NBFC Registration in Gift City

The tax benefits of operating in GIFT city are as follows:

• 100% income tax exemption for 10 consecutive years for eligible IFSC units
• Reduced Minimum Alternate Tax (MAT) at 9% of book profits
• Tax exemption on interest payments on monies borrowed by a Foreign Company (FC) or Foreign Unit (FU)
• Concessional 10% tax on dividends paid by an FC to non-resident shareholders
• Nil Goods and Services Tax (GST) on services received by units operating in the IFSC

To apply for NBFC registration in GIFT City, the applicant must first incorporate an entity in GIFT IFSC under the Companies Act, 2013. After incorporation, an NBFC registration application is submitted to the IFSCA, followed by filing Application Form F with the Development Commissioner for SEZ approval. The application is reviewed by the IFSCA and the Development Commissioner, and the applicant may be required to attend a personal hearing before the Unit Approval Committee (UAC). Once approved, the IFSCA issues the NBFC license to begin operations in GIFT City.

NBFCs in GIFT City are regulated by the IFSCA and are classified as Finance Companies or Finance Units, rather than traditional RBI-regulated NBFCs. A Finance Company is an India-incorporated entity that can carry out activities such as lending, investments, and treasury operations within the IFSC framework. A Finance Unit is a branch or unit of a foreign regulated financial institution, permitted to provide NBFC-like services in GIFT City, subject to IFSCA approval.

The NBFC License in GIFT City under IFSCA offers a globally aligned, flexible framework with faster approvals, lower capital requirements, and reduced compliance, supporting innovative financial activities like leasing, factoring, and international transactions.

To register an NBFC online in GIFT City, a Finance Company (FC) or Finance Unit (FU) must meet IFSCA’s eligibility criteria, including being from a FATF-compliant jurisdiction, having a robust business plan, and maintaining a registered office in the Gift SEZ. Applicants need a NOC from their home regulator, a minimum capital ratio of 8%, and a liquidity coverage ratio either individually or via the parent entity (for FUs). Additionally, total exposure to a single counterparty or related group must not exceed 25% of the eligible capital base without IFSCA approval. The net worth requirements for Non-Core Activities is $0.2 Million, for Core Activities is $3 Million, and for Specialized Activities is $5 Million.

Obtaining an NBFC License in GIFT City offers strategic, regulatory, and financial advantages, including significant tax incentives like 100% income tax exemption for 10 years, reduced compliance requirements, and a globally aligned regulatory framework under IFSCA.
Licensed NBFCs gain unrestricted access to international markets, freedom to transact in foreign currencies, and the ability to offer a wide range of financial services such as leasing, factoring, and cross-border financing. Additional benefits include single-window regulation, lower operating costs compared to global hubs, and access to world-class infrastructure and India’s skilled financial talent pool.

To apply for NBFC registration in GIFT City, applicants must submit a set of essential documents, including the duly filled Application Form F, Certificate of Incorporation, Board Resolution, and the company’s Memorandum and Articles of Association (MOA & AOA). Additionally, a detailed business plan or project report, a list of directors with KYC documents, and audited financial statements are required.
Other necessary documents include a consent letter or NOC from the SEZ developer, a provisional allotment letter of office space in the SEZ, affidavits or undertakings, and any other applicable NOCs or approvals.

GIFT City offers a highly concessional tax regime, including certain 0% tax benefits for eligible investors. However, it is not a blanket zero-tax zone for all. The zero-tax benefits apply only to specific types of income, transactions, and for defined time periods, making GIFT City an attractive financial hub with targeted tax incentives.

Yes, Indian residents can invest in the GIFT city through banks and financial institutions registered there. This is enabled by the Liberalized Remittance Scheme (LRS) under FEMA applicable to individual resident in India. While LRS allows a resident individual to remit an amount up to USD 250. 000 per financial year.