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CA SANDEEP KHANDELWAL

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skhandelwal@mnrsindia.com

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International Financial Services Centre in Gift City

GIFT City is a planned business district that was developed with the aim of creating a world-class financial and technology hub in India. The city is spread over an area of 886 acres and has been developed as a Special Economic Zone (SEZ) under the SEZ Act, 2005.

IFSC, or International Financial Services Centre, is a dedicated financial centre in India that facilitates international financial services. The IFSC was established in 2015 and is located in Gujarat International Finance Tec-City (GIFT City) in Gandhinagar, Gujarat.

IFSC in GIFT City is a promising initiative by the Indian government to establish a world-class financial centre in India. It provides several benefits to businesses who are looking to expand their operations globally, and its regulatory framework and tax benefits make it an attractive destination for financial services companies. IFSC in GIFT City provides a wide range of financial services, including banking, insurance, asset management, and capital markets. Some of the key features of IFSC in GIFT City are:

Tax benefits: IFSC units enjoy several tax benefits, including exemption from securities transaction tax, commodity transaction tax, and dividend distribution tax.

Regulatory framework: IFSC in GIFT City has its own regulatory framework, which is separate from the domestic regulatory framework. This allows for a more flexible and business-friendly environment.

International exposure: IFSC in GIFT City provides access to a large international market, which can be beneficial for businesses looking to expand their operations globally.

Infrastructure: GIFT City has the state-of-the-art infrastructure, including high-quality roads, power, water supply, and telecommunications.

Prerequisite for setting up a unit in IFSC in India

Setting up a unit in IFSC (International Financial Services Centre) in India requires the fulfilment of certain prerequisites. These include:

Business entity: The first prerequisite is to form a business entity that can operate in IFSC. The entity can be a company, a Limited Liability Partnership (LLP), or any other form of business entity permitted under Indian laws.

Minimum capital requirements: The entity setting up a unit in IFSC must comply with the minimum capital requirements set by the regulatory authorities. For instance, companies setting up units in IFSC are required to have a minimum capital of INR 10 million.

Approval from regulatory authorities: The entity must obtain approval from the regulatory authorities, including the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and Insurance Regulatory and Development Authority of India (IRDAI), as applicable, based on the type of financial services the entity intends to offer.

Registration with GIFT SEZ authority: The entity must register with the GIFT SEZ authority and obtain necessary approvals, such as the Letter of Approval (LOA), before commencing operations.

Infrastructure requirements: The entity must meet the infrastructure requirements set by the GIFT City authorities. This includes requirements related to office space, power, telecommunications, and other facilities.

Compliance with regulations: The entity must comply with the regulations and guidelines set by the regulatory authorities and the GIFT City authorities, including the prevention of money laundering and financing of terrorism.

How Can MNRS Help?

MNRS can provide various services to a unit in a Special Economic Zone (SEZ), including registration and set up. Some of the expertise services which MNRS can provide are:

  • Incorporation of company: We can assist in incorporating the company or business entity that will set up the unit in the SEZ.
  • Obtaining approvals and registrations: MNRS can help in obtaining approvals and registrations from various government departments, such as the Ministry of Environment and Forests, the Department of Industrial Policy and Promotion, and the Department of Commerce.
  • Compliance with regulatory requirements: We, as a CA firm, can undertake/assist in ensuring compliance with various regulatory requirements, such as those related to tax, customs, and excise.
  • Accounting and bookkeeping: Our long experience will help you in setting up accounting systems and maintaining proper books of accounts as per Indian accounting standards.
  • Tax planning and compliance: Tax saving is at the core of setting up a unit in IFSC. We can provide tax planning and compliance services, including GST compliance, transfer pricing compliance, and international tax planning.
  • Audit and assurance services: Our long experience in the audit domain of all types of entities including listed one, enable us to provide audit and assurance services to ensure that the financial statements of the unit are accurate and comply with the relevant accounting standards.
  • Advisory services: MNRS can provide advisory services on various matters, such as mergers and acquisitions, corporate restructuring, and financial planning.

Being a firm of professional Chartered Accountants with its long standing and wide clients base, MNRS can play a critical role in the registration, set up, and ongoing operations of a unit in a Special Economic Zone by providing a range of services related to accounting, tax, compliance, and advisory and can play a vital role of a knowledgeable partner in your growth since conceptual stage to ultimate business.