Ghai, 70, who directed notable films like "Kalicharan", "Karz", "Hero", "Ram Lakhan" and "Taal", will be honoured for his outstanding contribution to Indian cinema and nurturing young talents through his media institution Whistling Woods.
"We have decided to give the special honour to Subhash Ghai. He is a great filmmaker and his contribution to Indian cinema is immense. We have named the award as Outstanding Contribution to Indian cinema instead of Lifetime Achievement because we present the honour to the living legends of Indian cinema, who are yet to achieve many more milestones in their career," Andre Timmins, spokesperson IIFA, told PTI.
The award will be presented to him by leading actors of his blockbuster "Ram Lakhan" Anil Kapoor and Jackie Shroff, whom he introduced in "Hero".
Ghai, who is known for making guest appearances in his own movies, has been the part of the film industry since 1967.
Often called as the showman of Indian cinema, Ghai started his career in Bollywood as an actor with small roles in films including "Taqdeer" before he called the shots. He had the privilege of directing legendary actor Dilip Kumar with whom he worked in "Vidhaata" (1982), "Karma" (1986) and "Saudagar".
He is married to Mukta Ghai and they have a daughter Meghna Ghai, who looks after his media institute in Mumbai.
IIFA 2015 will start from June 5.