Budget 2026 expectations: Deloitte urges tax and regulatory parity to scale IFSC GIFT City as global financial hub
Ahead of the Union Budget 2026-27, Deloitte has urged the government to address tax asymmetries and compliance frictions affecting firms at IFSC GIFT City. The firm recommends parity with banking units, clearer treatment for broker-dealers and finance companies, and steps to improve certainty on anti-avoidance and transfer pricing issues to attract global institutions.
With the Union Budget 2026-27 approaching, Deloitte has outlined a set of policy recommendations aimed at accelerating India’s ambition to build the International Financial Services Centre (IFSC) at GIFT City into a full-scale global hub for banking, capital markets, insurance and allied financial services.
The consulting firm argues that interest from global banks, broker-dealers and capital market participants has been rising, but that the pace of expansion will depend on whether Budget 2026 delivers practical fixes to tax and regulatory gaps that create uneven competition among entities operating in the IFSC.
A central theme in Deloitte’s note is parity. It recommends that broker-dealers and finance companies based in GIFT City receive tax treatment comparable to International Banking Units (IBUs), particularly around capital gains exemptions, so that non-bank players can compete on similar terms when offering offshore access products linked to Indian securities.
Deloitte also calls for higher certainty through an exemption from the General Anti-Avoidance Rules (GAAR) for IFSC units and related transactions. The firm’s rationale is that IFSC entities already operate under an economic-substance framework and direct oversight, which should reduce the need for aggressive anti-avoidance scrutiny that can make global players wary.
Another pain point flagged is transfer pricing. Deloitte highlights that tax holidays can be undermined if income is later enhanced through transfer pricing adjustments and then denied the intended deduction benefit, potentially increasing disputes and undermining confidence in the stability of the IFSC regime.
Finally, Deloitte recommends widening relief on tax deduction at source (TDS) for payments to eligible IFSC units. The argument is straightforward: when income is meant to be fully deducted or effectively non-taxable during the holiday window, withholding can create avoidable compliance work and cash-flow friction.
Taken together, Deloitte’s wishlist positions Budget 2026 as a test of whether India can move from establishing a promising offshore-style centre to delivering the predictable, low-friction operating environment needed to compete with established international financial jurisdictions.