IFSCA Updates SEZ Compliance FAQs for GIFT IFSC Units

Overview

• The Office of Administrator (IFSCA) has issued Version 2.0 of the SEZ Compliance FAQs Booklet in August 2026, expanding the earlier Version 1.1 of June 2025 comprising 171 FAQs across 79 pages.
• Every IFSC unit approved, licensed, registered or authorised by IFSCA is also an SEZ unit, since Section 18 of the Special Economic Zones Act, 2005 provides that an IFSC can be set up only within an SEZ. Accordingly, compliance with the SEZ Act and Rules is mandatory in addition to compliance with the applicable IFSCA regulatory framework.
• The revised framework reflects a broader move towards digital filing, reduced physical documentation and simplified regulatory processes, while also providing greater clarity on defaults that may attract penalties.

KEY PROCEDURAL RELAXATIONS

• Digitisation of the BLUT: Pursuant to Instruction No. 123 dated 23.02.2026 issued by the Ministry of Commerce, BLUT can now be executed digitally, including through e-stamp and DSC, without physical notarisation. Approval and bond top-ups are processed through the SEZ Online portal.
• Eligibility Certificate issued without separate application: Once the BLUT is approved by both the Specified Officer and the Administrator (IFSCA), the Eligibility Certificate required under the Gujarat SEZ Act/Rules to claim State tax exemptions such as stamp duty is sent to the unit by email without a separate application
• Relaxation of the APR timeline: The Annual Performance Report (APR) in Form-I is to be submitted within nine months of the close of the financial year, effectively 31 December of the subsequent FY.
• SOFTEX exemption: RBI has clarified that IFSC Units qualifying as “financial institutions” under the IFSCA Act, 2019 and exporting software to persons resident outside India are not required to file the SOFTEX Declaration Form. (Public Notice No. 02/2026-27 dated 16.06.2026).
• Removal of dual reporting on reorganisation events: Changes such as shareholding, directors, mergers and constitution are reported through the relevant IFSCA Division, eliminating separate reporting on SEZ Online portal or by email. The Administrator (IFSCA) places such information before the UAC periodically.
• No intimation required for change of Principal Officer or Compliance Officer to the Office of the Administrator (IFSCA).
• Physical documents may be stored outside the SEZ, subject to prescribed record-maintenance requirements.

TIGHTENED COMPLIANCE & ENFORCEMENT

• Penal provisions specifically highlighted: Under Rule 54(2) of the SEZ Rules, a unit is liable to penal action under the Foreign Trade (Development and Regulation) Act, 1992 where the UAC concludes that the unit has failed to abide by the terms and conditions of its LOA or BLUT. The minimum penalty is ₹10,000, with higher penalties possible depending on the nature of the default.
• SERF corrections are not permitted. Once filed, SERF cannot be resubmitted and errors must be reported to the Administrator (IFSCA) by email. MPR, however, may be updated for the preceding three months.
• Broadbanding must precede additional activities: The LOA must be amended before obtaining IFSCA approval for new or additional services.
• SEZ ID cards are mandatory for both direct and indirect employees. Direct employee cards are valid for 3 years, while indirect employee cards are valid for 6 months.
• Funds are treated as separate SEZ units: Each Fund requires a supplemental Lease Deed and must comply separately with applicable MPR, SERF and APR requirements including NIL filings where applicable.
• Aircraft and Ship Leasing units must clear outstanding customs duties, if any, on assets leased to the DTA before seeking exit from GIFT IFSC.

Conclusion

• SEZ compliance is a precondition to IFSC operations, not a parallel formality.
• The revised FAQs simplify digital procedures and reduce duplication, while strengthening accountability for timely and accurate SEZ compliance.
• All GIFT IFSC units should ensure continuous compliance with valid LOA terms, timely reporting, proper Lease Deed requirements, and consistency between SEZ-authorised operations and IFSCA approvals.