GIFT City: India’s Financial Powerhouse Gets a Turbo Boost in Budget 25! ??????

Exciting times lie ahead for GIFT IFSC as the Indian government continues to strengthen its position as a global financial hub. The latest updates from the Finance Bill, 2025, bring a host of incentives and extensions that reaffirm India’s commitment to fostering investment, innovation, and ease of doing business within the International Financial Services Centre (IFSC).

Let’s take a closer look at what’s in store:

?? Extension of Benefits & Sunset Dates

Investors and businesses can breathe easy as tax exemptions, deductions, and relocation benefits have now been extended till March 31, 2030. This move provides a stable and predictable regulatory environment, ensuring long-term confidence in GIFT IFSC as a premier global destination for financial services.

??? Boost for Sovereign Wealth Funds & Pension Funds

• Deadline for tax-exempt investments by Sovereign Wealth Funds (SWFs) & Pension Funds has been extended beyond March 31, 2025.
• This ensures long-term infrastructure investments continue to flow into India via IFSC.

? Ship-Leasing Incentives: Sailing Smoothly!

• Capital gains exemption for non-residents transferring shares of a ship-leasing domestic company.
• Dividend exemption for IFSC-based ship-leasing units, making India an attractive hub for maritime financing.

?? Boost for Insurance Sector

A major win for the insurance industry! Life insurance proceeds via IFSC intermediaries are now exempted without any premium limit. This ensures parity for global investors and non-residents choosing IFSC-based insurers over foreign jurisdictions.

?? Clarification on Treasury Operations & Dividend Taxation

• Intra-group loans and corporate treasury operations within IFSC will no longer be classified as dividends, ensuring a seamless financial structure for MNCs.

?? Safe Harbor Regime for Investment Funds

In a bid to further attract offshore funds, investment funds operating in IFSC now enjoy a simplified compliance framework with relaxations extended until 2030. This enhances IFSC’s reputation as a low-risk, high-reward investment destination.

?? Tax-Free Non-Deliverable Forward (NDF) Contracts

Income from NDF contracts with Foreign Portfolio Investors (FPIs) in IFSC will now be exempt from tax. This puts GIFT City on par with international financial hubs like Singapore and Dubai.

?? Fund Relocation Relief: Seamless & Tax-Free!

Fund restructuring within IFSC will not be subject to capital gains tax, encouraging smoother transitions and greater flexibility for fund managers looking to relocate their structures.

?? Inclusion of Retail Schemes and ETFs in Fund Relocation Regime

• Retail schemes & Exchange Traded Funds (ETFs) in IFSC are now eligible for tax-neutral fund relocation, ensuring greater flexibility for investment funds.
• This aligns IFSC with top-tier financial jurisdictions like Singapore and Luxembourg.

?? Simplified Regime for Fund Managers in IFSC

• The compliance framework for investment fund managers based in IFSC has been simplified to ensure parity with competing offshore jurisdictions.
• Conditions under Section 9A have been relaxed, providing greater flexibility for global fund managers to operate from GIFT City.

?? Liberalized Remittance Scheme (LRS) Relaxation

Good news for individuals and students!

• The TCS (Tax Collected at Source) threshold has been raised from ?7 lakh to ?10 lakh.
• No TCS on education-related remittances via loans, reducing financial burden on students pursuing education abroad.

Why This Matters

These progressive measures reinforce GIFT IFSC’s standing as a global financial powerhouse, attracting top-tier investors, financial institutions, and businesses. With a future-ready regulatory framework, tax incentives, and a commitment to ease of doing business, India is rapidly transforming into the preferred gateway for global finance. ????

Stay tuned for more updates as we witness the evolution of India’s first Smart Financial Hub!