??GIFT City’s Tax Benefits: How it Attracts Investors and Homebuyers?

Gujarat International Finance Tec-City (GIFT City), located between Ahmedabad and Gandhinagar, is India’s first greenfield smart city and International Financial Services Centre (IFSC). Launched as a joint initiative between the Government of Gujarat and the Government of India, it is designed to be a globally competitive financial and technology hub.

Its most powerful draw? A robust system of tax incentives and regulatory clarity has piqued the interest of global investors, financial institutions, and residential homebuyers alike. By focusing on economic liberalisation, GIFT City is quickly transforming into a magnet for capital and infrastructure investment in Gujarat.

?? GIFT City Basics

GIFT City is divided into two key zones:

• Special Economic Zone (SEZ): Dedicated to the IFSC and businesses offering international financial services.

• Domestic Tariff Area (DTA): Hosts residential and commercial real estate, retail zones, and public infrastructure.

The city boasts world-class infrastructure: underground utility tunnels, smart mobility, metro connectivity, and sustainable systems. Most importantly, it offers a tax-efficient environment, with regulatory clarity driven by a unified authority—the International Financial Services Centres Authority (IFSCA).

? Key Tax Benefits for Businesses in GIFT City

1. Income Tax Exemptions

Entities set up in the IFSC can enjoy 100% income tax exemption for 10 consecutive years out of 15. This is available to units licensed by IFSCA and notified under the Income Tax Act.

2. Capital Gains Exemption

Investors and financial institutions benefit from long-term capital gains tax exemption on specific securities and derivatives traded within the IFSC.

3. GST Exemption on Offshore Services

IFSC units offering services to non-residents are exempt from Goods and Services Tax (GST). This significantly reduces the cost of cross-border transactions.

4. No Minimum Alternate Tax (MAT) or Alternate Minimum Tax (AMT)

IFSC units opting for the new corporate tax regime (22%) are exempt from MAT and AMT.

5. Withholding Tax Benefits

Interest payable to non-residents on loans taken by IFSC units is taxed at a reduced rate of 4%, making international borrowing more viable.

6. Tax-Neutral Relocation for Funds

Mutual funds and alternative investment funds (AIFs) shifting to the IFSC are allowed a tax-neutral relocation.

?? Tax Benefits for Homebuyers and Real Estate Investors

While the major tax incentives are reserved for financial institutions, residential and commercial real estate developments benefit from associated state-level and SEZ-linked incentives.

1. Reduced Stamp Duty

Gujarat offers competitive stamp duty rates within GIFT City to encourage development and homeownership. These are lower than other urban areas in the state.

2. Property Tax Rebates

Projects in the SEZ and surrounding DTA may qualify for property tax rebates, especially during the initial years of operation.

3. Capital Appreciation

As demand grows, property values have seen substantial appreciation. Professionals working in IFSCs, NRIs, and investors are increasingly seeking properties for both end-use and rental income.

? GIFT City’s Competitive Advantage

Feature	GIFT City	Other SEZs or Indian Cities
Tax Incentives	100% exemption, LTCG, GST waiver	Partial/sector-specific
Regulatory Authority	IFSCA – Unified	Multiple bodies (SEZ, RBI, SEBI, etc.)
Ease of Business	Single-window clearance	Bureaucratic delays
Infrastructure	Smart city, green energy, MRTS	Conventional or underdeveloped
Property Yield Potential	Rising	Stable to moderate

 

? Gujarat’s Role and Vision

Gujarat, being one of India’s most industrialised and business-friendly states, plays a critical role in the success of GIFT City. The state offers:

1. Strategic location with proximity to ports, highways, and airports.

2. A robust economic environment with strong industrial output.

3. Supportive policies for infrastructure, housing, and finance.

4. Promotion of urban development models that support walk-to-work living.

? GIFT City’s Growth Indicators

1. Over 700 companies have registered in GIFT City.

2. Major global banks like JPMorgan, Barclays, HSBC, and Deutsche Bank operate here.

3. Ranked 46th globally in the Global Financial Centres Index (2025).

4. The government aims to generate over 100,000 jobs by 2030.

5. Real estate projects such as co-living spaces, luxury apartments, and rental homes are mushrooming in the DTA region.

? Challenges and Opportunities

Challenges:

1. Limited nightlife and recreational facilities (though being addressed).

2. Social infrastructure like schools and hospitals is still developing.

3. GIFT City is in early stages of community settlement.

Opportunities:

1. Scope for first-mover advantage in real estate and finance.

2. Direct link to global markets for investors and NRIs.

3. Platform for tax-optimized capital flows and professional services.

? Conclusion

GIFT City is not just a real estate or financial venture—it is a symbol of India's economic ambition and regulatory innovation. With unmatched tax incentives, seamless regulatory governance, and futuristic urban planning, it positions Gujarat as a key player in the global financial ecosystem.

For investors and homebuyers, the city offers a dual benefit—financial efficiency and future-ready living. As more international institutions and NRIs recognise its potential, GIFT City is poised to become a powerhouse of wealth creation, employment, and sustainable urban development in India.

Whether you are a business looking to expand internationally or a homebuyer seeking a high-growth zone, GIFT City is a destination that promises returns, both fiscal and futuristic.

In case of any query regarding GIFT City’s Tax Benefits: How it Attracts Investors and Homebuyers? Feel free to connect with our legal experts, Tulja Legal, at +91 96380-69905

About the Author

Anju S Nair

Legal Researcher | LLB, MA English| Corporate Lawyer | Business Enthusiast | Founder & CEO at iLawbook.

?FAQs

1. What is GIFT City?
GIFT City is a planned smart city in Gujarat, housing India's only International Financial Services Centre (IFSC).

2. Who governs GIFT City’s tax regime?
The International Financial Services Centres Authority (IFSCA) regulates tax and compliance for IFSC entities.

3. What kind of tax exemptions are offered?
IFSC units get 100% income tax exemption, no GST on export services, and capital gains tax relief.

4. Can retail investors benefit from GIFT City?
Yes, through real estate investment, mutual funds based in IFSC, or offshore accounts linked to IFSC platforms.

5. Are there residential properties in GIFT City?
Yes, developers offer a variety of options including apartments, co-living units, and villas within the DTA.

6. How does GIFT City compare to Mumbai for investment?
GIFT City offers better tax efficiency, lower costs, and modern infrastructure. Mumbai has market maturity but higher prices.

7. Are NRIs investing in GIFT City?
Yes, GIFT City is becoming a preferred destination for NRIs due to liberalised foreign ownership rules and connectivity.

8. Is it safe to invest in GIFT City real estate?
Yes, with regulatory clarity, infrastructure development, and government backing, it's considered low-risk for long-term investors.

9. What is the future of job creation in GIFT City?
With the projected arrival of over 100,000 professionals, demand for housing and services will rise.

10. What sectors are booming in GIFT City?
Banking, insurance, stock exchanges, fund management, fintech, leasing, and real estate are the major sectors.

? References

1. SOBHA Developers Blog – “How GIFT City’s Tax Benefits Are Attracting Investors and Homebuyers”
   https://www.sobha.com/blog

2. Ministry of Finance, India – IFSC Policy and Budget 2025 Provisions
   https://www.finmin.nic.in

3. IFSCA Official Website – Tax and Regulatory Notifications
   https://www.ifsca.gov.in

4. GIFT City Official Portal – Master Plan, Infrastructure, and Projects
   https://www.giftgujarat.in

5. Economic Times – “GIFT City: How India is Building a Global Financial Hub”, 2025
   https://economictimes.indiatimes.com

6. Treelife Consulting – Tax Implications and Relocation of Funds in IFSC
   https://treelife.in

7. FT Report – “India’s GIFT City: A Glimpse into Dubai’s Financial Model”
   https://www.ft.com

8. CNBC-TV18 – “Why GIFT City Is the Next Big Thing for NRIs”
   https://www.cnbctv18.com

9. Gujarat Government Portal – Urban Planning and Stamp Duty Guidelines
   https://gujaratindia.gov.in

10. Ashaval Real Estate Reports – Comparative Property Yields in Gandhinagar and GIFT City
    https://www.ashaval.com