IFSCA Act 2019 & GIFT-IFSC Complete Guide | IFSCA, RBI & SEBI Grade A

IFSCA Grade A • RBI Grade B • SEBI Grade A • PFRDA Grade A

⚡ Quick Answer & AI Exam Snapshot (TL;DR)

The International Financial Services Centres Authority (IFSCA) Act, 2019 (Act 50 of 2019) and the GIFT-IFSC (Gandhinagar, Gujarat) ecosystem form the core syllabus of IFSCA Grade A and a high-yield current finance topic in RBI Grade B and SEBI Grade A. Every aspirant must memorize: (1) Establishment of IFSCA on 27 April 2020 (HQ: GIFT City, Gandhinagar) as India’s FIRST Unified Financial Sector Regulator exercising the powers of all 4 domestic financial regulators listed in the First Schedule (RBI, SEBI, IRDAI, and PFRDA) under Section 13; (2) Composition of the 9-Member Authority under Section 5 (1 Chairperson + 1 member each nominated by RBI, SEBI, IRDAI, and PFRDA [4 ex-officio regulator nominees] + 2 officials of the Ministry of Finance + 2 other members appointed on the Selection Committee’s recommendation; Tenure: 3 years or up to age 65 for Chairperson / 62 for Whole-Time Members!); (3) FEMA Status of GIFT-IFSC: Treated as a ‘Non-Resident / Offshore Jurisdiction’ under FEMA, 1999 (all transactions in 15 specified foreign currencies under Section 20); and (4) Flagship GIFT-IFSC Institutions: IFSC Banking Units (IBUs), India International Bullion Exchange (IIBX), NSE IX / India INX, Aircraft & Ship Operating Lease Framework, Foreign University Campuses (Deakin & Wollongong), and 100% Tax Holiday for 10 consecutive years out of 15 years under Section 80LA!

1. Statutory Architecture of the IFSCA Act, 2019 (Sections 1 to 34 & First Schedule)

Memorize the exact section-by-section structure, composition, and unique 3-year tenure rules of the IFSCA Act, 2019:

Section & Provision	Exact Statutory Rule & Exam Triggers
Enactment, Establishment & Headquarters (Sections 3 & 4)	• Enacted on 19 December 2019 (Act 50 of 2019). • IFSCA Established on: 27 APRIL 2020. • Headquarters: GIFT City (Gujarat International Finance Tec-City), Gandhinagar, Gujarat (approved as a Multi-Services SEZ under Section 18 of the SEZ Act, 2005). • 1st Chairperson: Shri Injeti Srinivas \| 2nd Chairperson: Shri K. Rajaraman.
Section 5: Composition of the 9-Member Authority	The Authority consists of NINE (9) Members appointed by the Central Government: 1. One (1) Chairperson; 2. Four (4) Members nominated by the 4 Domestic Financial Regulators (1 each from RBI, SEBI, IRDAI, and PFRDA) — ex-officio; 3. Two (2) Members from amongst officials of the Ministry of Finance — ex-officio; AND 4. Two (2) other Whole-Time or Part-Time Members appointed on the recommendation of a Selection Committee.
Section 6: Term of Office & Retirement Age (Major Exam Trap!)	• Chairperson: Term of THREE (3) YEARS OR up to the age of 65 YEARS, whichever is earlier (eligible for reappointment)! • Whole-Time Members: Term of THREE (3) YEARS OR up to the age of 62 YEARS, whichever is earlier (eligible for reappointment)!
Section 12 & Section 13: Unified Regulatory Powers (The First Schedule)	Under Section 13, all powers exercisable by the 4 Domestic Regulators listed in the First Schedule (RBI, SEBI, IRDAI, and PFRDA) under 15+ Central Acts (RBI Act 1934, BR Act 1949, FEMA 1999, SEBI Act 1992, SCRA 1956, Insurance Act 1938, IRDAI Act 1999, PFRDA Act 2013) inside an IFSC are exercised SOLELY by IFSCA!
Section 19 & Section 20: Performance Review Committee (PRC) & Foreign Currency Rule	• Section 19 (PRC): IFSCA must constitute a Performance Review Committee consisting of at least 2 members of the Authority to review regulatory governance at least once a year. • Section 20: Every financial transaction in an IFSC is conducted in 15 Specified Foreign Currencies (USD, EUR, GBP, JPY, CAD, AUD, CHF, HKD, SGD, AED, RUB, SEK, NOK, NZD, CNY).

2. GIFT-IFSC Ecosystem: IBUs, Bullion Exchange (IIBX), GIFT Nifty, FMEs & Aircraft/Ship Leasing

1. FEMA Status of GIFT-IFSC (‘Offshore Jurisdiction Inside India’):
Under FEMA, 1999, any unit set up in GIFT-IFSC is treated as a ‘Person Resident Outside India’ (Non-Resident / Offshore Entity). Resident Indians can remit up to USD 2,50,000 per FY under RBI’s LRS to GIFT-IFSC for investments, insurance, and education at foreign university branch campuses.

2. Five Flagship Pillars of GIFT-IFSC:
• IFSC Banking Units (IBUs — IFSCA Banking Regulations, 2020): Minimum parent capital of USD 20 Million; 100% EXEMPT from RBI’s CRR and SLR requirements (subject to LCR and NSFR instead).
• India International Bullion Exchange (IIBX — Launched July 2022): Allows Qualified Jewellers and valid India-UAE CEPA TRQ holders to directly import gold/silver via Bullion Depository Receipts (BDRs).
• International Stock Exchanges & Direct Listing: India INX and NSE IX (operates GIFT Nifty, migrated from Singapore in July 2023). Public Indian companies can directly list equity shares on India INX and NSE IX under the Jan 2024 Direct Listing Rules.
• Fund Management Entities (FMEs — IFSCA Fund Management Regulations, 2022/2025): Single registration of the Fund Manager across 3 categories: (i) Authorised FME, (ii) Registered FME (Non-Retail), and (iii) Registered FME (Retail).
• Aircraft/Ship Leasing & Foreign Universities: Aircraft & Ship Operating/Financial Leases are notified as financial products; Deakin University and University of Wollongong (Australia) opened the first two International Branch Campuses (IBCs) in GIFT-IFSC.

3. Tax Incentives in GIFT-IFSC (Section 80LA, MAT, STT/GST Exemption & 2030 Sunset Extension)

Tax Head / Section	GIFT-IFSC Tax Incentive (Extended to 31 March 2030 in Budget 2025–26!)
Corporate Income Tax Holiday (Section 80LA)	100% Tax Deduction on Business Profits for any 10 CONSECUTIVE YEARS out of a block of 15 YEARS at the unit’s option.
Minimum Alternate Tax (MAT / AMT — Section 115JB)	Concessional MAT rate of 9% (and 0% MAT for companies opting for the new corporate tax regime under Section 115BAA).
Transaction Taxes (STT, CTT, Stamp Duty & GST)	100% EXEMPT (0%) from STT, CTT, Stamp Duty, and GST on IFSC exchange transactions.
Sunset Extension (Union Budget 2025–26)	Sunset dates for tax concessions on offshore fund relocation, aircraft/ship leasing commencement, and global treasury centres extended up to 31 MARCH 2030.

🎯 High-Yield Exam One-Liners (Last-Minute Revision Box)

IFSCA was established on 27 April 2020 under the IFSCA Act, 2019 (Act 50 of 2019) with its headquarters at GIFT City, Gandhinagar, Gujarat.
IFSCA exercises the powers of all 4 domestic financial regulators listed in the First Schedule: RBI, SEBI, IRDAI, and PFRDA.
Under Section 5 of the IFSCA Act, 2019, the Authority consists of 9 Members: 1 Chairperson, 4 ex-officio regulator nominees (RBI, SEBI, IRDAI, PFRDA), 2 MoF officials, and 2 other members.
Under Section 6 of the IFSCA Act, 2019, the Chairperson holds office for 3 YEARS or up to age 65, and Whole-Time Members hold office for 3 YEARS or up to age 62.
Under Section 19 of the IFSCA Act, the Performance Review Committee (PRC) must consist of at least 2 members of the Authority and review compliance at least once a year.
Under FEMA, 1999, units in GIFT-IFSC are treated as ‘Persons Resident Outside India’ (Non-Resident / Offshore entities).
Under Section 20 of the IFSCA Act, financial transactions in GIFT-IFSC are conducted in 15 specified Foreign Currencies.
IFSC Banking Units (IBUs) require USD 20 Million minimum assigned capital from their parent bank and are 100% EXEMPT from RBI’s CRR and SLR requirements.
The India International Bullion Exchange (IIBX) was launched at GIFT-IFSC in July 2022 for trading Bullion Depository Receipts (BDRs).
In July 2023, SGX Nifty was migrated to NSE IX at GIFT City and rebranded as ‘GIFT Nifty’.
Under the January 2024 Direct Listing Rules (Section 23(3) of the Companies Act, 2013), public Indian companies can directly list equity shares on India INX and NSE IX.
IFSCA’s Fund Management Regulations register the Fund Management Entity (FME) across 3 categories: Authorised FME, Registered FME (Non-Retail), and Registered FME (Retail).
Deakin University and the University of Wollongong (both from Australia) established the first two International Branch Campuses (IBCs) in GIFT-IFSC.
Under Section 80LA of the Income Tax Act, GIFT-IFSC units enjoy a 100% Corporate Income Tax Holiday for any 10 consecutive years out of a 15-year block.
Union Budget 2025–26 extended the sunset dates for GIFT-IFSC tax exemptions (fund relocation, aircraft/ship leasing commencement, and treasury centres) to 31 March 2030.

📝 UPSC & Regulatory Level Practice MCQs (With Detailed Solutions)

Q1. Under Section 5 and Section 6 of the International Financial Services Centres Authority (IFSCA) Act, 2019, how many total members constitute the Authority, and what is the statutory term of office and maximum age limit for the Chairperson and Whole-Time Members?

A. 10 Members; Term of 5 years (max age 65 for Chairperson and 62 for Whole-Time Members)
B. 9 Members (1 Chairperson + 4 nominees from RBI/SEBI/IRDAI/PFRDA + 2 MoF officials + 2 other members); Term of 3 YEARS (max age 65 years for Chairperson and 62 years for Whole-Time Members)
C. 7 Members; Term of 3 years (max age 62 for both Chairperson and Whole-Time Members)
D. 9 Members; Term of 4 years (max age 70 for Chairperson)

Correct Answer: (B) — Under Section 5 of the IFSCA Act, 2019, the Authority consists of 9 members: 1 Chairperson, 1 member each nominated by RBI, SEBI, IRDAI, and PFRDA (4 members), 2 members from the Ministry of Finance, and 2 other members. Under Section 6, the term of office is 3 YEARS, with a maximum retirement age of 65 years for the Chairperson and 62 years for Whole-Time Members.

Q2. Under the IFSCA (Banking) Regulations, 2020 and RBI guidelines, which of the following statements regarding an IFSC Banking Unit (IBU) operating in GIFT-IFSC is CORRECT?

A. An IBU is treated as a domestic resident branch under FEMA and must maintain 4.5% CRR and 18% SLR with the RBI.
B. An IBU is treated as a ‘Non-Resident / Offshore’ entity under FEMA, requires a minimum capital of USD 20 Million from its parent bank, and is EXEMPT from maintaining Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) (maintaining LCR and NSFR instead).
C. An IBU can accept retail savings accounts in physical Indian Rupees (INR) from walk-in domestic customers.
D. Only foreign banks incorporated outside India are permitted to open an IBU in GIFT City.

Correct Answer: (B) — Under FEMA 1999 and IFSCA Banking Regulations 2020, both Indian and Foreign banks can set up an IFSC Banking Unit (IBU) in GIFT-IFSC with a minimum capital of USD 20 Million from the parent bank. IBUs are treated as non-resident/offshore branches under FEMA and are completely exempt from RBI’s CRR and SLR norms.

Q3. Under Section 80LA of the Income Tax Act, 1961, units established in GIFT-IFSC are eligible for a 100% deduction on business profits (Tax Holiday) for how many consecutive years, and what did Union Budget 2025–26 announce regarding the sunset date for GIFT-IFSC tax incentives?

A. 100% deduction for 5 consecutive years out of 10 years; Sunset date extended to 31 March 2027
B. 100% deduction for any 10 consecutive years out of a block of 15 years; Sunset date for IFSC tax concessions extended to 31 March 2030
C. 50% deduction for 15 years; Sunset date extended to 31 March 2028
D. 100% deduction for 20 years; No sunset date

Correct Answer: (B) — Section 80LA provides a 100% tax holiday on business income for any 10 consecutive assessment years out of a 15-year block chosen by the IFSC unit. Union Budget 2025–26 extended the sunset dates for various GIFT-IFSC tax exemptions up to 31 March 2030.

Q4. Which two foreign universities became the FIRST to establish International Branch Campuses (IBCs) in GIFT-IFSC under the IFSCA (Setting up and Operation of International Branch Campuses and Offshore Education Centres) Regulations, 2022?

A. Harvard University and Stanford University (USA)
B. Deakin University and University of Wollongong (Australia)
C. University of Oxford and Imperial College London (UK)
D. National University of Singapore and Nanyang Technological University (Singapore)

Correct Answer: (B) — Australia’s Deakin University and the University of Wollongong became the first two foreign universities to operationalize International Branch Campuses (IBCs) at GIFT-IFSC in Gandhinagar under the IFSCA IBC Regulations, 2022.

Q5. Which four domestic financial sector regulators are listed in the ‘First Schedule’ of the IFSCA Act, 2019, whose regulatory powers inside an IFSC are unified and vested in IFSCA under Section 13?

A. RBI, SEBI, NABARD, and SIDBI
B. RBI, SEBI, IRDAI, and PFRDA
C. RBI, SEBI, MCA, and IBBI
D. SEBI, IRDAI, PFRDA, and NHB

Correct Answer: (B) — The First Schedule of the IFSCA Act, 2019 lists the four domestic financial sector regulators — RBI, SEBI, IRDAI, and PFRDA — whose powers inside an IFSC are exercised solely by IFSCA.

❓ Frequently Asked Questions (Exam FAQs)

Q: How does IFSCA’s Fund Management Regulations (2022/2025) differ structurally from SEBI’s domestic Mutual Fund and AIF regulations?

Under domestic SEBI regulations, an entity must obtain separate registrations for Mutual Funds, AIFs, and PMS. In contrast, IFSCA registers the Fund Management Entity (FME) once (as Authorised FME, Registered FME Non-Retail, or Registered FME Retail), allowing it to launch multiple schemes cleanly.

Q: What is a Bullion Depository Receipt (BDR) on the India International Bullion Exchange (IIBX)?

On IIBX at GIFT-IFSC, physical gold and silver bars stored in accredited vaults are dematerialized by India International Depository IFSC Ltd (IIDI) into electronic Bullion Depository Receipts (BDRs) for trading and physical delivery by Qualified Jewellers.

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