What is GIFT City (IFSC)?
GIFT City hosts India's International Financial Services Centre (IFSC). This lesson explains who regulates it, why business there is done in foreign currency, and why a resident's money reaches it as an overseas remittance under RBI's Liberalised Remittance Scheme.
What it is
GIFT City stands for Gujarat International Finance Tec-City. It hosts India's International Financial Services Centre (IFSC). The institutions set up there, called IFSC units, include banking units, fund management entities and insurance offices.
Three features set the IFSC apart from the rest of India's financial system: its own regulator, business in foreign currency, and a special status under exchange control.
One regulator: IFSCA
The International Financial Services Centres Authority (IFSCA) was set up on 27 April 2020 under the International Financial Services Centres Authority Act, 2019. It is the single regulator for financial products, financial services and financial institutions in the IFSC.
Before that, four domestic regulators each looked after their own area of business there: RBI, SEBI, IRDAI and PFRDA. With IFSCA in place, a banking unit, a fund management entity and an insurance office in the IFSC all answer to the same authority.
Foreign currency and resident-outside-India status
Transactions in the IFSC are carried out in foreign currency, such as the US dollar, and not in rupees. Whatever is held there is expressed in foreign currency, so its value in rupees moves with the exchange rate, up or down.
For exchange-control purposes, a unit set up in the IFSC is treated as a person resident outside India, even though it is physically in India. Placing money with an IFSC unit is therefore not a domestic transfer; it is an overseas remittance.
How a resident's money gets there
A resident individual sends money to the IFSC under RBI's Liberalised Remittance Scheme (LRS). The limit is USD 250,000 per resident individual per financial year (as at October 2026), PAN is mandatory, and money sent to the IFSC shares that limit with every other remittance abroad.
Two sets of rules therefore sit side by side: IFSCA regulates the institution and the product, while the limits and conditions on the remittance remain RBI rules. Income earned there is taxable in India under the normal rules for residents.
Rules at a glance
A transfer that looks domestic but is not
Kavita, 38, a doctor in Indore, wants to place USD 5,000 with a banking unit in the GIFT IFSC. She assumes that, since GIFT City is in India, this is like a transfer between two Indian bank accounts.
It is not. The banking unit is treated as a person resident outside India, so her transfer is a remittance under LRS: her PAN is needed, and the USD 5,000 counts towards her USD 250,000 limit for that financial year.
At an assumed rate of ₹85 per dollar, a made-up figure for this example, the remittance costs 5,000 × 85 = ₹4,25,000. At an assumed ₹88 the same USD 5,000 would be worth 5,000 × 88 = ₹4,40,000; at an assumed ₹82 it would be worth 5,000 × 82 = ₹4,10,000. The rate can move in either direction.
Key points
- GIFT City (Gujarat International Finance Tec-City) hosts India's International Financial Services Centre (IFSC).
- IFSCA, set up on 27 April 2020 under the IFSCA Act, 2019, is the single regulator in the IFSC; earlier RBI, SEBI, IRDAI and PFRDA each regulated their own areas.
- Transactions in the IFSC are in foreign currency, so the rupee value of anything held there moves with the exchange rate in either direction.
- An IFSC unit is treated as a person resident outside India for exchange control, so a resident's transfer to it is an overseas remittance under LRS.
Common misunderstandings
- GIFT City is in India, but an IFSC unit is not a domestic institution for exchange control: it is treated as a person resident outside India.
- IFSCA being the single regulator inside the IFSC does not replace RBI's rules on sending money there: the LRS limit and conditions still apply.
- A foreign-currency holding does not only gain when measured in rupees: if the rupee strengthens, its rupee value falls.
Questions people ask
Is GIFT City the same thing as the IFSC?
GIFT City is the place. The IFSC is the International Financial Services Centre that it hosts, where financial business is done in foreign currency under IFSCA's regulation.
Are transactions in the IFSC done in rupees?
No. Business there is transacted in foreign currency, such as the US dollar.
Why does a transfer to a place inside India use the LRS?
Because an IFSC unit is treated as a person resident outside India for exchange control, a resident individual's transfer to it is an overseas remittance and counts towards that year's LRS limit.
What this lesson relies on
- International Financial Services Centres Authority Act, 2019
- RBI — Liberalised Remittance Scheme (Schedule III to the Foreign Exchange Management (Current Account Transactions) Rules, 2000; RBI FAQ on LRS)
This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.