Introduction India has historically been a country from which capital and businesses sought offshore structures for international operations. The classic approach was to set up a Mauritius, Singapore, or UAE holding company to access tax treaties, manage capital gains, and access global capital markets. But since 2015, India has been building its own international financial […]
India has historically been a country from which capital and businesses sought offshore structures for international operations. The classic approach was to set up a Mauritius, Singapore, or UAE holding company to access tax treaties, manage capital gains, and access global capital markets.
But since 2015, India has been building its own international financial centre: the Gujarat International Finance Tec-City (GIFT City). In Day 15, the final blog in our 15-part series, we compare GIFT City’s International Financial Services Centre (IFSC) with classic offshore jurisdictions, and provide a decision framework for Indian businesses and financial services companies considering their global structuring options.
GIFT City is India’s first operational International Financial Services Centre, located in Gandhinagar, Gujarat. It operates under the International Financial Services Centres Authority (IFSCA) and is designed to compete directly with Singapore, Dubai, Mauritius, and Luxembourg for financial services and global business.
– Transactions in foreign currency only (USD, EUR, GBP, etc.)
– Separate from India’s domestic financial regulations in many ways
– Governed by IFSCA — a unified regulator for banking, capital markets, and insurance in the IFSC
Under the Income Tax Act (Sections 10(4D) to 10(4H) and Chapter XII-O):
1. 100% income tax exemption for 10 consecutive years out of 15 years for eligible units
2. Zero GST on IFSC services
3. No STT (Securities Transaction Tax) on transactions on IFSC exchanges
4. No CTT (Commodities Transaction Tax)
5. Exemption from DDT (Dividend Distribution Tax — abolished, but dividends from IFSC units have further exemptions)
6. MAT/AMT at 9% (vs 15% in domestic India)
7. Capital gains exemption on transfers of securities by non-residents on IFSC exchanges
8. Interest income from lending to GIFT City units: exempt in hands of non-resident lender
– Banking (IFSC Banking Units — IBUs)
– Insurance and reinsurance
– Fund management (Alternative Investment Funds, Mutual Funds)
– Stock and commodity exchanges
– Depository services
– Aircraft and ship leasing
– Fintech companies
– Family offices
– Global in-house centres (GICs)
– Treasury and finance companies of multinationals
Classic Offshore Structures: Singapore, UAE, Mauritius
– Capital gains: 0%
– Corporate tax: 17% (with startups and qualifying companies getting lower effective rates)
– Participation Exemption on dividends from foreign subsidiaries
– Strong DTAA with India (pre-2017 capital gains grandfathering)
– Requires genuine substance
– Corporate tax: 9% (0% for QFZP)
– No WHT on dividends/interest from UAE
– No capital gains tax
– India-UAE DTAA available (but GAAR scrutiny increasing)
– Strong financial services ecosystem (DIFC, ADGM)
– Capital gains exemption for pre-April 2017 India investments (grandfathered)
– Post-2017: Capital gains on Indian shares taxable in India regardless
– Still useful for certain treaty-protected income types
– Lower reputation post-FATF grey-listing (delisted 2023)
GIFT City vs Classic Offshore: Head-to-Head Comparison
– GIFT City: 10-year income tax holiday
– Singapore: 0% capital gains; 17% corporate
– UAE: 0-9% corporate; no capital gains
India DTAA Access:
– GIFT City: Operates within India; domestic rules apply where DTAA is relevant
– Singapore: Full DTAA access (with substance requirements)
– UAE: Full DTAA access (GAAR scrutiny for tax-motivated structures)
– GIFT City: IFSCA (single regulator); Indian legal system
– Singapore: MAS; English law
– UAE (DIFC/ADGM): English common law; robust regulatory framework
– GIFT City: Must have office and employees in GIFT City; must conduct genuine business
– Singapore/UAE: Must have genuine management and control; economic substance rules apply
– GIFT City: NSE IFSC, BSE IFSC exchanges; growing product range
– Singapore: SGX; mature, liquid, globally connected
– UAE: NASDAQ Dubai; DFM; ADSE
When Should You Choose GIFT City?
1. Indian financial services companies seeking to offer international products (offshore funds, insurance, banking) without leaving India’s regulatory system
2. Foreign companies wanting to access India as a hub for regional treasury, aircraft leasing, or fund management
3. Alternative Investment Funds targeting non-resident investors with Indian management
4. Family offices seeking to structure wealth management in an India-proximate, compliant environment
5. Fintech companies building cross-border payments, lending, or investment platforms
Classic offshore structures remain preferable for:
1. Technology companies seeking VC/PE funding that requires a Singapore or Delaware entity
2. Holding structures where IP ownership and royalty flows across multiple non-Indian jurisdictions are central
3. Businesses with genuinely global (non-India-centric) capital flows
4. Companies where the GIFT City product suite does not yet cover the required activity
GIFT City represents India’s ambition to be a destination for international financial services — not just a source of outbound capital. For many Indian businesses, the combination of GIFT City’s tax incentives with domestic legal and regulatory familiarity is highly compelling.
However, GIFT City is not yet a complete replacement for Singapore or UAE for all purposes. The classic offshore jurisdictions maintain advantages in capital markets depth, legal systems, and global business networks.
The 2026 answer for most sophisticated Indian businesses is a hybrid: GIFT City for India-linked financial services and fund management; Singapore or UAE for holding structures with genuine global operations.
This concludes our 15-part Cross-Border Tax Planning 2026 series. We hope this series has provided a comprehensive, actionable framework for navigating international tax planning in an increasingly complex global environment.
Moiz Ezzi is a Certified Public Accountant (CPA) and Chartered Accountant (CA) specialising in cross-border tax advisory for multinationals, NRIs, and non-US founders with India-US and India-global operations. He advises clients across transfer pricing, international holding structures, DTAA planning, and entity structuring.
Connect with Moiz Ezzi on LinkedIn for weekly cross-border tax insights.
