GIFT City is India’s first International Financial Services Centre (IFSC). For NRIs in Dubai, the US, the UK, and Singapore, it represents a new way to access India’s growth story in foreign currency, with significant tax advantages and full repatriation rights.
This post explains what GIFT City is, who regulates it, what the tax benefits are, who can invest, and what major developments in 2025 and 2026 have made it even more attractive.
| Key Takeaways
• GIFT City stands for Gujarat International Finance Tec-City. It is India’s first operational IFSC, located between Ahmedabad and Gandhinagar, Gujarat, established in 2015. • Regulated by the IFSCA (International Financial Services Centres Authority), a unified single regulator with powers of SEBI, RBI, IRDAI, and PFRDA within the IFSC. • Legally treated as foreign territory under FEMA. All transactions happen in foreign currencies (USD, GBP, EUR, AED). No mandatory INR conversion. • Budget 2025 extended tax holidays for IFSC units through March 31, 2030. From April 2026, mutual funds and ETFs can relocate to GIFT City from Singapore or Mauritius as a tax-neutral transaction. • NRIs, PIOs, OCIs, and foreign investors can invest in GIFT City products. Resident Indians can invest under the LRS (up to USD 250,000 per year). |
What Is GIFT City?
GIFT City (Gujarat International Finance Tec-City) is India’s first operational International Financial Services Centre (IFSC), established in 2015 as a Special Economic Zone (SEZ) near Gandhinagar, Gujarat. It spans over 886 acres with plans to expand to 3,300 acres.
The core concept is that GIFT City is legally treated as foreign territory for financial transaction purposes under FEMA, even though it sits on Indian soil. This means all transactions happen in foreign currencies. You can invest in USD without converting to INR. The exchange rate risk that affects most India-linked investments for NRIs does not apply within GIFT City.
GIFT City is regulated by the IFSCA (International Financial Services Centres Authority), a unified regulator established in 2020 with the combined powers of SEBI, RBI, IRDAI, and PFRDA within the IFSC. This single-regulator model makes compliance significantly simpler than navigating multiple regulators on the Indian mainland.
| Think of GIFT City as India’s answer to Singapore, Dubai’s DIFC, and Hong Kong, placed in Gujarat with direct access to Indian capital markets. Dollar transactions. Significant tax benefits. Faster regulatory processes. |
Tax Benefits at GIFT City
| Tax Benefit | Who It Applies To | Key Detail |
| 10-year income tax holiday | Business entities (units) in IFSC | 100% exemption for any 10 years in a 15-year block. MAT at 9% applies. Extended to March 2030 (Budget 2025). |
| Zero capital gains for non-residents | Non-residents investing in specific IFSC instruments | Category III AIFs in derivatives and specified securities face zero capital gains tax in India. |
| GST exemption | Financial services within GIFT City | Management and advisory fees generally exempt from the 18% GST that applies on the mainland. |
| STT and stamp duty exemption | Transactions on India INX and NSE IFSC | Securities Transaction Tax and stamp duty do not apply on IFSC exchanges. |
| Life insurance tax exemption | IFSC insurance office policies | Maturity proceeds from IFSC office life insurance are tax-exempt in India (effective April 2025). |
| Dividend tax at 10% | Non-resident investors in IFSC company dividends | 10% rate vs. 20% for non-IFSC Indian companies. |
| April 2026 Development: From April 2026, mutual funds and ETFs can relocate from Singapore or Mauritius to GIFT City without incurring capital gains tax on the relocation. This encourages global funds to shift their base to GIFT City, expanding investment options for NRIs. |
Who Can Invest in GIFT City?
Non-resident investors (NRIs, OCIs, PIOs, foreign nationals)
Non-resident investors can open accounts with GIFT City intermediaries and invest in mutual funds, AIFs, bonds, foreign currency FDs, and global equities, all in foreign currency. This is especially valuable for NRIs in the UAE, US, UK, Singapore, and Canada who want Indian market exposure without rupee risk.
Resident Indians
Resident Indians can invest under the Liberalised Remittance Scheme (LRS), up to USD 250,000 per financial year. Most current GIFT City mutual fund schemes are designed primarily for non-residents. Resident Indians remain subject to Indian income tax on global income, so tax benefits applicable to non-residents may differ.
Institutional investors
Corporates, family offices, global fund managers, and institutional investors can set up entities in GIFT City. Minimum net worth requirements apply for registering as a Fund Management Entity (FME) with IFSCA.
What You Can Invest In at GIFT City
- Foreign Currency Fixed Deposits: IBUs of major Indian banks offer USD, GBP, EUR, AED, and SGD deposits. USD rates at approximately 4.5 to 5.5 percent per annum depending on bank and tenure. Interest is tax-free in India for NRIs.
- GIFT City Mutual Funds: Tata AMC launched the first GIFT City mutual fund for non-residents in September 2025 with minimum USD 500. From April 2026, more offshore funds are expected to relocate to GIFT City.
- Alternative Investment Funds: Minimum reduced from USD 150,000 to USD 75,000 in February 2025. Category I and II AIFs enjoy pass-through taxation.
- Global Equities: GIFT City intermediaries allow NRIs to invest in US stocks and global bonds directly in USD.
- Life Insurance: Dollar-denominated premiums and claims. Maturity proceeds tax-exempt in India (from April 2025).
GIFT City vs. Singapore, Dubai, and Mauritius
| Factor | GIFT City (IFSC) | Singapore | Dubai (DIFC) | Mauritius |
| Regulation | IFSCA (unified India regulator) | MAS | DFSA | FSC |
| Currency | USD, GBP, EUR, AED and others | Multi-currency | USD, AED | USD, EUR |
| India market access | Direct, with IFSC tax benefits | Via bilateral treaties | Via bilateral treaties | Via bilateral treaties |
| Non-resident capital gains | Zero (specific instruments) | Varies by treaty | Varies by treaty | Varies by treaty |
| Tax holiday | 10 of 15 years, to 2030 | No specific holiday | No specific holiday | Partial |
| Min AIF investment | USD 75,000 (from Feb 2025) | USD 200,000+ | USD 50,000+ | USD 100,000+ |
Frequently Asked Questions
What is GIFT City and what does IFSC stand for?
GIFT City is Gujarat International Finance Tec-City. IFSC stands for International Financial Services Centre. India’s first IFSC was established in GIFT City in 2015 as an SEZ in Gujarat. It is regulated by the IFSCA, a unified Indian regulator. Legally treated as foreign territory under FEMA, all transactions happen in foreign currencies.
Can NRIs invest in GIFT City?
Yes. NRIs, OCIs, and PIOs are the primary target investors for GIFT City products. They can invest in FDs, mutual funds, AIFs, and global equities in foreign currency without INR conversion. The rupee depreciation risk that affects NRE and NRO investments does not apply within GIFT City.
What are the main tax benefits at GIFT City?
The main benefits are zero capital gains tax for non-residents on specific IFSC instruments, GST exemption on financial services within the IFSC, no STT or stamp duty on IFSC exchange transactions, life insurance maturity proceeds tax-exempt in India, and a 10-year income tax holiday for IFSC units (extended to March 2030 by Budget 2025).
How is GIFT City different from NRE accounts?
NRE accounts are INR-based. Your foreign currency is converted to rupees when deposited. GIFT City products are held in foreign currency throughout. There is no INR exposure on the principal. Both are fully repatriable, but GIFT City removes the exchange rate risk that affects NRE returns in home-currency terms.
What is the minimum investment for GIFT City mutual funds?
Tata AMC launched the first GIFT City mutual fund for non-residents in September 2025 with a minimum of USD 500. GIFT City AIFs have a minimum of USD 75,000 following the February 2025 reduction. Foreign currency FDs at GIFT City IBUs typically start from USD 500 to USD 1,000. Confirm minimums directly with the fund or bank.
Can resident Indians invest in GIFT City?
Yes, under the Liberalised Remittance Scheme (LRS) up to USD 250,000 per financial year. However, resident Indians are taxed on global income in India, so the zero capital gains benefit available to non-residents may not apply. Specific 2025 GIFT City mutual fund schemes are currently designed only for non-residents. Verify eligibility with the specific fund.
How does GIFT City compare to Singapore or Mauritius?
GIFT City’s main advantage is direct proximity and regulatory connectivity to Indian capital markets, with IFSC-specific tax benefits comparable to or better than treaty benefits from offshore jurisdictions. From April 2026, funds can relocate from Singapore or Mauritius to GIFT City without capital gains tax on the relocation, making GIFT City increasingly competitive as a fund domicile.
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