At India Juris, we are committed to delivering outstanding legal and business support to Ancillary Units. We provide advice on how to set up an Ancillary Unit in GIFT City to legal and compliance service providers, auditing and accounting firms, management consultant service providers.
- Assisting in incorporation of the entity in GIFT City.
- Offering guidance in obtaining Letter of Approval by Authority.
- Assisting in filing application to IFSCA in accordance with Framework for Enabling Ancillary Units in IFSCA.
- Drafting of developer’s agreement with respect to office unit.
FAQs
1 What activities qualify as ancillary services in IFSC?
Ancillary services include activities that directly or indirectly support financial products, institutions, and services, as defined in Section 3(1) of the IFSCA Act, 2019. These services help strengthen or are connected to IFSC operations.
2 What specific activities are allowed for ancillary service providers?
According to IFSCA Circulars, providers can engage in various services such as legal, compliance, auditing, management consulting, and administrative support. These activities aim to aid the effective functioning of financial institutions in IFSC.
3 Who can become an ancillary service provider?
Entities eligible to become providers include newly incorporated or existing Indian and foreign companies, branches, LLPs, or registered partnerships operating in IFSC. These entities may set up as companies, LLPs, or other approved forms by the IFSCA.
4 Who are the clients for these services?
Ancillary service providers can offer services to entities in IFSC, foreign jurisdictions, or Indian entities planning to operate in IFSC or overseas. All payments must be made in freely convertible foreign currencies.
5 What currency is used for transactions?
Service providers in IFSC must conduct transactions in foreign currencies. However, they may cover administrative costs using INR by maintaining an INR account.
6 What approvals are needed to set up as an ancillary service provider?
Entities must receive approvals from the SEZ Division and the IFSCA. Additionally, they may require other approvals under applicable laws based on the entity’s operations.
7 How should books of accounts be maintained?
Providers must maintain their financial records and accounts in the foreign currency declared during their registration application with IFSCA.
8 What compliance and reporting requirements exist?
Service providers must submit annual financial statements, confirm compliance with regulations, report any regulatory actions, and provide any other information requested by IFSCA periodically.
9 Is there a standard format for application submission?
Yes, IFSCA provides a format for filing applications, available for download on their website. The application must follow this prescribed format.
10 What supporting documents are required for the application?
Documents to include are the incorporation certificate, constitutional documents (such as Memorandum and Articles of Association), audited financial statements, director’s proof of address, tax identification documents, SEZ approval, payment proof, and authorization letters.
11 Can entities seeking to undertake regulated activities apply under the ancillary framework?
Entities planning to engage in regulated activities such as Investment Advisor, Debenture Trustee, or fund management must apply separately for registration under the respective frameworks instead of using the Ancillary Services framework.
12 What are the applicable fees for ancillary service providers?
The fee structure includes an application fee, authorization fee, and annual fee, each of USD 1,000 per activity. Payments can be made either in USD or INR, based on the entity’s location and relevant exchange rates.
13 When should the fees be paid?
The application fee must be paid at the time of submission, while the authorization fee is due after receiving in-principle approval from IFSCA. Annual fees are calculated on a pro-rata basis for the first year and must be paid within 15 days of communication.
14 What are the advantages of setting up as an ancillary service provider in GIFT IFSC?
Key benefits include global outreach, a robust regulatory environment, world-class infrastructure, excellent connectivity, tax incentives, lower operational costs, and access to a highly skilled talent pool.
15 What tax framework applies to ancillary service providers?
Ancillary service providers enjoy a 10-year tax holiday within 15 years of setup. The Minimum Alternate Tax (MAT) rate is 9% for units in IFSC. Additionally, services received by units in IFSC or provided to offshore clients are exempt from GST.
16 Is there a minimum capital requirement for ancillary service providers?
The minimum capital requirement depends on the type of service and the structure of the business. It is advisable to consult with GIFT City authorities or legal advisors for specific details.
17 What technology services are considered ancillary services in GIFT City?
Technology services such as IT consulting, cybersecurity, cloud computing, software development, and financial technology (FinTech) solutions are considered ancillary services in GIFT City.
18 Can ancillary service providers collaborate with IFSC units?
Yes, ancillary service providers can collaborate and offer services to units established within the IFSC, including international banks, insurance companies, and other financial institutions.
Above FAQs provide a foundational understanding of the operations and requirements for ancillary service providers in GIFT City. For detailed and specific advice, companies should consult legal advisors familiar with GIFT City’s regulations.
