Harun Raaj & AssociatesHarun Raaj & Associates
+91 93008 97008Contact
AIF & Fund Management Services

GIFT City & IFSC Fund Setup

GIFT City AIF

Start — upload documents, pay when ready →Talk to a CAWhatsApp us
SCOPEConfirmed in writing

Overview

GIFT City and IFSC fund setup is the establishment of an alternative investment fund in India's International Financial Services Centre at GIFT City — the offshore jurisdiction within India where funds operate in foreign currency under the International Financial Services Centres Authority. The IFSCA was established under the International Financial Services Centres Authority Act 2019, and fund management in the IFSC operates under the IFSCA's fund management framework (VERIFY: the IFSCA (Fund Management) Regulations 2022 and the current registration requirements for IFSC funds). SEBI's AIF framework applies to IFSC funds with the modifications the regulator prescribes.

The IFSC fund is the bridge between Indian capital and the global market: the fund is located in India's own international financial centre, operates in foreign currency, and accesses the incentives the framework provides. For sponsors, the IFSC route combines the comfort of an Indian-regulated centre with the international character of an offshore fund; for investors, the fund offers the structures and the flexibility the centre was built for.

The cost of a wrong setup is the structure failing its purpose: a fund that does not meet the IFSCA's registration requirements, an investment manager without the IFSC presence the framework expects, or a fund structure that misses the incentives. Each is a regulatory defect in the very centre built for regulatory cleanliness.

This service is for fund sponsors and investment managers setting up AIFs and other funds at GIFT City IFSC. We advise on the IFSCA framework and the AIF modifications, structure the fund and the manager, prepare and file the registration, draft the PPM and the constitutive documents, and set up the compliance — the reporting, the audits and the ongoing obligations of the IFSC fund.

How It Works

  1. 1

    IFSC Fund Structuring

    We advise on the fund structure under the IFSCA framework and the IFSC AIF modifications.

    Harun Raaj & Associates does this1-2 weeks
  2. 2

    Manager & Fund Documents

    We prepare the fund and manager documentation for the IFSCA registration.

    Harun Raaj & Associates does this2-3 weeks
  3. 3

    IFSCA Filing

    We file the registration with the IFSCA and manage the queries.

    Harun Raaj & Associates does this4-8 weeks
  4. 4

    PPM & Operations Setup

    We draft the PPM and set up the fund's operating and banking arrangements.

    Harun Raaj & Associates does this2 weeks
  5. 5

    Ongoing Compliance

    We manage the IFSC fund's reporting, audit and compliance obligations.

    Harun Raaj & Associates does thisOngoing

Frequently Asked Questions

What regulatory framework governs fund setup in GIFT City IFSC?
Funds in GIFT City are regulated by the IFSCA (Fund Management) Regulations 2022 notified under Section 28 of the International Financial Services Centres Authority Act 2019. The Regulations distinguish three entity types: Venture Capital Scheme (VCS), Restricted Scheme, and Retail Scheme — each with separate eligibility, corpus, and investor count thresholds. The Fund Management Entity (FME) itself must hold a registration under Regulation 4 of the FM Regulations before launching any scheme.
What are the minimum corpus and investor requirements for a Restricted Scheme under IFSCA FM Regulations 2022?
Under Schedule III of the IFSCA (Fund Management) Regulations 2022, a Restricted Scheme requires a minimum corpus of USD 5 million (or equivalent) and may not have more than 1,000 investors. Each investor must be a "qualified investor" as defined in Regulation 2(1)(s) — broadly, an entity or individual with a minimum net worth of USD 500,000 or a professional investor within the meaning of the Regulations. The minimum investment per investor is USD 150,000.
How does GIFT City taxation work for an AIF registered as a Restricted Scheme?
An IFSC unit holding a valid Letter of Approval from IFSCA is eligible for a 10-year tax holiday on income from fund management activities under Section 80LA of the Income Tax Act 1961 (ITA 1961), which continues to apply for AY 2026-27 (FY 2025-26). For Tax Year 2026-27 onward under ITA 2025, the equivalent provision is carried forward under Section 163 read with the Tenth Schedule. Additionally, transfer of securities by a non-resident investor in a Category III AIF located in IFSC is exempt from capital gains tax under Section 47(viiab) of ITA 1961 (Section 87 of ITA 2025), subject to the securities being listed on a recognised stock exchange in IFSC.
What FEMA approvals does a GIFT City AIF need before accepting foreign capital?
A GIFT City FME and its schemes are treated as non-residents for FEMA purposes per RBI AP Dir Series Circular No. 15 of 2015 read with the FEMA (IFSC) Regulations 2015. Foreign capital flows into IFSC funds under the Automatic Route — no prior RBI approval is required — but the FME must file Form FC-GPR (for equity) or the relevant FC reporting through the AD Bank within 30 days of each capital call. Repatriation of profits is permitted freely, and no LRS limits apply to the fund vehicle itself.
Can an Indian resident invest in a GIFT City AIF, and are there any tax implications?
Yes. Indian residents may invest in a GIFT City Restricted or Retail Scheme subject to the Liberalised Remittance Scheme (LRS) limit of USD 250,000 per financial year under Schedule III of the Foreign Exchange Management (Current Account Transactions) Rules 2000. Income received by a resident from such a fund is taxable in India under the normal provisions — capital gains on redemption are subject to ITA 1961 Section 45 (ITA 2025 Section 67) based on holding period and asset class. The fund is not a pass-through for Indian tax purposes unless it qualifies as a Category I or II AIF and separately registers with SEBI under the AIF Regulations 2012.

Ready to get GIFT City & IFSC Fund Setup?

File a request in under 2 minutes. Our team contacts you within 24 hours.

Start — upload documents, pay when ready →