GIFT City for NRIs: Tax-Free Investing from India’s International Financial Hub

What is GIFT IFSC?

Gujarat International Finance Tec-City (GIFT City) is India's first International Financial Services Centre (IFSC), located in Gandhinagar, Gujarat. It operates as a special economic zone where financial transactions happen in foreign currency — essentially an offshore financial centre on Indian soil.

For NRIs, this creates an unusual opportunity: access to global financial products through an Indian-regulated platform, with tax benefits that rival traditional offshore centres like Singapore or Dubai.

Why NRIs should care

The appeal for NRIs comes down to three factors:

• No capital gains tax on investments made through GIFT IFSC. Securities Transaction Tax (STT), Commodity Transaction Tax (CTT), and stamp duty do not apply. Long-term and short-term capital gains on specified securities are exempt.
• No LRS restrictions. Since GIFT IFSC operates in foreign currency, investments do not count against the Liberalised Remittance Scheme (LRS) cap of USD 250,000 per year.
• Familiar regulatory framework. GIFT IFSC is regulated by the International Financial Services Centres Authority (IFSCA), which operates under Indian law. For NRIs who are wary of parking money in less-regulated offshore jurisdictions, this provides a comfortable middle ground.

Three structures worth knowing

1. GIFT City AIFs. Several Category III AIFs have set up units in GIFT IFSC. These funds invest globally — US tech, European high-yield, Asian emerging markets — and NRIs can invest in USD without FEMA complications. The tax treatment is significantly more favourable than investing in the same strategies through a domestic Cat III AIF.

2. GIFT City Portfolio Management. SEBI-registered portfolio managers are now permitted to offer USD-denominated PMS through GIFT IFSC. This is particularly relevant for NRIs in the US and UK who want India-based professional management of their global portfolio.

3. Direct listing and ETFs. GIFT City's stock exchanges (NSE IFSC and BSE IFSC) list global ETFs, bonds and other securities. NRIs can trade US-listed ETFs, international bonds and gold futures through brokers registered in GIFT IFSC.

Practical considerations

Opening an account in GIFT IFSC requires working with a registered intermediary — a broker, fund manager or bank branch operating in the zone. Documentation is similar to standard KYC but includes additional FEMA-related declarations.

Repatriation is straightforward since the entire ecosystem operates in foreign currency. There are no RBI approvals needed for moving funds in and out of GIFT IFSC accounts.

What we recommend

For NRIs with USD 100,000 or more to deploy, GIFT City should be on the radar as a complement to domestic Indian investments and existing offshore holdings. It is especially useful for NRIs who want India-managed exposure to global markets without the regulatory complexity of routing through Singapore or Mauritius fund structures.