Module: General Practice
Q96: For the specific purpose of the Foreign Exchange Management Act (FEMA), how is a unit set up in an International Financial Services Centre (IFSC) (e.g., GIFT City) treated?
✅ Correct Answer: B
A Person Resident Outside India.
Concept Definition: The Offshore Status.
Structural Breakdown: The Fiction: Although physically located in Gandhinagar (India), a unit in an IFSC is legally deemed to be "outside India" for exchange control purposes.
Implication: Transactions between two IFSC units are in Foreign Currency (not INR). Transactions between an Indian resident (Domestic Tariff Area) and an IFSC unit are treated as Foreign Exchange transactions (Subject to LRS/ODI limits). Purpose: To create an offshore financial hub on Indian soil that competes with Dubai or Singapore without currency controls.
Concept Definition: The Offshore Status.
Structural Breakdown: The Fiction: Although physically located in Gandhinagar (India), a unit in an IFSC is legally deemed to be "outside India" for exchange control purposes.
Implication: Transactions between two IFSC units are in Foreign Currency (not INR). Transactions between an Indian resident (Domestic Tariff Area) and an IFSC unit are treated as Foreign Exchange transactions (Subject to LRS/ODI limits). Purpose: To create an offshore financial hub on Indian soil that competes with Dubai or Singapore without currency controls.