GIFT City is gradually carving out a reputation as a rising financial hub, attracting interest from both global and Indian investors.
Backed by government efforts to transform it into an international finance centre, regulatory processes are expected to become more streamlined and transparent over time, according to a joint report released by Julius Baer and Ernst & Young.
Recent policy developments have already allowed for the creation of investment structures under the supervision of the International Financial Services Centres Authority (IFSCA).
This has provided asset managers with a tax-friendly, globally aligned base for operations.
However, while GIFT City opens up new possibilities, the rapid growth of family offices in India is facing increasing legal and regulatory hurdles.
As more affluent families and entrepreneurs establish private offices to oversee their wealth, they are also contending with a growing web of compliance requirements.
Tax concerns and cross-border complexity
The report highlights that close to 50% of Indian family offices are concerned about evolving tax legislation, with more than one-third pointing to the uncertainty around cross-border investments as a major issue.
This is particularly relevant for those with diverse holdings across industries and countries, where the rules on overseas investments remain intricate and frequently revised.
To deal with this, many family offices depend on specialist advisers for tasks such as regulatory interpretation, financial analysis, and due diligence.
These entities must adhere to several legal regimes, including the Income-tax Act, 1961, the Foreign Exchange Management Act (FEMA), and the Prevention of Money Laundering Act, 2002, all of which govern tax, currency, and compliance norms.
On the domestic front, particularly in private equity and venture capital spaces, family offices must also ensure compliance with the Securities and Exchange Board of India’s (SEBI) Alternative Investment Fund (AIF) regulations.
These overlapping rules heavily shape how investors devise their strategies, including decisions on asset mix and organisational setup.
Some family offices respond by designing customised tax strategies—choosing suitable legal entities or tweaking asset allocation—to mitigate risks and safeguard returns over the long term.
The Julius Baer–EY report underscores that tax planning is integral to building resilient and compliant investment portfolios.
As the landscape continues to develop, the report suggests there is a strong need for more coherent and supportive regulation.
GIFT City, it notes, could offer a more accessible gateway to international markets and simplified compliance structures for Indian family offices.
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