What exactly is FIF?
• A Family Investment Fund (FIF) is a self-managed Fund in GIFT City that is established by a single family office or organisations controlled by the family.
• Can be utilized as a worldwide investment structure • First-of-its-kind structure for Indian family offices
2022 International Financial Services Centre Authority (IFSCA) (Fund Management) Regulations
The minimum amount of investment FIF ?
Within three years of its inception, it must have a minimum corpus of $10 million.
Investment ceilings
Individual investors may invest up to $250K (subject to the LRS limit).
Entities – Entities may be single proprietorship firms, partnership firms, LLPs, trusts, corporations, or a body corporate. if a person or group of people from a single family has a’substantial economic stake’ (at least 90%)
The Advantages of Investing in FIF
Allows for global diversity –
• Can invest in public and unlisted stocks, as well as physical assets such as real estate, bullion, and annuities.
• Allows for leveraged investments • Removes the LRS restriction from family members
The benefit of GIFT City
• Proximity to major Indian cities • Access to wealth managers and advisors • Taxation of FIF • 100% income tax exemption for ten consecutive years within a fifteen-year period (subject to the nature of investments qualifying as required ‘business’)
• GST exemption • Contributed by Water Field Advisors
Is it true that FIF capital gains are tax-free for the first ten years?
Whether or not capital gains on investments by a FIF qualify for 100% tax exemption is dependent on whether or not they may be classified as business income. Any income must be classified as business income or not according to basic standards that apply to any other taxpayer. There will be some leeway for Family Investment Funds (FIF) to characterise income from the sale of listed securities as business profits, subject to tax authorities’ approval of general conditions such as intent, systematic business activity, accounting treatment, borrowing, and so on.
The tax break is offered on revenue from a unit in GIFT City that has been authorised for establishment. If such income (capital gains on investments) can be shown to be allowed company income, then the tax break should be accessible.
GIFT City’s FIF.
GIFT City members manage the Family Investment Fund (FIF).
To be created by a single family office or family-controlled enterprises for foreign investment.
India’s first family-run business’s unique building design
IFSCA (Fund Management) Regulations, 2022 govern fund management.
Low Investment
Capital for the first three years: $10 million.
Investment minimums
Individuals may invest $250,000 (LRS maximum).
Up to half its net worth “Entity” may be a sole proprietorship, partnership, limited liability company, trust, corporation, or other legal organisation. own at least 90% of a company.
Funding Value through FIF
Accesses international options
Stocks, bonds, ETFs, mutual funds, real estate, bullion, and other tangible assets.
Leverages investments; Removes LRS limit for households
Gift City Benefits
Financial managers/advisors Key Indian cities nearby Lower administrative, setup, and daily operating expenses
- 100% income tax exemption for ten years over 15 years (assuming investments qualify as “business”). FIF taxation | Water field Advisors’ contribution GST exempt
FIF capital gains: 10-year, 100% tax-free?
Whether a FIF’s investment gains constitute company income impacts whether they are tax-free. When classifying money as corporation income, the same standards must be used as for other taxpayers. The Family Investment Fund (FIF) may include listed securities sales as company income under specific circumstances. The FIF’s goal, business consistency, accounting practises, capacity to borrow money, and so on.
After receiving approval to operate, GIFT City units are tax-exempt. If investment gains are “approved business income,” the tax deduction should apply.
