In a transformative move that’s set to redefine India’s financial landscape, the Union Budget 2026-27, unveiled by Finance Minister Nirmala Sitharaman, has dramatically extended tax benefits for units in the GIFT City (Gujarat International Finance Tec-City) and its International Financial Services Centre (IFSC). The deduction under Section 80LA now stretches to 20 consecutive years out of 25 for IFSC units, with a concessional 15% tax rate on business income post-deduction—doubling the previous holiday period and slashing post-holiday taxation to boost global competitiveness.
Sanjay Kaul, Managing Director and Group CEO of GIFT City, called these proposals a “very important” and “far-reaching” intervention that sends a powerful signal to international investors. “When someone has an option of going to some other financial center in the world, when they see that here you’re getting a 20-year tax break, they would definitely want to come in here first,” Kaul told the media agency. This extended tax holiday for GIFT City IFSC units, combined with 20 consecutive years for Offshore Banking Units (OBUs), provides the long-term certainty global firms crave, making India’s premier greenfield smart city and financial hub an irresistible destination over rivals like Singapore, Dubai, or London.
The budget also rationalizes deemed dividend provisions for treasury centers in the IFSC, exempting them from applicability (with certain riders). This eliminates previous tax hurdles on intra-company lending and fund transfers, streamlining operations and encouraging deeper capital flows. Kaul highlighted how removing this barrier addresses past reluctance from global players, who now gain clarity, continuity, and parity with top international jurisdictions. “They want clarity of rules and regulations and continuity of regulations, and it has to be on par with other jurisdictions,” he emphasized, praising the government’s strategic tweaks that align GIFT City governance and tax concessions with global benchmarks.
These bold enhancements position GIFT City—India’s only operational International Financial Services Centre—as a magnet for banking, insurance, capital markets, asset management, and more. With world-class infrastructure, sustainable planning, and a future-ready ecosystem spanning domestic and SEZ zones, the hub is primed for explosive growth in offshore banking, global trading, reinsurance, and fintech innovations. The 15% post-deduction tax rate further sharpens edges against higher-tax competitors, while the overall package fosters private sector influx, job creation in high-skill finance roles, and stronger integration with India’s booming economy under Viksit Bharat goals.
Experts see this as a masterstroke for attracting foreign direct investment into financial services, unlocking billions in potential inflows, and elevating GIFT City’s stature on the world stage. The continuity of policies, regulatory excellence, and generous incentives scream confidence: India is open for serious global business. As Kaul summed up, “Any global capital looks at two things: global positioning as well as what the regulations and governance are… There’s continuity of governance and policies; continuity is there.” This budget delivers exactly that—propelling GIFT City toward becoming a top-tier international financial powerhouse.
The implications ripple far: faster onboarding of multinational firms; enhanced liquidity in Indian markets via onshore-offshore synergies; and a multiplier effect on Gujarat’s economy and beyond. With these tax reforms taking effect from April 1, 2026, the stage is set for a surge in activity at GIFT City IFSC. Watch this space as the world’s financiers turn their eyes toward Gandhinagar—India’s financial future just got brighter.
