GIFT City & IFSC Fund Setup
Fund setup in GIFT City IFSC under the IFSCA (Fund Management) Regulations 2022 — FME registration, AIF structuring (Category I, II, III), PPM filing, and USD-denominated banking. Key benefits: Section 80LA 10-year tax holiday for fund managers, Section 10(4D) exemption for non-resident investors, zero STT, and 18% GST exemption on management fees.
More details are coming soon. Contact us to get started.
Why GIFT City?
GIFT City (Gujarat International Finance Tec-City) houses India's only International Financial Services Centre (IFSC) under the Special Economic Zones Act, 2005 and the IFSC Authority Act, 2019. Funds set up here are treated as offshore for Indian regulatory purposes — allowing fund managers to compete directly with Singapore and Mauritius jurisdictions while remaining domiciled in India.
Fund manager tax holiday
Section 80LA — 10 years out of 15 years (100% of income)
Non-resident investor exemption
Section 10(4D) — business income from specified funds; Section 10(4E) — gains from transfer of non-debt units
GST on management fee
0% (vs. 18% for domestic AIFs)
STT/CTT
Zero on IFSC AIF transactions
Minimum scheme size
USD 3 million
Min. investor commitment
USD 1,50,000 (USD 40,000 for employees/directors of manager)
Sponsor commitment (Cat I/II)
Lower of USD 7,50,000 or 2.5% of corpus
Sponsor commitment (Cat III)
Lower of USD 1,500,000 or 5% of corpus
Setup timeline
30–60 working days from IFSCA application
What We Do
- Fund entity incorporation in GIFT City IFSC — trust, company, or LLP
- Fund Management Entity (FME) registration with IFSCA under the IFSCA (Fund Management) Regulations 2022
- AIF structure selection — Category I, II, or III across all permitted strategies
- PPM preparation and IFSCA filing (30 days before first close)
- Coordination with GIFT City bank for USD multi-currency account setup
- Advise on LRS structuring for resident Indian investors investing in GIFT City AIFs (net worth ≥ USD 1M in preceding FY)
- FDI, FPI, and FVCI route structuring for non-resident investors deploying into Indian investee companies
- Ongoing compliance: quarterly IFSCA filings, annual accounts, FME net worth maintenance
- Tax position certification for non-resident investors under Section 10(4D) and Section 10(4E)
- Section 80LA certification for fund managers claiming the 10-year tax holiday
- Coordinate with legal counsel on Investment Management Agreement and LPA
Frequently Asked Questions
Can a GIFT City AIF be registered by the same manager as an existing SEBI AIF?
Yes. A fund manager managing a SEBI-registered AIF can also set up a GIFT City AIF. The manager must establish a presence in GIFT City — either by opening a branch of the existing entity or incorporating a new subsidiary or FME in the IFSC. The two funds operate under separate regulatory frameworks (SEBI vs. IFSCA).
Can a GIFT City AIF invest in Indian companies?
Yes. A GIFT City AIF can invest in India via FDI, FPI, or FVCI routes depending on the fund strategy. The applicable route determines permissible instruments, sectoral caps, and FEMA reporting obligations. FDI permissibility in the investee company depends on the sector.
Can resident Indians invest in a GIFT City AIF?
Yes, subject to LRS limits. Resident Indian investors with net worth ≥ USD 1 million in the preceding financial year can invest via the Liberalised Remittance Scheme (LRS), currently capped at USD 2,50,000 per year. Anti-round-tripping rules apply — the fund cannot invest back into Indian assets through FVCI / FDI routes if funded predominantly by resident Indian LRS remittances.
What is a Fund Management Entity (FME)?
An FME is the licensed entity within GIFT City IFSC authorised to manage funds under the IFSCA (Fund Management) Regulations 2022. It replaces the concept of an "investment manager" in the SEBI AIF framework. FMEs must maintain a minimum net worth of USD 150,000 (Retail FME) or USD 750,000 (Non-Retail FME).
What statutory references govern GIFT City AIFs?
Key regulations: Special Economic Zones Act, 2005; IFSC Authority Act, 2019; IFSCA (Fund Management) Regulations, 2022; SEBI circular dated November 26, 2018 (Operating Guidelines for AIFs in IFSC); FEMA (IFSC) Regulations, 2015; Section 80LA and Section 10(4D)/(4E) of the Income Tax Act, 1961.
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