1. What exactly will the IFSC entity do?
IFSCA regulates by activity. The first step is to describe the business precisely enough to place it in one framework, because each framework sets its own capital, people and conduct rules. In outline:
- Managing funds or portfolios: registration as a Fund Management Entity under the IFSCA (Fund Management) Regulations, 2025.
- Lending, factoring, investing or running a group treasury: a finance company or finance unit under the IFSCA (Finance Company) Regulations, including the framework for global or regional corporate treasury centres of 4 April 2025.
- Banking: an IFSC Banking Unit (a branch) or an IFSC Banking Company (a subsidiary) under the IFSCA (Banking) Regulations and the Banking Handbook.
- Insurance and reinsurance: an IFSC Insurance Office or an insurance intermediary office under IFSCA's insurance regulations.
- Broking, advice, distribution and similar intermediation: the IFSCA (Capital Market Intermediaries) Regulations, 2025.
- Serving your own financial group: a Global In-House Centre or, for a bank, a Global Administrative Office.
- Professional, technology or back-office support to financial institutions: the TechFin and Ancillary Services Regulations, 2025, or the BATF Regulations, 2024 for book-keeping, accounting, taxation and financial crime compliance.
A support registration does not authorise the regulated activity it supports. An ancillary service provider cannot, for example, manage funds or give investment advice under that registration. A business that does two things may need two registrations, kept separate.
2. Who are the clients?
Several frameworks limit who may be served. BATF services may be provided only to non-residents, including IFSC units. A Global In-House Centre serves entities of its own financial institution group, and its services to group entities in India may not exceed 10% of its total revenue in a financial year. A treasury centre acts for its group entities, the group entities of its parent and their branches.
Indian residents can reach IFSC products, but generally only through the routes that exchange control allows, such as the Liberalised Remittance Scheme for individuals. Serving your own group is treated differently from serving third parties, and the answer often decides between a captive framework and a market-facing one.
IFSC entities transact in freely convertible foreign currency. Most frameworks allow a rupee account only for administrative and statutory expenses.
3. Is the parent regulated elsewhere?
If the parent carries on a regulated financial activity at home, IFSCA will usually want comfort from the home regulator. The Finance Company Regulations require a no-objection certificate from the home regulator where the parent of a finance company carries on a regulated financial activity, and bank-led structures (IFSC Banking Units and Global Administrative Offices) need home-regulator no-objection as well.
Jurisdiction also matters. Several frameworks require the applicant or its promoters to come from a FATF-compliant jurisdiction, and fit-and-proper tests extend to controlling shareholders as well as directors and officers. Collect the ownership chain to the ultimate beneficial owner, and any home-regulator correspondence, before you file.
4. Where will decisions be made?
IFSCA expects real people, real premises and decision-making in the IFSC. Most frameworks require the principal officer and compliance officer to be full-time employees based in the IFSC. For fund managers, the proposal on the portfolio composition of a fund must be initiated by a person based in the FME's IFSC office.
A plan that leaves the IFSC entity as a booking office, with decisions taken elsewhere and ratified afterwards, rarely passes. The same facts are relevant later to the tax question of whether income is really earned by the IFSC unit. See office space, physical presence and substance.
5. When will operations start?
Timing has both tax and procedural consequences:
- Under section 147 of the Income-tax Act, 2025, an eligible unit may choose any 20 consecutive tax years out of 25 for a 100% deduction of eligible income. A unit commencing on or after 1 April 2026 qualifies only if it is not formed by splitting up or reconstructing a business already in existence (section 147(5)), subject to the exceptions in the section.
- Income from the transfer of a leased aircraft or ship counts as eligible income only if the unit commenced its business operations by 31 March 2030 (section 147(3)(d)).
- The lease of IFSC premises must be filed with IFSCA on SWIT within 6 months of the SEZ Letter of Approval.
- Commencement is marked by the first invoice or transaction and a date-of-commencement request to IFSCA as SEZ Administrator.
If an answer is genuinely unclear on your facts, IFSCA's Informal Guidance Scheme, 2024 is open to persons who intend to set up a unit in an IFSC, so a structure can be tested before the application is filed.