Why This Matters to You

If you’re an NRI, you’ve likely faced this frustration: investing in India means dealing with complicated repatriation rules, multiple regulators, and confusing tax treatment. Want to invest abroad from India? You hit the LRS limit quickly, face 20% TCS, and still manage currency risk.

GIFT City changes this equation. Think of it as India’s answer to Dubai or Singapore—a financial zone that’s technically in India but operates like an offshore hub. You get the best of both worlds: access to Indian growth stories, global investment products, and all of it in US dollars with simplified tax treatment.

But here’s the catch: GIFT City comes with its own rule book. FEMA treats it differently. RBI has special guidelines. Tax treatment varies based on how you fund your investments. Get it wrong, and you could face repatriation blocks, tax notices, or compliance headaches.

This guide cuts through the complexity and tells you exactly what you need to know.

What Makes GIFT City Different

GIFT City (Gujarat International Finance Tec-City) in Gandhinagar is India’s first and only International Financial Services Centre (IFSC). The government treats it as a “deemed foreign territory” under FEMA regulations—which means different rules apply compared to mainland India.

The regulator here is IFSCA (International Financial Services Centres Authority), not SEBI, RBI, or IRDAI individually. This unified regulation means faster approvals, more flexibility, and products that don’t exist in regular India.

Key advantages:

• Investments and transactions in US dollars
• 10-year tax holiday for IFSC entities (Section 80LA)
• Full repatriation allowed when funded correctly
• Access to global products alongside Indian ones
• Extended trading hours covering US, Europe, and Asia

Who can invest: NRIs, OCIs, Resident Indians (via LRS), and foreign investors.

Investment Options Available to NRIs

1. Mutual Funds and ETFs in GIFT City

GIFT City hosts mutual funds from Indian and international asset managers offering everything from Nifty index funds to global equity funds tracking S&P 500 or Nasdaq.

How it works for NRIs:

• Fund using NRE/FCNR accounts or fresh foreign remittance
• All transactions in USD
• Fully repatriable when funded through repatriable sources
• No RBI approval needed (treated as portfolio investment under FEMA)

Tax treatment:

• Equity funds (>12 months): 10% LTCG above ₹1 lakh, or claim DTAA benefit
• Debt funds: 20% with indexation for LTCG, or DTAA rate
• TDS applies; submit Form 10F + Tax Residency Certificate to claim treaty benefits

Why this matters: IFSC funds can be more tax-efficient than regular Indian mutual funds, especially for categories benefiting from Section 80LA.

2. Alternative Investment Funds (AIFs)

GIFT City AIFs give you access to private equity, venture capital, real estate, and hedge fund strategies with more regulatory flexibility than onshore Indian AIFs.

Key points:

• Minimum investment: Usually USD 150,000+
• Fully repatriable if funded correctly
• Pass-through taxation applies
• TDS depends on income type

Risk level: High. These are illiquid, long lock-in periods, suitable only for sophisticated investors with surplus capital.

3. Stock Exchange Trading

NSE IFSC and India INX operate in GIFT City, offering:

• Indian derivatives (Nifty, BankNifty futures/options)
• Currency derivatives
• Global stocks via Unsponsored Depository Receipts

What NRIs should know:

• Trading in USD (creates currency exposure)
• Extended trading hours (21+ hours daily)
• Derivative income = business income (not capital gains)
• Fully repatriable profits when funded repatriably

4. Banking Products (IBU Deposits)

Indian and foreign banks run IFSC Banking Units (IBUs) offering foreign currency deposits with competitive rates.

Advantages over regular NRE deposits:

• RBI interest rate caps don’t apply here
• Often get higher USD deposit rates
• Fully repatriable (principal + interest)

Tax treatment:

• Interest income: Taxable in India for NRIs
• TDS: 30% unless you claim DTAA benefit
• Submit Tax Residency Certificate + Form 10F for lower treaty rate

5. Insurance Products

Life and health insurance companies offer USD-denominated policies in GIFT City.

Benefits:

• Premiums and claims in foreign currency
• Maturity proceeds tax-free under Section 10(10D) if conditions met
• For UAE NRIs with India-UAE DTAA: potentially nil TDS on maturity

How Resident Indians Can Invest (LRS Rules)

If you’re a resident Indian, you can invest in GIFT City but only through the Liberalized Remittance Scheme (LRS).

Critical facts:

• LRS limit: USD 250,000 per financial year (no expansion has happened)
• TCS: 20% on amounts above ₹7 lakh for investment purposes
• Must use purpose code S0001 when remitting
• All LRS transactions reported to RBI by your bank

Tax implications:

• All GIFT City income taxable in India
• Must disclose in ITR Schedule FA (foreign assets)
• Capital gains taxed per holding period and asset class
• If you paid tax abroad, claim foreign tax credit under Section 90/91

Tax Benefits: What Actually Applies to You

Section 80LA Tax Holiday

This 10-year tax exemption applies to IFSC entities (fund houses, banks), not directly to you as an investor. But you benefit indirectly through lower costs and better returns.

Your Tax Treatment as NRI

Equity investments:

• LTCG (>12 months): 10% above ₹1 lakh, or DTAA rate
• STCG (≤12 months): 15%, or DTAA rate

Debt investments:

• LTCG (>36 months): 20% with indexation, or DTAA rate
• STCG: 30%, or DTAA rate

Derivative trading:

Business income at 30%

DTAA Considerations by Location

• UAE NRIs: No capital gains tax in UAE; India taxes apply. Net result: you only pay Indian tax.
• US NRIs: US taxes your global income. Claim foreign tax credit for Indian taxes paid. Watch out for PFIC rules on certain funds.
• UK NRIs: UK taxes worldwide income. Claim foreign tax credit. Consider timing exits around UK tax year.
• Singapore NRIs: No capital gains tax in Singapore. India-Singapore DTAA favorable for portfolio investments.

Bottom line: You must evaluate tax in BOTH countries. DTAA prevents double taxation but doesn’t eliminate reporting requirements.

Repatriation: Getting Your Money Out

The Golden Rule

If you fund through NRE, FCNR, or fresh foreign remittance, your GIFT City investments are fully repatriable with no annual ceiling.

If you fund through NRO account, repatriation is capped at USD 1 million per financial year (standard FEMA rule).

Documents You Need

When remitting proceeds outside India:

• Form 15CA/15CB – CA certificate required if amount exceeds limits
• Investment proof – original confirmations
• Tax payment proof – TDS certificates, advance tax challans
• Bank certificate – confirming source of funds
• FEMA declaration – investment made per regulations

Pro tip: Keep immaculate records from day one. Banks and CAs need complete documentation for smooth repatriation.

Your GIFT City Compliance Checklist

Before You Invest

• ☐ Confirm NRI/OCI status with proper documentation
• ☐ Decide funding source: NRE/NRO/FCNR/foreign remittance
• ☐ Understand repatriation status of your funding route
• ☐ Check tax implications in India + your residence country
• ☐ Verify if DTAA applies and what documents you need
• ☐ Confirm IFSCA registration of the product/institution
• ☐ Review risks, fees, lock-ins carefully

During Investment Period

• ☐ Keep detailed records: amounts, dates, exchange rates
• ☐ Save all transaction confirmations and statements
• ☐ Track TDS deductions
• ☐ Submit Form 10F + Tax Residency Certificate for DTAA benefits
• ☐ Don’t mix repatriable and non-repatriable funding

Tax Filing

• ☐ File ITR in India if income exceeds basic exemption
• ☐ Declare GIFT City investments in foreign asset schedule (if applicable)
• ☐ Claim foreign tax credit in country of residence
• ☐ Keep TRC valid for relevant assessment year
• ☐ Report foreign accounts per residence country laws (FBAR/FATCA if US)

At Exit

• ☐ Calculate capital gains correctly
• ☐ Ensure all TDS paid before requesting repatriation
• ☐ Get CA certificate (Form 15CB) if required
• ☐ Submit complete documentation to bank
• ☐ Update investment records both in India and abroad

Common Mistakes to Avoid

• Funding mix-ups: Using both NRO and NRE to fund the same investment without tracking. This creates repatriation headaches later.
• Ignoring residence country taxes: Just because UAE has zero tax doesn’t mean you skip reporting. US, UK, and other countries tax global income.
• Wrong capital gains calculation: Using incorrect holding periods or forgetting indexation benefits.
• Assuming automatic tax exemption: Not all GIFT City products qualify for tax benefits. Check structure.
• No DTAA claim: Paying full 30% TDS when your treaty rate is 10-15%. Always submit Form 10F + TRC upfront.
• Currency risk blindness: Everything’s in USD. If rupee strengthens when you exit, you lose on currency conversion.

GIFT City vs Regular India: Quick Comparison

*when funded correctly

Should You Invest in GIFT City?

GIFT City makes sense if you:

• Want USD-denominated investments with India exposure
• Need flexible repatriation without annual caps
• Have surplus funds in NRE/FCNR accounts
• Want access to global products while in India’s regulatory framework
• Are comfortable with higher minimum investments

Skip GIFT City if you:

• Need small-ticket investments (minimums are high)
• Want rupee returns (everything’s in USD)
• Prefer simple, straightforward domestic products
• Don’t want to manage cross-border tax compliance
• Need high liquidity with zero lock-ins

For UAE NRIs specifically: GIFT City is attractive because you avoid double taxation and get easy USD access. But still evaluate if the same return is achievable through simpler Dubai-based investments.

For US/UK NRIs: Factor in your residence country’s tax on GIFT City income. The arbitrage may be lower than it appears.

Looking Ahead: What’s New in 2026

GIFT City is scaling rapidly—crossing USD 12 billion in AIF assets with projections reaching USD 50 billion by 2030. Monthly turnover on exchanges has crossed USD 100 billion, and banking assets exceed USD 100 billion.

New developments to watch:

• Bullion trading and storage now operational
• More global IPO listings expected (especially $50-200M range)
• IFSCA fintech sandbox expanding to include crypto derivatives (though cryptocurrency trading remains restricted under FEMA for NRIs)
• Enhanced connectivity with global exchanges

Bottom line: GIFT City is maturing from “interesting experiment” to “credible offshore hub.” Early movers who understand the rules will benefit most.

In Simple Terms: Should You Care About GIFT City?

Here’s the reality: GIFT City won’t replace your entire investment portfolio. But it solves specific problems:

The key is understanding what applies to YOUR specific situation—your residency status, funding source, tax position in both countries, and investment goals.

Don’t invest in GIFT City because it sounds sophisticated. Invest because it solves a specific problem you have and you understand the compliance requirements.

Final Thoughts

GIFT City is real, it’s growing, and it offers genuine advantages—but only if you follow the rules. FEMA compliance isn’t optional. Tax filing in both countries isn’t optional. Proper documentation isn’t optional.

The opportunity is there: 70% of GIFT City’s USD 12 billion AUM comes from NRIs, showing there’s clear value for the diaspora. But the same NRIs who succeed here are the ones who:

• Understand their funding sources
• Track everything meticulously
• File taxes in both jurisdictions
• Work with advisors who know cross-border rules
• Don’t chase returns without understanding risks

If you’re serious about GIFT City, don’t DIY this. The intersection of FEMA, Income Tax Act, DTAA, and IFSCA regulations is complex. One mistake in documentation can block your repatriation. One missed tax filing can trigger notices from both countries.

Get professional help. A qualified cross-border financial advisor who understands both Indian and your residence country’s tax laws can save you multiples of their fees by structuring things correctly from the start.

Need Expert Guidance?

GIFT City investments require specialized knowledge of FEMA, cross-border taxation, and IFSCA regulations. The Fair Advice connects NRIs with experienced advisors who specialize in:

• India-overseas financial planning
• GIFT City investment structuring
• Repatriation planning
• DTAA optimization
• Holistic cross-border wealth management

Whether you’re exploring GIFT City for the first time or already invested and need compliance support, find the right advisor for your specific situation at The Fair Advice.