GIFT City Investing for Resident Indians: LRS, Products and Tax Guide (2026)

Updated: June 2026

For resident Indians trying to diversify into global markets, the domestic route is increasingly blocked. Axis Mutual Fund, Nippon India, Franklin Templeton and several other AMCs suspended fresh inflows into their international funds through April and May 2026 as SEBI's $7 billion industry-wide overseas investment cap neared exhaustion. With fewer than 30 international mutual funds still open for new investments, GIFT City's International Financial Services Centre has moved from an option to a primary route for resident Indians seeking global exposure.

GIFT City is no longer a niche experiment. As of 2026, it hosts 1,034 registered financial entities, holds over $100 billion in banking assets, and ranks 43rd globally among financial centres, up from 92nd just five years ago. Budget 2026 doubled its tax holiday to 20 years. In March 2026, NSE International Exchange expanded its connectivity across international markets.

This guide covers what GIFT City is, who can access it as a resident Indian, what products are available at different ticket sizes, how the taxes actually work, and how to get started step by step.

Sources: IFSCA Annual Report 2024-25; Global Financial Centres Index 38 (Z/Yen, October 2025); Union Budget 2026.

What Is GIFT City and IFSC?

GIFT City stands for Gujarat International Finance Tec-City. Located between Ahmedabad and Gandhinagar in Gujarat, it is India's answer to global financial hubs like Singapore, Dubai, and London's Canary Wharf.

Inside GIFT City sits a special zone called the International Financial Services Centre (IFSC). For financial and regulatory purposes, the IFSC is treated as "offshore", even though it is physically inside India. It has its own unified regulator: the International Financial Services Centres Authority (IFSCA), which operates independently of SEBI, RBI, and IRDAI for IFSC-specific activities.

How IFSC Works in Practice

Think of IFSC as a financial gateway that is simultaneously inside and outside India:

• All transactions are in foreign currency (primarily USD).
• One unified regulator, IFSCA, handles banking, capital markets, insurance, and fund management within GIFT City.
• Brokers, banks, fund houses, and insurance companies operate dedicated IFSC branches that connect directly to global exchanges.
• NSE International Exchange (NSE IX) provides access to US stocks via Unsponsored Depository Receipts (UDRs), with exchange connectivity expanding over 2025 and 2026. Confirm live market availability directly with your broker before investing.

Who Can Invest via GIFT City?

The products, tax treatment, account structure, and step-by-step process on this page are written for individuals who are tax-resident in India and investing via the RBI's Liberalised Remittance Scheme.

Resident Indians (via LRS)

If you live and pay taxes in India, you can access certain GIFT City products using the Liberalised Remittance Scheme (LRS), the RBI's framework allowing Indian residents to remit up to USD 250,000 per financial year for investments, education, travel, and other permitted purposes. Your GIFT City investment counts toward this $250,000 annual cap.

Not every GIFT City fund is open to resident Indians. Some IFSC funds are structured exclusively for NRIs and foreign investors. Confirm eligibility before proceeding.

What Can You Invest in Through GIFT City?

The IFSC investment universe expanded significantly in 2025 and 2026. Here are the main options available today for resident Indians investing via LRS.

1. US and Global Stocks via UDR

Through Unsponsored Depository Receipts (UDRs) listed on NSE International Exchange (NSE IX), investors can buy shares of US companies including Apple, Microsoft, Tesla, and Amazon, priced and settled in USD. According to NSE IX data, UDR trading volume grew approximately 9x from FY23 to FY25 (from around 1.1 lakh to 9.9 lakh contracts), reflecting strong retail adoption of this route. Verify current listed securities directly with NSE IX or your broker, as the universe continues to expand.

2. Global Exchange-Traded Funds (ETFs)

GIFT City ETFs offer low-cost exposure to global indices and thematic baskets through a single instrument traded like a stock. Common categories include S&P 500 trackers, Nasdaq 100 funds, MSCI World funds, and sector-based baskets covering areas such as clean energy, artificial intelligence, and global healthcare. For investors focused on long-term international diversification at controlled cost, this is a structurally straightforward route compared with direct stock selection.

3. GIFT City Mutual Funds

This is the newest route for resident Indians. SEBI caps the total industry-wide overseas investment by domestic mutual funds at $7 billion. With multiple AMCs suspending or restricting fresh inflows in 2026 as this cap nears exhaustion, GIFT City funds bypass it entirely because they are IFSCA-regulated, not SEBI-regulated domestic funds.

For resident Indians investing via LRS, the main outbound fund currently available is the DSP Global Equity Fund (GIFT City entity), launched June 2025 by DSP Mutual Fund with a minimum investment of $5,000 and a globally diversified equity mandate. This fund is structured as an IFSCA-registered trust. Minimum thresholds and fund availability are subject to change; confirm the current terms in the fund's Key Information Memorandum before investing.

4. Foreign Bonds and Debt Instruments

USD-denominated bonds from global corporations, multilateral agencies (World Bank, ADB), and sovereign governments are available through IFSC-registered brokers. These suit investors seeking steady income in foreign currency rather than equity-market returns. The minimum ticket size and liquidity profile vary significantly by instrument. Interest and capital gains are taxable in India at applicable rates; see the tax section below.

5. Alternative Investment Funds (AIFs)

IFSC-registered AIFs invest in pre-IPO companies globally, private equity, hedge fund strategies, and real assets. According to IFSCA's published data, over 200 AIFs are registered in GIFT City with substantial committed capital as of late 2025. The minimum ticket size was reduced from $150,000 to $75,000 per the IFSCA circular issued in early 2025, widening access to the HNI segment. Verify the current circular reference with your broker or the IFSCA website before committing capital. For tax treatment on AIF investments, see our AIF taxation guide.

6. Other Products

The IFSC product shelf also includes structured notes and market-linked debentures, international REITs (real estate investment trusts), and commodities in certain permitted forms. These are generally suitable for sophisticated investors; minimum sizes, lock-in terms, and liquidity profiles vary widely. Confirm current availability and terms directly with your IFSC broker.

Three Routes to Global Investing for Resident Indians: How They Compare

Most resident Indians asking about GIFT City are choosing between three distinct routes to global investing. Here is how they compare on the dimensions that matter most.

How to Start Investing via GIFT City: Step by Step

Here is the process for a resident Indian to begin investing through GIFT City IFSC.

Step 1: Choose a GIFT City-Registered Broker or AMC

Not all brokers have active IFSC branches, and not all GIFT City funds are open to resident Indians. Active operators currently include Zerodha IFSC, Kotak Securities IFSC, HDFC Securities IFSC, ICICI Securities IFSC, and DSP Mutual Fund's GIFT City entity. Compare product offerings, fees, account-opening process, and platform quality before choosing. Confirm directly with the broker or AMC that their IFSC entity is live for retail onboarding and that you are eligible as a resident Indian.

Step 2: Complete KYC and Open a Dedicated IFSC Account

Even if you have an existing account with a broker, you must open a separate IFSC account with their GIFT City entity. KYC requirements include FATCA/CRS self-certification and tax residency declarations, in addition to standard Indian KYC documents: PAN card, Aadhaar or Passport, bank details for LRS transfers, proof of address. Most brokers now offer online KYC for IFSC accounts. Activation typically takes 3 to 7 working days.

Step 3: Fund Your Account via LRS

Go to your bank and complete the LRS outward remittance form. The standard purpose code for funding a GIFT City IFSC investment account is S0001 ("Investment in overseas securities"), but confirm the correct code with your bank as RBI purpose code classifications are periodically updated. Specify the amount in INR (converted to USD at your bank's prevailing rate) and the beneficiary details of your broker's GIFT City IFSC account.

Funds typically reflect in your IFSC account within 1 to 3 working days after bank processing.

Step 4: Place Your Orders

Once funds are available, you can buy US stocks and ETFs via UDR on NSE IX, invest in GIFT City mutual funds through your AMC's IFSC entity where eligible, or access other products (bonds, structured notes) on your broker's IFSC platform.

Step 5: Monitor Your Portfolio

Track performance through your broker's IFSC platform. Your returns are denominated in USD, which means your INR-equivalent value will also move with the USD/INR exchange rate. A weakening rupee amplifies USD returns when converted back; a strengthening rupee compresses them. This currency dimension is a distinct and ongoing component of total return that operates independently of how the underlying investments perform.

Step 6: Withdraw or Reinvest Funds

• Sell your investments on the platform and proceeds are credited in USD to your IFSC account.
• You may retain and reinvest income earned from LRS investments without repatriation.
• As per RBI's LRS framework, realised or unused foreign exchange that is not reinvested must generally be repatriated and surrendered to an authorised person within 180 days.
• To repatriate, request conversion to INR and transfer to your Indian bank account.

Is GIFT City Tax-Free for Resident Indians?

Partly, but the answer depends on the product and the investor. GIFT City eliminates certain transaction taxes and offers a tax holiday for entities operating within it. As a resident Indian investor, the tax obligations on your gains depend on what you hold. Here is what actually applies.

1. Capital Gains on Foreign Stocks and ETFs

• Short-Term Capital Gains (STCG): Held less than 24 months, taxed at your income tax slab rate.
• Long-Term Capital Gains (LTCG): Held 24 months or more, taxed at 12.5% without indexation for transfers on or after July 23, 2024, per the Finance Act 2024. No indexation benefit is available for foreign stocks or ETFs. For a detailed breakdown of how capital gains tax applies across asset classes, see our capital gains tax guide.

2. TCS on Your LRS Remittance

When you transfer money from your Indian bank to your GIFT City IFSC account under LRS, your bank collects Tax Collected at Source (TCS) at 20% on the remittance amount above ₹10 lakh per financial year.

3. Tax Treatment for GIFT City Mutual Funds

Tax treatment for GIFT City mutual funds is not uniform: it depends on the fund's legal structure.

Some GIFT City funds, such as DSP Global Equity Fund, are structured as determinate irrevocable trusts. Under Indian tax law, for such structures, the trustee pays taxes as a representative assessee at the fund level. This means:

• Tax on the fund's portfolio gains is discharged at the fund level and is already reflected in the post-tax NAV.
• Gains on redemption of units in such structures may not be taxed again at the investor level, as the tax obligation has already been met by the fund.
• For funds domiciled in India (such as IFSCA-registered funds with Indian PAN), fund units may not need to be declared in Schedule FA of your ITR, as they may not constitute a "foreign asset."

4. No STT, CTT, or GST

Unlike domestic Indian stock transactions, you pay no Securities Transaction Tax, Commodity Transaction Tax, or GST on IFSC trades. This modestly improves net returns, and is particularly relevant for higher-frequency strategies.

5. Dividend Income from Foreign Stocks

• US companies deduct 25 to 30% withholding tax on dividends before the amount reaches you.
• You can claim a Foreign Tax Credit by filing Form 67 with your ITR, avoiding double taxation.
• The net dividend, after foreign withholding, is still included in your Indian taxable income under "Income from Other Sources."

6. ITR Reporting: Product-Dependent

Your ITR obligations differ by what you hold:

• Direct foreign stocks, UDRs, or foreign brokerage accounts: These are foreign assets. Report in Schedule FA of ITR-2 or ITR-3 every year. ITR-1 (Sahaj) cannot be used.
• GIFT City mutual funds domiciled in India (such as certain IFSCA-registered trust structures): Schedule FA may not apply. The fund's official tax note will clarify. File Form 67 if claiming foreign tax credit on dividends from any underlying foreign stocks.
• When in doubt, consult a CA. The rules are product-specific and this is an evolving area of tax law.

7. Budget 2026: Tax Holiday Extended to 20 Years

8. NRI Tax Considerations

NRIs face a materially different tax picture, driven by their country of residence, applicable DTAA treatment, and in the case of US-based NRIs, PFIC rules for fund investments. NRI tax treatment is covered in full in a dedicated guide: GIFT City Investing for NRIs: Complete Guide.

Tax rules are subject to change and this is an evolving regulatory area. This section reflects publicly available information current as of early 2026. Always check the fund's official tax note and consult a qualified chartered accountant before making decisions based on tax treatment.

Key Risks to Be Aware Of Before Investing

GIFT City is legitimate, well-regulated, and growing, but it carries risks specific to its structure. Understanding these before committing capital is important.

1. Currency Risk

You invest in USD; your living expenses are in INR. If the rupee strengthens, your INR-equivalent returns will be lower even if the underlying investment performs well in USD. Currency movement is difficult to predict and works in both directions.

2. Regulatory Risk

IFSCA regulations are relatively new and continue to evolve. Tax benefits, eligible products, and operational rules can and do change. Budget 2026's 20-year holiday extension is a positive signal, but the regulatory environment is less settled than SEBI-governed domestic markets.

3. Liquidity Risk

Several GIFT City products, particularly AIFs, structured notes, and some newer funds, have lower liquidity than domestic mutual funds or listed stocks. Check lock-in periods and redemption timelines before committing, especially for amounts that may be needed in the near term.

4. No DICGC Deposit Insurance on GIFT City Bank Accounts

5. RBI Repatriation Requirement (180 Days)

Under RBI's LRS framework, realised or unused foreign exchange that is not reinvested must be repatriated and surrendered to an authorised person within 180 days of receipt, realisation, or return to India. This is a compliance requirement, not a penalty. If you sell investments and do not reinvest the proceeds, you must bring the funds back within this window. Plan investment and withdrawal timelines accordingly.

6. TCS Cash Flow Impact

TCS at 20% on LRS remittances above ₹10 lakh locks up capital until your ITR is filed and the credit processed. For large investments, this is a meaningful short-term cash consideration. Plan your annual remittance schedule accordingly.

FAQs

1. Is GIFT City investing legal for Indian residents?

Yes. GIFT City IFSC operates under IFSCA, a statutory authority established by the Indian Parliament. Investments are funded via the RBI's LRS, a fully legal route for Indian residents to invest internationally. Please consult a SEBI-registered investment adviser to understand which products are suitable for your specific situation.

2. Does TCS apply when I fund my GIFT City account, and can I get it back?

Yes. Your bank collects TCS at 20% on LRS remittances above ₹10 lakh per financial year. This amount is not a permanent fee; it acts as an advance tax asset that can be claimed back as a refund or offset against your total tax liability when filing your annual ITR.

3. Do I need a separate account for GIFT City investments?

Yes. Even if you have an existing account with Zerodha, Kotak, or HDFC Securities, you must open a dedicated IFSC account with their GIFT City entity. These are legally separate entities with separate KYC, account numbers, and platforms. FATCA/CRS self-certification is part of the onboarding process.

4. Do I have to file Schedule FA in my ITR for GIFT City investments?

It depends on the product. Direct foreign stocks, UDRs, and foreign brokerage holdings are foreign assets and require Schedule FA in ITR-2 or ITR-3. For some GIFT City mutual funds domiciled in India (such as certain IFSCA-registered trust structures), Schedule FA may not apply. Check the fund's official tax note. When in doubt, consult a CA.

5. Are my deposits in a GIFT City bank account protected by DICGC?

No. DICGC insurance (up to ₹5 lakh on Indian bank deposits) does not apply to IFSC Banking Units in GIFT City. Avoid holding large idle cash balances in your IFSC account and repatriate proceeds within the RBI's 180-day requirement if not reinvesting.

6. What is the minimum amount to start investing in GIFT City as a resident Indian?

For managed funds open to resident Indians, the DSP Global Equity Fund (GIFT City) requires a minimum of $5,000. US stock UDRs on NSE IX have no fixed per-unit minimum. AIFs have a minimum of $75,000 per IFSCA's current guidelines. Some GIFT City funds with lower minimums are structured for NRIs and foreign investors only. Always confirm eligibility and current minimums directly with the AMC before investing.

Disclaimer: This article is for general information and educational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell any securities or financial instruments. Tax rules, IFSCA regulations, and product eligibility are subject to change and reflect publicly available information current as of early 2026. Data on registered entities and banking assets sourced from IFSCA Annual Report 2024-25; GFCI ranking from Z/Yen Global Financial Centres Index 38 (October 2025). Please consult a SEBI-registered investment adviser and a qualified chartered accountant before making any investment decision. Investments are subject to market risks.