Status key
Status is as of 1 October 2026. Budget items are announcements until notified; the 2026 amending Act is in force. The brochure’s status labels are: OPEN (available or accepting applications); CLOSING (a stated window or period ends on the date shown); CLOSED (no new applicants); ANNOUNCED (announced or approved; check operating guidelines). The status text below is kept as printed.
GIFT City IFSC: deduction and MAT
GIFT City’s International Financial Services Centre is the main central incentive for financial services; conditions and filings apply.
| Scheme | What the investor gets | Who qualifies | Status |
|---|---|---|---|
| IFSC unit deduction (s.147, Income-tax Act 2025) | 100% deduction of eligible income for 20 consecutive years out of 25, up from 10 out of 15, from tax year 2026-27 | IFSC units; units starting from 1 April 2026 must not be formed by splitting or reconstructing a business in India | ENACTED, FINANCE ACT 2026 |
| Offshore banking unit deduction (s.147) | 100% deduction of eligible income for 20 consecutive years, up from 10 | Offshore banking units (same condition for units starting from 1 April 2026) | ENACTED, FINANCE ACT 2026 |
| Rate after the deduction period | Proposed: business income from the IFSC taxed at 15% once the deduction period ends | IFSC units and offshore banking units | PROPOSED 1 FEB 2026; NOT IN FINANCE ACT 2026 |
| Minimum Alternate Tax for IFSC units | MAT at 9% of book profit, plus surcharge and cess, for IFSC units deriving income solely in convertible foreign exchange; other old-regime companies pay a final 14% | IFSC companies that stay in the old regime | IN FORCE: S.206, INCOME-TAX ACT 2025 |
| Treasury centres: deemed dividend | Loans between a group entity and an IFSC finance company or finance unit are not deemed dividends where the parent is listed abroad; Budget 2026-27 proposed notified-jurisdiction conditions | Group treasury centres in an IFSC | In force; change proposed 1 Feb 2026 |
Note: The 15% rate after the deduction period was proposed in Budget 2026-27 but is not in the Finance Act 2026. Do not model it as law.
Funds, FIIs and market access
Foreign funds gain new tax exemptions and wider access to Indian markets.
| Scheme | What the investor gets | Who qualifies | Status |
|---|---|---|---|
| FII income on government securities | Interest on government securities and capital gains on their transfer are exempt, subject to furnishing prescribed information | Foreign Institutional Investors | IN FORCE FROM 1 APR 2026 (ACT 21 OF 2026) |
| Offshore fund manager safe harbour (s.9(12)) | An eligible Indian fund manager does not create a business connection; residents’ direct participation capped at 5% of corpus, ignoring manager contributions up to ₹25 crore in the first three years; four months to cure | Non-resident funds from treaty or notified jurisdictions | IN FORCE, ACT 21 OF 2026 |
| Corporate bond market | Market-making framework with access to funds, derivatives on corporate bond indices and total return swaps on corporate bonds | Investors and market intermediaries | BUDGET 2026-27, 1 FEB 2026 |
| Municipal bond incentive | ₹100 crore incentive for a single bond issue of more than ₹1,000 crore by a large city; AMRUT support for issues up to ₹200 crore continues | Large cities issuing municipal bonds | BUDGET 2026-27, 1 FEB 2026 |
| Banking and FEMA reviews | A High Level Committee on Banking for Viksit Bharat, and a comprehensive review of the FEMA (Non-debt Instruments) Rules for a more user-friendly framework | Banks and foreign investors | BUDGET 2026-27, 1 FEB 2026 |
The Taxation and Other Laws (Amendment) Act 2026 (No. 21 of 2026) received assent on 17 August 2026; the brochure records the FII exemption and the reset safe harbour as deemed effective from 1 April 2026.
Exemptions that sit alongside the schemes
GIFT City pairs the deduction with further relief described on the tax and zones page: no STT, CTT, stamp duty or GST on IFSC exchange transactions; no GST on services received by or supplied to IFSC units or offshore clients; and exemptions for non-residents on interest from money borrowed by an IFSC unit and on income from NDFs and offshore or OTC derivatives with an IFSC banking unit.
For the cross-sector list of central schemes see central schemes and the incentive tracker.
What to check next
- Confirm whether a planned IFSC unit would be treated as formed by splitting or reconstructing an existing Indian business; units starting from 1 April 2026 must not be.
- Decide which 20 of the 25 years to claim, and whether the unit’s income is solely in convertible foreign exchange for the 9% MAT.
- For an offshore fund, test resident participation against the 5% cap and the ₹25 crore manager-contribution carve-out.
- Treat the corporate bond, municipal bond and review items as Budget announcements until operating guidelines are notified.
- Check the treasury-centre deemed-dividend conditions, since a change was proposed on 1 February 2026.