Corporate Treasury Centres in GIFT IFSC: Registration, Permitted Activities and the Deemed-Dividend Question

A group treasury centre helps multinational groups manage funds and lending between affiliates. In GIFT IFSC, a Global or Regional Corporate Treasury Centre (GRCTC) operates under the IFSCA regulatory framework, while Indian tax law may treat certain intra-group loans as deemed dividends. Amendments introduced in 2025 and 2026 changed the scope of this tax exclusion, making both regulatory compliance and the conditions for relief important when structuring treasury operations.

The Regulatory Half: A GRCTC is a Finance Company or Finance Unit

Treasury centres are not a separate licence category under the GIFT IFSC regulatory framework. Instead, Global/Regional Corporate Treasury Centres (GRCTCs) are recognised as a permitted core activity under regulation 5(1)(ii)(e) of the IFSCA (Finance Company) Regulations, 2021.

Two structural choices follow from the regulations:

• a Finance Company is separately incorporated (a subsidiary, joint venture or newly incorporated company under the Companies Act, 2013), does not accept public deposits and is not registered as a Banking Unit; while
• a Finance Unit is a branch of an entity incorporated in its home jurisdiction.

For Finance Units generally, the regulations require the applicant to be engaged in financial services and regulated in its home jurisdiction, with a no-objection certificate from the home regulator. A second proviso to regulation 3(3) disapplies that requirement for an entity setting up a GRCTC as a Finance Unit. This is a deliberate accommodation: a manufacturing or technology group’s treasury arm is not a regulated financial institution at home, and would otherwise be unable to qualify.

Capital is calibrated accordingly. Under the Schedule, a GRCTC must maintain the higher of USD 0.2 million or any amount required under the relevant framework, as against USD 3 million for other core activities. The Schedule also exempts a GRCTC from regulation 4, the prudential requirements including the 8% capital ratio, liquidity coverage ratio and 25% exposure ceiling, subject to having a Board-approved prudential policy and satisfying fit-and-proper criteria.

The Operating Framework for GIFT IFSC Treasury Centres

IFSCA’s framework circular of 4 April 2025, updated as on 9 June 2025, superseded the earlier 2021 framework. Its main features:

Registration conditions (clause 3). The applicant must have or undertake to set up adequate infrastructure in the IFSC; undertake to employ at least five qualified personnel based in the IFSC, including a Head of Treasury and a Compliance Officer, before commencing operations; demonstrate the owned-fund requirement; have a parent from a jurisdiction not identified in the FATF public statement as a “High Risk Jurisdiction subject to a call for action”; satisfy fit-and-proper requirements; and not have been refused authorisation by IFSCA in the preceding year. The June 2025 amendment allows the Chairperson to relax the five-personnel condition, on request, for up to one year from commencement of operations.

Legal form (clause 5). A company in the IFSC, or a branch of a company incorporated in India or outside India.

Owned fund (clause 6). USD 0.2 million at all times, which for a Finance Unit may be maintained at parent level.

Who may be served (clause 12). A GRCTC may undertake permissible activities for its group entities, the group entities of its parent, and branches of such parent or group entities. Those service recipients may be resident or non-resident under FEMA. Where a service recipient is a person resident in India, the framework expressly requires compliance with FEMA. The GRCTC must maintain an updated list of service recipients and provide it to IFSCA when called for, and service recipients must be registered under some law with a competent or statutory body in their home jurisdiction.

Permissible activities (clause 13). Raising capital by issuing equity shares; borrowing, including inter-company deposits; credit arrangements; transacting or investing in financial instruments issued in or outside the IFSC; OTC and exchange-traded derivatives; foreign exchange transactions in specified currencies; factoring and forfaiting; acting as a re-invoicing centre; liquidity management; maintaining relationships with financial counterparties; managing service recipients’ insurance and pension-related obligations; advisory services related to those activities and to financial and risk management, funding and capital markets; acting as a holding company; and any other notified activity with prior approval. A GRCTC undertaking factoring and forfaiting must additionally register under the IFSCA (Registration of Factors and Registration of Assignment of Receivables) Regulations, 2024.

Commencement (clause 14). Operations must begin within six months of the certificate of registration. An extension of up to three months may be sought at least two months before the deadline, supported by a board resolution.

Governance (clause 15). Board-approved corporate governance, risk management and permissible-activity policies are mandatory, the last covering approval processes and delegation, financial limits, oversight or audit, and control mechanisms.

Currency rules come from the regulations themselves: operations in freely convertible foreign currency, an INR account permitted for administrative and statutory expenses, and a balance sheet maintained in US dollars.

The Tax Half: The Deemed-Dividend Carve-Out

Under Indian income-tax law, certain advances or loans to shareholders or to concerns in which a shareholder has a substantial interest may be treated as deemed dividends. For GIFT IFSC treasury centres, which rely on intra-group lending, this can create significant tax concerns. The Finance Acts of 2025 and 2026 introduced a conditional exclusion from the deemed-dividend provisions, subject to specific requirements relating to group entities, foreign listings and notified jurisdictions.

Parliament addressed this in two stages.

2025. The Finance Act, 2025 inserted an exclusion in section 2(22) of the Income-tax Act, 1961 for an advance or loan between two group entities where one of them is a Finance Company or Finance Unit, and the parent or principal entity of the group is listed on a stock exchange outside India, other than in territories the Board may specify.

2026. The Finance Act, 2026 substituted the corresponding sub-clause in section 2(40) of the Income-tax Act, 2025. As substituted, the exclusion covers an advance or loan between two group entities where:

• one of the group entities is a “Finance Company” or a “Finance Unit”;
• the other group entity to the transaction is located in a country or territory outside India; and
• the parent entity or principal entity of the group is listed on a stock exchange in a country or territory outside India,

with the added stipulation that, for the second and third conditions, the country or territory outside India “shall be specified by the Central Government, by notification”.

The amendment also fixes the vocabulary. “Group entity” takes the meaning given to “group entities” in regulation 2(1)(m) of the IFSCA (Payment Services) Regulations, 2024. “Parent entity” or “principal entity” means an entity of which the other group entities are subsidiaries and which either exercises or controls more than half the total voting power, alone or with subsidiaries, or controls the composition of the board of directors.

Two practical consequences follow.

First, the relief is structurally conditional. A group whose parent is unlisted, or listed only in India, does not satisfy the third condition, however genuine its treasury operations. The exclusion is drawn around listed multinational groups.

Second, the relief depends on a notification. As substituted, the provision requires the relevant countries or territories to be specified by the Central Government. As at 17 September 2026, no such notification was traced in the IFSCA notifications database or in publicly available Income Tax Department material. Until the position is confirmed, a group relying on the carve-out for the tax year 2026-27 should treat the scope of eligible jurisdictions as unresolved and document the basis on which it takes its position.

Reading the Two Halves Together

The regulatory framework is permissive about who may be served, including Indian group companies, subject to FEMA. The tax carve-out is narrower, keyed to listed foreign parents, foreign-located counterparty group entities and notified jurisdictions. A treasury structure that satisfies IFSCA’s requirements is therefore not automatically outside the deemed-dividend charge, and the two analyses should be run together before the first intra-group loan is made.

FAQs

1. What is a GRCTC in GIFT IFSC?

A Global or Regional Corporate Treasury Centre (GRCTC) manages intra-group financing, liquidity and treasury operations under the IFSCA regulatory framework.

2. What is the deemed-dividend exclusion for GRCTCs?

It provides conditional relief for qualifying intra-group loans under section 2(40) of the Income-tax Act, 2025, subject to the statutory requirements.

3. Can an Indian group qualify for the exclusion?

The exclusion requires the relevant group entity to be located outside India and the parent or principal entity to be listed on a foreign stock exchange, subject to the specified-jurisdiction requirement.

4. Is the deemed-dividend exclusion automatic?

No. Eligibility depends on the statutory conditions, including the Central Government’s notification of the relevant countries or territories.