With strong government backing, robust infrastructure, and increasing global interest, GIFT City is well on its way to becoming the financial nerve center of India.
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