Archive · 1 Feb 2026
Union Budget Extends Tax Holiday for IFSC Units
The Indian government has made some big changes to help companies in a special financial area called IFSC in Gujarat.
They doubled the time these companies don't have to pay taxes from 10 years to 20 years.
After that, they only have to pay 15% in taxes instead of 25-35%.
This is great news for banks and other businesses in this area because it makes their operations cheaper and more competitive with other places like Singapore or Dubai.
The first companies started in this area in 2015, so their tax break was about to end in 2025.
Now, they get an extra 11 years of tax-free operations.
This change is expected to attract more companies to set up shop in Gujarat's GIFT IFSC.
The Union Budget extended the tax holiday for IFSC units in Gujarat from 10 to 20 years.
Post-holiday tax rate reduced from 25-35% to 15% for IFSC entities.
Banks and early movers in GIFT IFSC benefit the most from the extended tax holiday.
GIFT IFSC offers a one-time, uninterrupted 20-year tax holiday, unlike other IFSCs that require periodic renewals.
Operating out of GIFT City can reduce overall operating costs by 50-70% compared to other major IFSCs.
- Who
- Companies operating from the International Financial Services Centre (IFSC) in Gujarat
- What
- Extension of tax holiday to 20 years and reduction of post-holiday tax rate to 15%
- When
- Announced in the Union Budget
- Where
- Gujarat, India
- Why
- To make IFSC entities more competitive and provide tax certainty
- Tax Holiday Duration
- 20 years (previously 10 years)
- Post-Holiday Tax Rate
- 15% (previously 25-35%)
- IFSC Units Registered
- 1,034 as of September 2025
- Banking Assets in GIFT IFSC
- $100 billion as of September 2025
- Banks in GIFT IFSC
- 37
- Fund Management Entities
- 194
- Alternative Investment Funds
- 310