GIFT City & IFSC
The finance ministry has notified four key financial services (book-keeping, accounting, taxation and financial crime compliance) that can now be provided through units operating in IFSC (International Financial Services Centre) at GIFT City (Gujarat International Finance Tec-City).

What’s the buzz around this decision, and how does it impact the financial landscape in the country? Let’s dive in.

Tax benefits galore.

The finance ministry has opened the door to tax benefits for entities offering specific financial services in IFSC or GIFT City. The designated services are:

Book-keeping

Maintaining financial records for clients from a GIFT City unit.

Accounting

Accounting services delivered through IFSC-based entities.

Taxation

Tax services provided to eligible international clients.

Financial crime compliance

AML, CFT and FATF-aligned compliance services.

This move is poised to bring a paradigm shift in how financial services are rendered and received in the country.

Target audience and operational framework.

One key stipulation in the notification is that these services must be provided to non-residents whose business is not established by reorganising existing operations in India. This sets the stage for these services to cater specifically to international clients, in line with the global nature of IFSC and GIFT City.

Understanding financial crime compliance.

The notification includes “financial crime compliance services”, covering activities related to:

  • Anti-money laundering (AML)
  • Countering the financing of terrorism (CFT) measures
  • Financial Action Task Force (FATF) recommendations
  • Other related compliance activities

This underscores the commitment to global financial standards and positions GIFT City as a hub for stringent financial regulatory compliance.

Boost for the Big Four.

Industry experts predict that this decision will give a significant boost to the major consultancy firms, often called the “Big Four”. With the opportunity to offer services through units in GIFT City, these firms can leverage the tax benefits and contribute to the growth of India’s only operational international financial services centre.

Expanding the scope.

Entities in GIFT City are currently permitted to operate across a range of financial domains:

  • Banking
  • Capital markets
  • Asset management
  • Insurance
  • Aircraft leasing
  • Fintech
  • Stock and commodity exchanges

The inclusion of these key services further diversifies what is on offer, making GIFT City a more comprehensive hub for international financial activities.

Conclusion.

The finance ministry’s move to allow specific financial services with tax benefits in IFSC and GIFT City is a strategic step towards strengthening India’s position in the global financial arena. It opens new avenues for financial service providers and aligns with the evolving dynamics of the international financial landscape.

As GIFT City continues to evolve, the potential for growth and collaboration in the financial sector is undoubtedly rising.

Stay tuned for further updates on this development shaping the future of finance in India.