Part I: Preliminary — Structural Context of the Income Tax Act, 2025
1.1 The Recodification Landscape
Section 9 of the 2025 Act carries forward the substance of Sections 9 and 9A of the 1961 Act. It restructures and consolidates these provisions. Earlier, Section 9A covered activities that did not constitute a business connection. These rules now appear in Section 9(12), read with Schedule I of the 2025 Act.
Part II: Section 9 — Structural Overview and the Architecture of Deemed Income
2.1 The Deeming Architecture of Section 9
Section 9 of the Income Tax Act, 2025 forms the core source-rule framework for non-resident taxation in India. It defines income deemed to accrue or arise in India. This includes income from a business connection. It also covers interest, dividends, royalties, fees for technical services, and gains from transfer of Indian capital assets. At its core, the provision relies on a deeming fiction. It treats certain income as arising in India for tax purposes. This applies even when the income would not arise under ordinary analysis. The sub-sections cover different categories of income:
Section 9(2): Covers income accruing or arising through any asset, source, property, or business connection in India, or from the transfer of a capital asset situated in India.
Salary Income — Section 9(3): Deems salary income to arise in India, covering services rendered in India and Government salaries paid to Indian citizens for services abroad.
Section 9(4): Brings dividends paid by Indian companies outside India within the Indian tax net.
Interest Income — Section 9(5): Covers interest payable by the Government, a resident (with carve-outs for offshore business), or a non-resident in respect of debt used for a business carried on in India.
Section 9(6): Addresses royalty with an expansive definition covering software, satellite transmission processes, and all forms of IP licensing. The statute expressly extends the definition of royalty to cover consideration regardless of whether the payer holds possession or control of the right, property, or information; regardless of whether the payer directly uses that right, property, or information; and regardless of whether that right, property, or information sits in India.
Fees for Technical Services — Section 9(7): Covers managerial, technical, or consultancy services that a non-resident renders to Indian parties.
Business Connection and SEP — Section 9(9): Defines business connection broadly, incorporating the concept of Significant Economic Presence (SEP) for digital and emerging business models.
The Fund Manager Safe Harbour — Section 9(12): Provides the statutory carve-out for eligible fund managers — the central subject of this analysis.
2.2 The Business Connection Doctrine under Section 9(9)
Before analysing Section 9(12), understanding the business connection doctrine it carves out from is essential. Section 9(9) defines a business connection in India to include any business that carries out all or part of its operations in India, or that maintains a significant economic presence in India.
Parliament introduced the SEP concept, embodied in Section 9(9), in response to OECD concerns about digital businesses. The Memorandum explaining the Finance Bill 2018 stated that the SEP provisions aim to place more reliance on economic allegiance rather than physical location, and to bring emerging business models — including digitised businesses that require no physical presence in India — within the tax net.
This legal environment shapes how one must read Section 9(12): an offshore investment fund that appoints an Indian-resident fund manager risks the fund manager’s activities constituting a “business connection” of the fund in India — triggering Indian tax on the fund’s global income attributable to Indian operations.
Part III: Section 9(12) — Statutory Analysis
3.1 Statutory Text and Legislative Purpose
Section 9(12) of the Income Tax Act, 2025, provides the eligible fund manager safe harbour. An eligible fund manager is defined under Section 9(12). The manager must act for an eligible investment fund. The person must carry on fund management activities. The manager must also meet the conditions in Schedule I.
The operative effect of Section 9(12) is this: where an eligible fund manager located in India carries out fund management activity on behalf of an eligible investment fund established outside India, such fund management activity shall not constitute a business connection of the fund in India. This prevents the offshore fund from being dragged into India’s tax net merely by virtue of its Indian fund manager.
The provision also expressly extends a regulatory relaxation mechanism: the Central Government may, by notification, specify that any one or more of the conditions as referred to in clause (e) shall not apply, or shall apply with such modifications, as specified, in case of an eligible investment fund and its eligible fund manager, if the eligible fund manager is located in an International Financial Services Centre and has commenced its operations on or before the 31st March, 2030.
This IFSC-specific limb is discussed extensively in Part V.
3.2 Dual-Entity Regime: The Fund and the Manager
Section 9(12) creates a dual-entity regulatory framework. Both the fund and the manager must meet separate conditions:
(a) The eligible investment fund — conditions specified in Schedule I, Paragraph 1(1); and
(b) The eligible fund manager — conditions specified in Schedule I, Paragraph 1(3).
Both sets of conditions must be met for the safe harbour to apply. The fund and the manager must each comply. If either side fails, the protection falls away. This may lead to a business connection in India.
3.3 Legislative Intent: Preventing India from Being Penalised for Having Skilled Fund Managers
The legislative intent of Section 9(12) is of critical importance. Prior to the introduction of the predecessor provision (Section 9A of the 1961 Act), there was a perverse incentive: offshore funds would not appoint Indian-resident fund managers because doing so could constitute a business connection, drawing the entire fund’s income into India’s tax net. This discouraged the growth of the Indian fund management industry.
Section 9(12) resolves this tension by providing a statutory safe harbour: skilled Indian (or IFSC-based) fund managers can actively manage offshore funds without creating Indian tax exposure for those funds, subject to structural conditions designed to prevent abuse.
The predecessor provision — Section 9A of the 1961 Act — established that fund management activities carried out through an eligible fund manager for an eligible investment fund do not constitute a business connection of that fund in India. The 2025 Act carries forward and consolidates this intent under Section 9(12).
Part IV: International Tax Principles Underlying Section 9(12)
4.1 The Source Rule and Nexus
In international taxation, a state’s right to tax is typically justified by one of two nexuses: residence (the taxpayer lives or is incorporated there) or source (income arises there). India, like most jurisdictions, employs both. For non-residents, Section 5(2) limits taxability to income received in India or deemed to accrue or arise in India — the source nexus.
The business connection doctrine under Section 9(9) creates a nexus with India based on economic activity performed here. An Indian-resident fund manager acting on behalf of a Cayman Islands fund creates such a nexus precisely because part of the fund’s operations — portfolio research, investment decisions, execution — occurs in India.
Section 9(12) creates a conditional statutory carve-out from this nexus. Where the fund and manager satisfy Schedule I conditions, the activity performed in India is deemed not to constitute a business connection — effectively negating the source nexus for that fund.
4.2 The Permanent Establishment (PE) Concept and Dependent Agent PE
Under OECD and UN Model Conventions, a dependent agent — one who habitually concludes contracts in the name of the enterprise — can create a PE. A business activity carried out through a person who, acting on behalf of the non-resident, has and habitually exercises in India an authority to conclude contracts on behalf of the non-resident… shall constitute a business connection.
An Indian fund manager who actively manages and makes investment decisions for an offshore fund is, economically, a dependent agent. Section 9(12) addresses this risk through a domestic statutory exclusion. It is similar in function to the independent agent rule in Article 5(6) of the OECD Model Convention. Under that rule, no permanent establishment arises through an independent agent. However, Section 9(12) takes a different approach. The treaty rule focuses on legal independence and arm’s-length conduct. Section 9(12) can apply even to an economically dependent manager. It instead relies on structural safeguards. These conditions ensure the arrangement is not used for tax avoidance.
4.3 Income Attribution Principles
Even where a PE or business connection exists, only income attributable to the Indian operations is taxable here. The AOA (Authorised OECD Approach) to profit attribution treats a PE as a hypothetically independent enterprise. Section 9(12) avoids this complexity entirely by eliminating the business connection finding, so there is no income to attribute.
This is pragmatically significant: income attribution analysis under Indian transfer pricing rules (Section 92 of the 1961 Act / corresponding provisions of the 2025 Act) can be deeply contentious and unpredictable. By design, Section 9(12) keeps offshore funds entirely outside this framework.
4.4 The Tax Treaty Interface
Section 9(12) and the DTAA network interact in two important ways. First, most of India’s DTAAs (OECD-model treaties with Mauritius, Singapore, the Netherlands, etc.) contain PE exclusion articles. A non-resident fund could, in theory, claim treaty protection independently of Section 9(12). However, treaty protection requires treaty eligibility — the fund must be a resident of a treaty country. Section 9(12) provides a domestic-law safe harbour that does not require treaty eligibility, making it available to funds in non-treaty jurisdictions as well, provided they meet Schedule I conditions.
A non-resident may apply whichever is more beneficial — the treaty or the domestic law. A fund with both treaty protection and Section 9(12) eligibility should apply the more favourable provision on a provision-by-provision basis.
4.5 BEPS and Anti-Avoidance Considerations
The OECD’s BEPS Project has reshaped source-country nexus rules. Action 6 targets treaty abuse, while Action 7 addresses PE avoidance. India’s GAAR provisions can still apply to Section 9(12) structures. This risk arises where arrangements lack commercial substance or are primarily tax-driven. There is concern that GAAR may also apply to IFSC units, an issue raised repeatedly by industry. The CBDT has not issued a formal exemption for such structures. This remains an area of uncertainty.
Part V: Schedule I — Detailed Analysis
5.1 Nature and Function of Schedule I
Schedule I provides for Conditions for Certain Activities Not To Constitute Business Connection In India. It is the operative conditions schedule for Section 9(12), setting out the eligibility matrix for both the eligible investment fund and the eligible fund manager.
Schedule I has six sub-paragraphs addressing: (1) conditions for the eligible investment fund; (2) exemptions for sovereign funds; (3) conditions for the eligible fund manager; (4) reporting obligations; (5) CBDT guidelines; and (6) the IFSC relaxation mechanism.
5.2 Conditions for the Eligible Investment Fund — Schedule I, Para 1(1)
The following thirteen conditions must be satisfied by the fund:
Condition (a) — Non-Residency: The fund is not a person resident in India. This is an absolute threshold. An India-resident fund cannot avail the safe harbour regardless of other conditions.
Condition (b) — Treaty/Notified Territory Residency: The fund must hold residency in a country or specified territory with which India has entered into an agreement under Section 159(1) or (2), or the fund must establish, incorporate, or register itself in a country or specified territory that the Central Government notifies for this purpose. Section 159 corresponds to the old Section 90/90A DTAA provisions. The Central Government can bring funds from non-treaty jurisdictions within the safe harbour by notifying their territory.
Condition (c) — 5% Indian Participation Cap: The aggregate participation or investment in the fund, directly, by persons resident in India does not exceed 5% of the corpus of the fund as on the 1st April and the 1st October of the tax year.
Note the critical amendment: the 2025 Act (incorporating the Finance Act 2025 modification) restricts the 5% cap to direct participation only — the calculation excludes indirect Indian participation. This significant relaxation helps facilitate fund-of-fund structures. If the fund breaches the 5% threshold on the testing date, a four-month grace period applies.
Importantly, during the first three years of the fund’s operation, the eligible fund manager’s contributions not exceeding ₹25 crore do not count toward the 5% calculation. This exclusion encourages fund managers to seed their own funds during the initial period.
Conditions (d) — Investor Protection Regulation: The fund must comply with investor protection regulations. These rules apply in the country or specified territory of establishment. They also apply where the fund is incorporated or resident.
Conditions (e), (f), (g) — Diversification and Anti-Concentration: These are the most structurally demanding conditions from an investor perspective:
- The fund has a minimum of twenty-five members who are, directly or indirectly, not connected persons;
- Any member along with connected persons shall not hold more than 10% participation interest; and
- The aggregate participation of ten or fewer members (plus their connected persons) shall be less than 50%.
These conditions, taken together, ensure genuine diversification and prevent the Section 9(12) regime from being used by a closely-held fund with a thin veneer of offshore structure.
Condition (h) — Investment Concentration Limit: The fund shall not invest more than 25% of its corpus in any entity. This prevents a fund from being a single-purpose vehicle for one investee.
Condition (i) — No Associate Investment: The fund shall not make any investment in its associate entity. “Associate” means an entity in which a director, trustee, partner, member, or fund manager of the fund holds, directly or collectively, more than 15% share or interest.
Condition (j) — Minimum Corpus: The monthly average of the corpus of the fund shall not be less than one hundred crore rupees. For newly established funds, this must be achieved within 12 months of establishment. Wound-up funds are exempt.
Conditions (k) and (l) — No Indian Business Operations: These are the twin epicentre conditions:
- The fund shall not carry on or control and manage, directly or indirectly, any business in India; and
- The fund shall neither itself have a business connection in India, nor have any person acting on its behalf whose activities constitute such a business connection — except for the eligible fund manager.
These conditions complete the circle: the only permitted Indian-nexus activity is the fund manager’s activities under the safe harbour itself.
Condition (m) — Arm’s Length Manager Remuneration: The fund must pay the eligible fund manager adequate remuneration for fund management activities. The amount must meet the prescribed calculation.
- This rule prevents funds from paying token fees to Indian managers. It also stops them from routing real profits through other structures.
- This prevents the fund from paying token fees to an Indian manager while routing the real economics through other structures.
5.3 Exemption for Sovereign Funds — Schedule I, Para 1(2)
The conditions specified in paragraph (1)(e), (f) and (g) shall not apply in case of an investment fund set up by the Government or the Central Bank of a foreign State or a sovereign fund, or such other fund as the Central Government may, by notification, specify in this behalf.
This recognises that sovereign wealth funds inherently fail diversification conditions due to their concentrated governmental ownership and large-ticket single investments. The exclusion is commercially rational and aligns with India’s broader policy of attracting sovereign capital — India has extended SWF/Pension Fund tax exemptions separately under Section 10(23FE) equivalent provisions.
5.4 Conditions for the Eligible Fund Manager — Schedule I, Para 1(3)
Four conditions must be satisfied by the fund manager:
Independence from the Fund: The person is not an employee of the eligible investment fund or a connected person of the fund. This ensures the manager is a genuine third-party service provider, not a captive entity.
Registration Requirement: The person is registered as a fund manager or an investment advisor in accordance with the regulations as specified. For non-IFSC managers, “specified regulations” means SEBI (Portfolio Managers) Regulations 2020 or SEBI (Investment Advisers) Regulations 2013. For IFSC-based managers, this is modified to IFSCA regulations (discussed in Part VI).
Ordinary Course of Business: The person is acting in the ordinary course of his business as a fund manager.
Profit Participation Cap: The fund manager, together with connected persons, must not claim — directly or indirectly — more than 20% of the profits that the eligible investment fund earns from transactions the fund executes through the fund manager. This limit carried interest to 20%, preventing the manager from effectively being the economic owner of the fund while claiming the position of a mere service provider.
5.5 Reporting Obligations — Schedule I, Para 1(4)
Part VI: IFSCA Regulatory Framework — Integration with Section 9(12) and Schedule I
6.1 The IFSC Ecosystem and IFSCA
An International Financial Services Centre (IFSC) is a jurisdiction that provides financial services to non-residents and residents, to the extent permissible under the current regulations. However, such financial services should involve transaction in any currency except Indian Rupee.
GIFT City in Gujarat houses India’s only IFSC. The IFSCA (International Financial Services Centres Authority), established under the IFSCA Act 2019, is the unified regulator for all financial services in the IFSC — covering banking, capital markets, insurance, and fund management. The IFSCA has issued the International Financial Services Centres Authority (Fund Management) Regulations, 2022 (‘FME Regulations’). Any entity intending to undertake the fund management business in the Gift City is required to be registered as a Fund Management Entity (‘FME’).
6.2 The IFSC-Specific Relaxation under Section 9(12) and Schedule I, Para 1(6)
- The most consequential regulatory integration is the IFSC relaxation embedded in Schedule I, Paragraph 1(6):
- The Central Government may relax certain conditions by notification. This power applies to conditions referred to in clause (e).
- The conditions may not apply, or may apply with modifications. This depends on what is specified in the notification.
- The relaxation is available to an eligible investment fund and its fund manager. The manager must be located in an IFSC.
- The manager must also commence operations on or before 31 March 2030.
- This provision creates a two-tier regulatory architecture:
Tier 1 (Standard): Offshore funds with non-IFSC Indian fund managers must satisfy all Schedule I conditions without modification.
Tier 2 (IFSC-Enhanced): Offshore funds whose fund managers are located in the IFSC and commence operations by 31 March 2030 may have one or more Schedule I conditions waived or modified by Central Government notification.
6.3 Modification of Fund Manager Registration Condition for IFSC Managers
The IFSCA regulations modify the fund manager eligibility condition.Notification No. 59/2022 modifies the condition under clause (b) of Section 9A(4). This now corresponds to Schedule I, Para 1(3)(b). It applies to eligible fund managers in the IFSC.
Under the revised rule, the person must hold valid registration. This must be as a portfolio manager or an investment advisor. The registration must follow the IFSCA (Capital Market Intermediaries) Regulations, 2021. These are issued under the International Financial Services Centres Authority Act, 2019.
This substitution is critical: IFSC-based managers need not be SEBI-registered. Their IFSCA registration under the FME Regulations or Capital Market Intermediaries Regulations is sufficient. This aligns with the IFSCA’s role as the single unified regulator for IFSC activities, and avoids the anomaly of an IFSC entity having to maintain a dual regulatory presence under both IFSCA and SEBI.
6.4 FME Categories under IFSCA Regulations
The FME may register under three categories. These include Authorised FME, Registered (Non-Retail) FME, and Registered (Retail) FME. For Section 9(12), all three IFSCA-registered FMEs can qualify as an “eligible fund manager.” This applies if they meet the conditions in Schedule I, Para 1(3).
An Authorised FME usually manages proprietary or co-investor funds. A Registered (Non-Retail) FME manages AIF or private equity structures. A Registered (Retail) FME manages public-facing schemes.
6.5 Tax Holiday for IFSC Fund Managers
Beyond the safe harbour from business connection, IFSC-based FMEs enjoy significant tax concessions. An FME in an IFSC, such as GIFT City, may qualify for a full tax exemption on its business income. The benefit applies for 10 years within a 15-year window. It is available under the equivalent of Section 80LA. Units must commence operations before 31 March 2030. This creates a strong two-pronged benefit for fund managers. The offshore fund avoids business connection risk under Section 9(12). At the same time, the IFSC-based FME earns tax-exempt management fee income for 10 years.
6.6 TDS Relief for Payments to IFSC Units
No tax shall be deducted at source on specified payments to eligible IFSC units. This applies if the required Form is submitted to confirm eligibility. This removes TDS friction on management fees paid by offshore funds. It benefits IFSC-based FMEs. Earlier, such TDS requirements created practical challenges in fund manager arrangements.
6.7 AIF Capital Asset Characterisation — Intersection with Section 9(12)
A closely related development affecting the Section 9(12) ecosystem is the reclassification of AIF securities holdings. The proposed amendment clarifies that Category I and Category II AIFs must treat securities they hold as capital assets. Accordingly, the fund pays tax on any income arising from the transfer of such securities under the head of capital gains and not business income.
This clarification, effective from Tax Year 2026-27, eliminates a long-standing litigation risk. Previously, an offshore fund could rely on Section 9(12) to avoid a business connection. However, a risk remained. If the position failed, Indian Revenue could still challenge the income character. The fund’s returns might be treated as business income instead of capital gains. This would lead to different tax outcomes under DTAAs and the Act.
Part VII: Cross-Reference Matrix — Interconnected Provisions
The following provisions interact directly with Section 9(12) and Schedule I in practice:
Section 9(9) — Business Connection/SEP: The provision from which Section 9(12) provides relief. Reading Section 9(12) in isolation, without understanding 9(9)’s scope, leads to misapplication.
Section 159(1)/(2) — DTAA Provisions: Defines the treaty countries whose residents can qualify as eligible investment funds under Schedule I, Para 1(1)(b).
Permanent Establishment Definition — Section 173(c): Understanding what constitutes a PE is essential. Schedule I conditions must align with this definition.
Connected Person — Section 184(5): The definition of “connected person” governs the diversification conditions (e), (f), (g) and the profit cap condition for fund managers. Misidentification of connected persons is a common area of non-compliance.
Section 202/206 — Tax Rates: Applicable to tax computed on income not protected by Section 9(12).
Equivalent of Section 10(4D)/10(23FBA)/10(23FBB) — Exempt Income: These provide income-level exemptions for specified funds in IFSC, operating in tandem with the business connection safe harbour under Section 9(12).
Equivalent of Section 115UB — Investment Fund Pass-Through Regime: Section 115UB of the Income-tax Act, 1961 read with other provisions provides for a special scheme relating to taxation of income in the hands of Investment Fund and its unit holders. The law defines ‘Investment Fund’ as a Category I or Category II AIF, regulated under the AIF Regulations or the FME Regulations. This pass-through regime determines investor-level taxation after Section 9(12) resolves the fund-level business connection question.
Equivalent of Section 47(viiad) — Tax-Neutral Fund Relocation: The law allows tax-neutral relocation of funds to an IFSC. Investors can transfer shares, units, or interests from the original fund to a resultant fund.
- The law does not treat this transfer as a taxable event. As a result, no capital gains tax arises on such relocation.
- This relocation mechanism complements Section 9(12) by making migration to IFSC tax-neutral for existing offshore funds.
Part VIII: Areas of Ambiguity and Anticipated Litigation
8.1 The “Directly” Qualification in the 5% Indian Participation Cap
Schedule I, Para 1(1)(c) now restricts the 5% cap to direct Indian participation, excluding indirect participation. While this relaxation aims to facilitate fund-of-fund structures, it raises interpretive questions: what constitutes “direct” investment by an Indian resident who invests through a foreign holdco that Indian owners themselves control? The CBDT has not yet issued clarificatory guidance on this point, and Revenue may adopt a substance-over-form approach in assessments.
8.2 The Arm’s Length Manager Remuneration Condition — Prescription Yet to Materialise
8.3 GAAR Application to Section 9(12) Structures
As noted at Para 4.5, India’s GAAR provisions apply to arrangements where the main purpose is to obtain a tax benefit and the arrangement lacks commercial substance. In theory, GAAR can challenge a structure built mainly to use the Section 9(12) safe harbour. This risk extends to units in the GIFT IFSC.Industry has sought a formal GAAR exclusion for such structures. However, no notification has been issued to date.
8.4 The Sunset Date and Continuity of IFSC Relaxations
- The IFSC relaxation under Schedule I, Para 1(6) applies only to certain fund managers. Specifically, the manager must commence operations on or before 31 March 2030.
- This creates a cliff-edge risk. Fund managers who commence after this date lose access to relaxed conditions. The same risk applies if the sunset is not extended.
- The sunset date was 31 March 2024. It was then extended to 31 March 2025. It now stands at 31 March 2030.
- Certain activity deadlines have also been extended to this date. Clients should not assume any further extension.
8.5 Definition of “Connected Person” — Scope of Section 184(5)
8.6 Characterisation of Carried Interest
The 20% profit cap in Schedule I, Para 1(3)(d) interacts with the carried interest issue. There is an issue about characterisation of carried interest. Whether income from transfer of securities is a Capital Gain or Business Income is a litigious issue. From Tax Year 2026–27, the capital asset clarification applies. Carried interest on securities gains is expected to qualify as capital gains. However, where carried interest relates to non-securities income (real estate, debt instruments), characterisation remains ambiguous.
Part IX: Compliance Checklist and Advisory Conclusions
9.1 Pre-Investment Structuring Checklist
Any fund structure seeking Section 9(12) protection must confirm key conditions at the structuring stage:
(a) The fund establishes itself outside India and maintains non-resident status.
(b) The fund must be incorporated or registered in a qualifying jurisdiction. This includes a treaty partner country or a Central Government–notified territory under Schedule I, Para 1(1)(b).
(c) Direct participation by Indian residents must remain below 5%. This is tested on 1 April and 1 October of each tax year. Alternatively, the fund can qualify under the seeding exclusion or applicable grace period.
(d) The fund manager must hold valid registration. This can be with SEBI (for non-IFSC) or IFSCA (for IFSC). The manager must act independently of the fund and manage assets in the ordinary course of business.
(e) Manager’s profit entitlement does not exceed 20%.
(f) The fund pays manager remuneration at or above the arm’s-length floor prescribed under Schedule I Para 1(1)(m).
(g) For IFSC-based managers: the manager commences operations on or before 31 March 2030 and the structure relies on applicable Central Government notifications.
(h) The fund files the annual statement under Schedule I, Para 1(4) within 90 days of the tax year end.
(i) The advisor conducts a separate treaty analysis for each category of Indian-source income of the fund, independent of the business connection question.
(j) The advisor independently assesses indirect transfer exposure under Section 9(2) for each portfolio holding.
9.2 Conclusion
Section 9(12) of the Income Tax Act, 2025, read with Schedule I, balances two key objectives. It preserves India’s source-based taxation rights while also making the country attractive for global fund managers setting up in GIFT City’s IFSC.
The IFSC relaxation under Schedule I, Para 1(6), works alongside the IFSCA’s FME framework and several tax incentives. These include a 10-year tax holiday, capital asset classification for AIF securities, TDS exemptions, and tax-neutral fund relocation. Together, these measures create a competitive and investor-friendly fund management ecosystem in India.Parliament’s extension of the sunset date to 31 March 2030 signals strong legislative commitment to GIFT City’s growth.
Key ambiguities remain — GAAR exposure, the “directly” qualification, unprescribed arm’s-length remuneration, and carried interest characterisation — and need active CBDT monitoring.
Tax advisors must combine tax and IFSCA regulatory expertise when structuring IFSC fund manager arrangements. Advising on one without the other creates material compliance risk.
