IFSCA - Regulations, Listing and Compliances · International Financial Services Centres: An Introduction

Section 31 IFSCA Act: Power to Modify Other Enactments for IFSCs

Updated 11 October 2026 · Fact-checked

Section 31 of the IFSCA Act, 2019 lets the Central Government, by notification, direct that provisions of other Central Acts, rules or regulations do not apply to financial products, services or institutions in an IFSC, or apply with exceptions, modifications and adaptations. A draft must be laid before Parliament for thirty days.

Understand Power to Modify Enactments for IFSCs (Section 31)

An IFSC is meant to work like an international financial centre. Many Indian laws were written for the domestic market. Applied as they are, they can make an IFSC unit uncompetitive or simply unworkable.

Section 31 solves this. It gives the Central Government a power to adjust other Central laws for the IFSC. It does not amend the other Act in Parliament. It works through a notification. This is how, for example, companies in an IFSC can get relaxations from the Companies Act. The notification names the provisions affected and says what happens to them.

There are two options under sub-section (1). Under clause (a), the specified provisions shall not apply to financial products, financial services or financial institutions in an IFSC. Under clause (b), they shall apply with such exceptions, modifications and adaptations as the notification specifies. So the choice is between full exclusion and tailored application.

There are limits. The power covers provisions of any other Central Act, and rules, regulations, notifications, orders or directions made under it. It excludes the provisions relating to making of rules or regulations. It is a power of the Central Government, not of IFSCA. It covers financial products, services and institutions in an IFSC, not every business there.

Sub-section (2) adds Parliamentary control. A copy of every notification proposed to be issued must be laid in draft before each House for a total of thirty days, in one session or in two or more successive sessions. If, before the expiry of the session immediately following, both Houses agree in disapproving it, it is not issued. If both agree to a modification, it is issued only in that modified form. Section 31 came into force on 21 August 2020.

Key rules to remember

Who exercises the power: Central Government, by notification (section 31(1)); Not IFSCA. IFSCA regulates under section 12 and section 13; section 31 is the Centre's power.
Option (a): disapplication: Specified provisions shall not apply to financial products, services or institutions in an IFSC; Full exclusion for the IFSC.
Option (b): modified application: Specified provisions apply with such exceptions, modifications and adaptations as the notification specifies; Tailored application for the IFSC.
What can be modified: Provisions of any other Central Act, rules, regulations, notifications, orders or directions under it; Excludes provisions relating to making of rules or regulations.
Parliamentary control: Draft laid before each House for a total of thirty days (one session or successive sessions) (section 31(2)); If both Houses agree in disapproving, it is not issued. If both agree to a modification, it is issued only as modified.

How to solve Power to Modify Enactments for IFSCs (Section 31) questions

Use this order for any question on section 31, including case-based ones about a Companies Act relaxation for an IFSC entity.

1Identify the claim: someone wants another Central Act or its rules to apply differently in an IFSC. Name section 31 of the IFSCA Act, 2019.
2State who acts: the Central Government, by notification, not IFSCA and not the company.
3Check the subject: financial products, financial services or financial institutions in an IFSC. A business outside the IFSC or a non-financial activity is outside the section.
4Choose the option: clause (a) if the provisions are switched off, clause (b) if they apply with exceptions, modifications and adaptations.
5Check the target: it must be a provision of a Central Act or rules, regulations, notifications, orders or directions under it, other than provisions on making rules or regulations.
6Apply sub-section (2): the draft is laid before each House for thirty days, and both Houses can disapprove or modify it.
7Conclude: say whether the relaxation is valid and what the entity must follow, which is the notification as issued.

Quickest way: Who, what, which option, Parliament

When to use it: For short answers and the opening of a long case answer, when you have under five minutes.

Write: Under section 31(1), the Central Government may by notification...
Add the two options in one line: not apply, or apply with exceptions, modifications and adaptations.
Add the scope: financial products, services or institutions in an IFSC; other Central Acts and subordinate instruments.
Close with sub-section (2): draft laid for thirty days before each House; both Houses may disapprove or modify.

Common mistakes in Power to Modify Enactments for IFSCs (Section 31)

Saying IFSCA modifies other Acts under section 31.
IFSCA is the main regulator in the IFSC, so students link every power to it.
Fix: Section 31 says the Central Government. IFSCA's powers sit in sections 12 and 13.
Saying the other Act is amended by Parliament or that the notification repeals it.
Students confuse modification with legislative amendment.
Fix: The Act stays unchanged elsewhere. The notification only disapplies it or adapts it for IFSC financial products, services and institutions.
Forgetting the second option and saying the section only gives exemptions.
Exemption notifications are the best known examples.
Fix: Remember both: clause (a) does not apply, clause (b) applies with exceptions, modifications and adaptations.
Saying the notification is laid after it is issued.
Most notifications are laid after issue.
Fix: Section 31(2) refers to a notification proposed to be issued, laid in draft for thirty days.
Treating the thirty days as one continuous period in one session.
Students skip the wording on the period.
Fix: It is a total of thirty days, in one session or in two or more successive sessions.
Applying section 31 to any business in the IFSC.
Students ignore the subject limit.
Fix: The power is for financial products, financial services or financial institutions in an IFSC.

Worked examples

Example 1

The Central Government proposes a notification stating that certain provisions of a Central Act shall apply to financial services in an IFSC only with specified modifications. Explain the legal basis and the procedure before it is issued.

Show the solution

Basis: section 31(1)(b) of the IFSCA Act, 2019 lets the Central Government direct that specified provisions apply to financial products, services or institutions in an IFSC with exceptions, modifications and adaptations.
Form: the direction is given by notification, naming the provisions and the changes.
Procedure: under section 31(2), a copy of the notification proposed to be issued is laid in draft before each House of Parliament while in session, for a total of thirty days, in one session or successive sessions.
Parliamentary options: if both Houses agree in disapproving it before the end of the session immediately following, it is not issued. If both agree on a modification, it is issued only in that modified form.
Conclusion: the notification may be issued as proposed if no such disapproval or modification is agreed by both Houses.

Answer: The basis is section 31(1)(b). The draft must be laid before each House for thirty days, and it is issued as proposed unless both Houses agree to disapprove or modify it.

Example 2

Aarav Finserve Ltd, an IFSC financial institution, says it is exempt from a provision of a Central Act because IFSCA has informally told it so. Another Central Act provision is claimed to apply differently on the strength of a section 31 notification. Advise.

Show the solution

Identify the power: section 31 lets the Central Government, not IFSCA, disapply or modify other Central Act provisions for IFSC financial products, services and institutions.
Informal advice: an informal statement by IFSCA is not a notification under section 31(1), so it gives no exemption.
Valid route: if a section 31 notification exists, Aarav must follow it exactly. Under clause (a) the specified provision does not apply. Under clause (b) it applies with the stated exceptions, modifications and adaptations.
Scope: the relief covers only what the notification specifies and only financial products, services or institutions in an IFSC.
Conclusion: Aarav must comply with the provision unless a section 31 notification covers it, and then only to that extent.

Answer: The informal IFSCA statement gives no exemption. Relief exists only to the extent a Central Government notification under section 31 provides, and Aarav must follow its terms.

Exam tips

Quote the key phrase: shall not apply, or shall apply with such exceptions, modifications and adaptations.
Always name the Central Government as the authority and notification as the instrument.
Mention sub-section (2) every time: draft laid for thirty days, both Houses can disapprove or modify.
In case questions, check the entity is a financial institution or the activity a financial product or service in an IFSC.
Because the paper is open book, mark the section 31 text in your copy, but still practise writing the answer from memory.

Practice questions from International Financial Services Centres: An Introduction

Power to Modify Enactments for IFSCs (Section 31) in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Power to Modify Enactments for IFSCs (Section 31): frequently asked questions

What does section 31 of the IFSCA Act, 2019 do?

It empowers the Central Government to direct, by notification, that provisions of other Central Acts and their subordinate instruments do not apply to IFSC financial products, services or institutions, or apply with exceptions, modifications and adaptations.

Does section 31 let the Centre change the Companies Act for IFSC companies?

Yes, a Central Act such as the Companies Act can be disapplied or adapted this way, but only for financial products, services or institutions in an IFSC and only through a notification. Check the notification for the exact relief.

Does Parliament approve a section 31 notification?

Not by a vote of approval. The proposed notification is laid in draft for a total of thirty days. It is not issued if both Houses agree in disapproving it, and is issued as modified if both agree on a modification.

Can section 31 be used for rules and regulations on making rules?

No. The power excludes the provisions relating to making of rules or regulations of the other Act.