GIFT City, an International Financial Services Centre (IFSC) located in Gujarat, India, introduces the Family Investment Fund (FIF), providing Indian families with a convenient avenue for offshore investments. The FIF allows affluent families to pool their resources and invest in various domestic and international asset classes.

The key advantage of the FIF is its ability to create a diversified portfolio that goes beyond domestic assets, encompassing international options like listed and unlisted securities, real estate, bullion, and art. Individual investors can contribute up to $250,000 to the FIF, with a 20% tax collection at source (TCS) applicable from 1st July. Qualified Indian entities, which must be 90% family-owned, can contribute up to 50% of their net worth.

To establish an FIF in GIFT City, the fund must amass a minimum corpus of $10 million within three years. Additionally, FIFs benefit from the prospect of accessing loans from banks situated in GIFT City, allowing for potential leverage.

GIFT City operates within a Special Economic Zone (SEZ), offering attractive tax benefits and exemptions, such as a 100% income tax exemption for ten consecutive years within a fifteen-year period (subject to qualifying investments as requisite ‘business’), along with exemptions from GST. This setup makes long-term investments, like global PE/VC funds, particularly appealing.

An essential advantage of setting up an FIF is its ability to maximize the liberalized remittance scheme (LRS) limit for family members. By using the FIF route, individuals can preserve their personal $250,000 global remittance limit for other international ventures.

Establishing an FIF in GIFT City comes with lower regulatory burdens compared to other funds, saving time and costs. Furthermore, the broader range of investment opportunities available within the IFSC enhances the appeal of the FIF.