Three legal spaces in one city
GIFT City was developed by Gujarat International Finance Tec-City Company Limited (GIFTCL), which the Government of Gujarat established through Gujarat Urban Development Company Limited. According to GIFT City's 'Doing Business in GIFT City' guide (2024), the city covers 886 acres, of which 261 acres are allotted to the SEZ and 625 acres to the DTA. The guide adds that the city's boundaries have since been extended to take in further land.
Inside those boundaries there are three legal spaces:
- The IFSC, notified within the multi-service SEZ, where IFSCA regulates financial services and acts as SEZ Administrator for IFSC units.
- The rest of the SEZ, which GIFT City's guides describe as serving IT and ITeS and other services exports.
- The domestic tariff area, which the guides describe as the place for business related to India operations.
The address alone does not tell you which regime applies. The unit's approvals do.
What happens in the domestic zone
The domestic zone holds most of the city's non-IFSC life: commercial offices, IT and ITeS operations, residential projects, schools, hotels, retail and other social infrastructure. GIFT City's guides name domestic banks and financial institutions, IT companies and other businesses among its occupants.
A business there is an ordinary Indian business. It does not need IFSCA registration or SEZ unit approval because of its location. It deals in rupees, is regulated by the usual Indian regulators for any regulated activity, and is taxed under the ordinary rules. What it needs is what it would need anywhere else in Gujarat: incorporation or registration, tax registrations, State registrations as an employer, and any sector licence.
IFSC, SEZ and DTA side by side
| Question | IFSC unit | Other SEZ unit | DTA business |
|---|---|---|---|
| Regulator of financial activity | IFSCA | The usual Indian regulators | The usual Indian regulators |
| Exchange control status | Generally a person resident outside India under FEMA | Resident | Resident |
| Currency of business | Specified foreign currency, with limited rupee exceptions | Rupee business is normal | Rupee business is normal |
| Income tax | Section 147 deduction for eligible units | SEZ tax rules applicable to its date of set-up | Ordinary rules |
| Indirect tax | SEZ treatment of supplies | SEZ treatment of supplies | Ordinary GST |
| Approvals tied to location | IFSCA registration and SEZ unit approval through IFSCA as Administrator | SEZ unit approval | None specific to GIFT City |
For the detail, see IFSC, SEZ and domestic tariff area compared and how FEMA treats IFSC units.
Dealing across the line
Many groups have both an IFSC unit and a domestic business in or near GIFT City. The line between them is legal, not physical:
- Exchange control. An IFSC unit selling into India is dealing across a border for FEMA purposes, even if the buyer is in the next tower. See where rupees can and cannot be used.
- GST. GIFT City's IFSC guide states that GST applies to services an IFSC unit provides to the DTA. See GST and customs.
- Group transactions. Services and charges between the two entities need arm's length pricing. See transfer pricing.
- Separation. Keep premises, records, systems and decision-making apart, so that each entity can show it does its own business. See substance and the two-entity model.
Common misreadings
- A lease in a GIFT tower makes the tenant an IFSC unit. It does not. The unit must be approved for the IFSC and registered for an activity IFSCA permits.
- A DTA office can run IFSC business informally. It cannot. Activity that needs IFSCA registration must be carried on by the registered unit.
- State incentives are only for IFSC units. Gujarat's sector policies apply by their own terms. GIFT City's 2024 guide presents the city as a location for IT and ITeS businesses in both the DTA and the SEZ, and eligibility under the IT/ITeS Policy depends on that policy, not on the zone. See Gujarat incentives and stamp duty and Gujarat sector policies.
For premises in either zone, see land, leases and property.