GIFT City Funds
Overview
Gujarat International Finance Tec-City (GIFT) is India’s first and only International Financial Services Centre (IFSC).
GIFT is positioned as India's gateway to global financial markets, facilitating inbound and outbound investments, and hosting a myriad of other financial activities.
International Financial Services Centres Authority (IFSCA) is a unified regulatory for the IFSC. Regulatory powers of four financial services regulators in India, viz. RBI, SEBI, IRDAI and PFRDA have been vested in IFSCA.
Gujarat International Finance Tec-City (GIFT City) – India’s only approved IFSC
A free trade zone offering various tax incentives for cross-border flow of financial products and services
Globally benchmarked IFSC developed by the Government of Gujarat through a joint venture
Stock exchanges in GIFT City have achieved single day highest volumes of USD 24 billion
Ranked 1st as a rising financial hub in the Global Financial Centers Index
Types of Funds
GIFT City funds include feeder funds launched and managed by Asset Management Companies (AMCs) through authorized banking and fund management units located within Gujarat International Finance Tec-City (GIFT City). These include:
Outbound GIFT City Fund
Outbound GIFT City funds refer to investment vehicles established within the GIFT City IFSC that pool capital from resident investors (both individual & non-individual) to invest in global markets, providing international diversification for investors under a regulated framework.
Inbound GIFT City Fund
Inbound GIFT City funds refer to open-ended inbound feeder fund (AIF Category III) registered in India's GIFT City IFSC, that pool capital from non-residents to invest in underlying domestic equities, mutual funds & ETFs. Non-residents can diversify their portfolio by investing in Indian markets through inbound Gift City Fund.
Why Invest through Gift City Funds
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- Stable regulatory regime at par with global jurisdictions
- Favourable carve-out in tax laws to promote GIFT IFSC-based funds
- Attractive tax regime
- Simplified regulations in line with global benchmarks
- Simplified access to Indian markets for the large NRI investor base to benefit from Indian growth story
Key Features and Advantages
Inbound GIFT City Fund
- Seamless foreign currency investment and easy repatriation of profits.
- Gateway for global investors to capitalize on India's economic potential with regulatory clarity and competitive cost structure.
- NRIs & Foreign Investors (individual & non-individual) can invest. All investors should be from FATF compliant jurisdictions.
- Seamless investment for non-resident investors without FPI registration.
Outbound GIFT City Fund
- Generally structured as close ended category III AIF with private placement offer to accredited investors.
- Operate in multiple foreign currencies, enabling seamless global asset allocation.
- Ability to invest without restrictions in global equities, debt, private equity, venture capital, and real estate, providing wide diversification opportunities.
- Tax neutrality for the funds on offshore investments with exemptions from Indian capital gains tax on offshore asset transfers, along with no GST on fund management services within GIFT City.
- Indian investors can invest through RBI’s LRS scheme subject to annual limit.
Taxation
Inbound GIFT City Fund
- Investors in inbound funds benefit from exemptions on capital gains tax for specified securities traded within the IFSC, including no capital gains tax on transfers of units in Category III AIFs held by non-residents.
- For individual non-resident investors such as NRIs, investing through inbound GIFT City funds can be tax-efficient due to exemptions from tax deducted at source (TDS) on dividends and capital gains, simplifying compliance and reducing withholding taxes.
Outbound GIFT City Fund
- Capital gains earned by non-resident investors from outbound GIFT City funds are exempt from Indian capital gains tax, enhancing the attractiveness of these funds for offshore investors seeking global diversification.
- No Goods and Services Tax (GST) is levied on fund management services provided within the GIFT City IFSC, reducing operating costs for funds.
- For resident Indian investors investing through outbound funds under RBI's Liberalized Remittance Scheme (LRS), normal Indian tax rules apply on income and capital gains, including applicable short-term and long-term capital gains tax rates.
- Repatriation of profits and capital from outbound funds is seamless due to GIFT City's regulatory framework, allowing investors ease of access to their returns without additional tax hurdles.