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Unraveling the Potential: Setting Up AIF Category II in GIFT City, India’s IFSC

Comprehensive Guide to Setting Up AIF Category II in GIFT City, India’s IFSC

The guide provides a comprehensive roadmap for setting up an Alternative Investment Firm (AIF) Category II in the Gujarat International Finance Tec-City (GIFT City), India’s sole International Financial Service Centre (IFSC). It covers the regulatory landscape of IFSCs, AIF categories, permissible investors, key steps for setting up GIFT AIF, tax benefits, relaxations for AIF in GIFT City, and investment avenues.

Key Takeaways:

1. International Financial Service Centre (IFSC)

An IFSC is a jurisdiction where global financial service providers offer financial products/services to global customers in foreign currencies.

GIFT City is India’s only approved IFSC located in Gandhinagar, Gujarat.

2. Regulation of IFSC

IFSCs are approved by the Central Government under the Special Economic Zones (SEZ) Act, 2005 and are governed by financial services regulators such as RBI, SEBI, and IRDAI.

3. Setting Up AIF in IFSC

AIF can be set up in the form of a company, LLP, trust, or body corporate in the IFSC.

4. Categories of AIFs Permitted in IFSC

Category I, II, and III AIFs are recognized, each with specific investment criteria and restrictions.

5. Permitted Investors

Permissible investors in an AIF set up in IFSC include non-resident individuals, non-resident Indians, and institutional investors resident in India eligible under exchange regulations.

6. Key Steps for Setting Up GIFT AIF, GIFT AIF Manager, and GIFT AIF Sponsor

The process involves obtaining approvals, identifying office space, and complying with SEZ and SEBI regulations.

7. Tax Benefits

AIFs in GIFT City have tax pass-through status for Indian income-tax purposes, with various exemptions and benefits for investors and managers/sponsors.

8. Relaxations for AIF in GIFT City

AIFs in GIFT City are permitted to undertake leverage, co-invest in portfolio companies, and invest in domestic AIFs, among other relaxations.

9. Diversification Limit and Leverage

Diversification limits and leverage conditions for AIFs in GIFT City differ from those under the AIF Regulations, providing more flexibility.

10. Investment Avenues

IFSC AIFs have multiple investment avenues, including securities issued by companies incorporated in IFSC, listed securities, and units of an AIF.

Synopsis:

The provide is a comprehensive guide to setting up an Alternative Investment Firm (AIF) Category II in the Gujarat International Finance Tec-City (GIFT City), India’s sole International Financial Service Centre (IFSC). It delves into the regulatory landscape of IFSCs, the intricacies of AIF categories, tax benefits, and investment avenues, offering a roadmap for global financial service providers.

International Financial Service Centre (IFSC)

An IFSC is a jurisdiction where global financial service providers offer financial products/services to global customers in foreign currencies. GIFT City is India’s only approved IFSC located in Gandhinagar, Gujarat. It undertakes financial services transactions that are currently carried on outside India by overseas financial institutions and subsidiaries/overseas branches of Indian financial institutions.

Regulation of IFSC

IFSCs are approved by the Central Government under the Special Economic Zones (SEZ) Act, 2005 and are governed by financial services regulators such as the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and Insurance Regulatory and Development Authority (IRDAI).

Setting Up AIF in IFSC

An Alternative Investment Firm can be set up in the form of a company, LLP, trust, or body corporate in the IFSC.

Categories of AIFs Permitted in IFSC

SEBI IFSC guidelines recognize Category I, II, and III AIFs, each with specific investment criteria and restrictions.

Permitted Investors

Permissible investors in an AIF set up in IFSC include non-resident individuals, non-resident Indians, and institutional investors resident in India eligible under exchange regulations.

Key Steps for Setting Up GIFT AIF, GIFT AIF Manager, and GIFT AIF Sponsor

The process involves obtaining approvals, identifying office space, and complying with SEZ and SEBI regulations.

Tax Benefits

Category I and Category II AIFs have tax pass-through status for Indian income-tax purposes, with various exemptions and benefits for investors and managers/sponsors.

Relaxations for AIF in GIFT City

AIFs in GIFT City are permitted to undertake leverage, co-invest in portfolio companies, and invest in domestic AIFs, among other relaxations.

Diversification Limit and Leverage

Diversification limits and leverage conditions for AIFs in GIFT City differ from those under the AIF Regulations, providing more flexibility.

Investment Avenues

IFSC AIFs have multiple investment avenues, including securities issued by companies incorporated in IFSC, listed securities, and units of an AIF.

FAQ

Q1: What is an International Financial Service Centre (IFSC)?

A1: An IFSC is a jurisdiction where global financial service providers offer financial products/services to global customers in foreign currencies. GIFT City is India’s only approved IFSC located in Gandhinagar, Gujarat.

Q2: How is an IFSC regulated?

A2: IFSCs are approved by the Central Government under the Special Economic Zones (SEZ) Act, 2005 and are governed by financial services regulators such as RBI, SEBI, and IRDAI.

Q3: How can an Alternative Investment Firm be set up in IFSC?

A3: An Alternative Investment Firm can be set up in the form of a company, LLP, trust, or body corporate in the IFSC.

Q4: What are the different categories of AIFs permitted to be set up in IFSC?

A4: SEBI IFSC guidelines recognize Category I, II, and III AIFs, each with specific investment criteria and restrictions.

Q5: Who is permitted to invest in an AIF set up in IFSC?

A5: Permissible investors in an AIF set up in IFSC include non-resident individuals, non-resident Indians, and institutional investors resident in India eligible under exchange regulations.

Q6: What are the key steps for setting up GIFT AIF, GIFT AIF Manager, and GIFT AIF Sponsor?

A6: The process involves obtaining approvals, identifying office space, and complying with SEZ and SEBI regulations.

Q7: What are the tax benefits for AIFs and their managers/sponsors in GIFT City?

A7: AIFs in GIFT City have tax pass-through status for Indian income-tax purposes, with various exemptions and benefits for investors and managers/sponsors.

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Comprehensive Guide to Setting Up AIF Category II in GIFT City, India’s IFSC

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<h2>Key Takeaways:</h2><h3>1. International Financial Service Centre (IFSC)</h3><p>An IFSC is a jurisdiction where global financial service providers offer financial products/services to global customers in foreign currencies.</p><p><br></p><p>GIFT City is India’s only approved IFSC located in Gandhinagar, Gujarat.</p><h3>2. Regulation of IFSC</h3><p>IFSCs are approved by the Central Government under the Special Economic Zones (SEZ) Act, 2005 and are governed by financial services regulators such as RBI, SEBI, and IRDAI.</p><h3>3. Setting Up AIF in IFSC</h3><p>AIF can be set up in the form of a company, LLP, trust, or body corporate in the IFSC.</p><h3>4. Categories of AIFs Permitted in IFSC</h3><p>Category I, II, and III AIFs are recognized, each with specific investment criteria and restrictions.</p><h3>5. Permitted Investors</h3><p>Permissible investors in an AIF set up in IFSC include non-resident individuals, non-resident Indians, and institutional investors resident in India eligible under exchange regulations.</p><h3>6. Key Steps for Setting Up GIFT AIF, GIFT AIF Manager, and GIFT AIF Sponsor</h3><p>The process involves obtaining approvals, identifying office space, and complying with SEZ and SEBI regulations.</p><h3>7. Tax Benefits</h3><p>AIFs in GIFT City have tax pass-through status for Indian income-tax purposes, with various exemptions and benefits for investors and managers/sponsors.</p><h3>8. Relaxations for AIF in GIFT City</h3><p>AIFs in GIFT City are permitted to undertake leverage, co-invest in portfolio companies, and invest in domestic AIFs, among other relaxations.</p><h3>9. Diversification Limit and Leverage</h3><p>Diversification limits and leverage conditions for AIFs in GIFT City differ from those under the AIF Regulations, providing more flexibility.</p><h3>10. Investment Avenues</h3><p>IFSC AIFs have multiple investment avenues, including securities issued by companies incorporated in IFSC, listed securities, and units of an AIF.</p><h2>Synopsis:</h2><p>The provide is a comprehensive guide to setting up an Alternative Investment Firm (AIF) Category II in the Gujarat International Finance Tec-City (GIFT City), India’s sole International Financial Service Centre (IFSC). It delves into the regulatory landscape of IFSCs, the intricacies of AIF categories, tax benefits, and investment avenues, offering a roadmap for global financial service providers.</p><h2>International Financial Service Centre (IFSC)</h2><p>An IFSC is a jurisdiction where global financial service providers offer financial products/services to global customers in foreign currencies. GIFT City is India’s only approved IFSC located in Gandhinagar, Gujarat. It undertakes financial services transactions that are currently carried on outside India by overseas financial institutions and subsidiaries/overseas branches of Indian financial institutions.</p><h2>Regulation of IFSC</h2><p>IFSCs are approved by the Central Government under the Special Economic Zones (SEZ) Act, 2005 and are governed by financial services regulators such as the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and Insurance Regulatory and Development Authority (IRDAI).</p><h2>Setting Up AIF in IFSC</h2><p>An Alternative Investment Firm can be set up in the form of a company, LLP, trust, or body corporate in the IFSC.</p><h2>Categories of AIFs Permitted in IFSC</h2><p>SEBI IFSC guidelines recognize Category I, II, and III AIFs, each with specific investment criteria and restrictions.</p><h2>Permitted Investors</h2><p>Permissible investors in an AIF set up in IFSC include non-resident individuals, non-resident Indians, and institutional investors resident in India eligible under exchange regulations.</p><h2>Key Steps for Setting Up GIFT AIF, GIFT AIF Manager, and GIFT AIF Sponsor</h2><p>The process involves obtaining approvals, identifying office space, and complying with SEZ and SEBI regulations.</p><h2>Tax Benefits</h2><p>Category I and Category II AIFs have tax pass-through status for Indian income-tax purposes, with various exemptions and benefits for investors and managers/sponsors.</p><h2>Relaxations for AIF in GIFT City</h2><p>AIFs in GIFT City are permitted to undertake leverage, co-invest in portfolio companies, and invest in domestic AIFs, among other relaxations.</p><h2>Diversification Limit and Leverage</h2><p>Diversification limits and leverage conditions for AIFs in GIFT City differ from those under the AIF Regulations, providing more flexibility.</p><h2>Investment Avenues</h2><p>IFSC AIFs have multiple investment avenues, including securities issued by companies incorporated in IFSC, listed securities, and units of an AIF.</p><h2>FAQ</h2><p><strong>Q1: What is an International Financial Service Centre (IFSC)?</strong></p><p><strong>A1:</strong> An IFSC is a jurisdiction where global financial service providers offer financial products/services to global customers in foreign currencies. GIFT City is India’s only approved IFSC located in Gandhinagar, Gujarat.</p><p><br></p><p><strong>Q2: How is an IFSC regulated?</strong></p><p><strong>A2:</strong> IFSCs are approved by the Central Government under the Special Economic Zones (SEZ) Act, 2005 and are governed by financial services regulators such as RBI, SEBI, and IRDAI.</p><p><br></p><p><strong>Q3: How can an Alternative Investment Firm be set up in IFSC?</strong></p><p><strong>A3:</strong> An Alternative Investment Firm can be set up in the form of a company, LLP, trust, or body corporate in the IFSC.</p><p><br></p><p><strong>Q4: What are the different categories of AIFs permitted to be set up in IFSC?</strong></p><p><strong>A4:</strong> SEBI IFSC guidelines recognize Category I, II, and III AIFs, each with specific investment criteria and restrictions.</p><p><br></p><p><strong>Q5: Who is permitted to invest in an AIF set up in IFSC?</strong></p><p><strong>A5: </strong>Permissible investors in an AIF set up in IFSC include non-resident individuals, non-resident Indians, and institutional investors resident in India eligible under exchange regulations.</p><p><br></p><p><strong>Q6: What are the key steps for setting up GIFT AIF, GIFT AIF Manager, and GIFT AIF Sponsor?</strong></p><p><strong>A6: </strong>The process involves obtaining approvals, identifying office space, and complying with SEZ and SEBI regulations.</p><p><br></p><p><strong>Q7: What are the tax benefits for AIFs and their managers/sponsors in GIFT City?</strong></p><p><strong>A7:</strong> AIFs in GIFT City have tax pass-through status for Indian income-tax purposes, with various exemptions and benefits for investors and managers/sponsors.</p>

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