GIFT City has become one of the most talked-about developments in India’s global investing landscape. For many investors, it feels like a long-awaited bridge between domestic comfort and international markets, offering a regulated way to access global markets without opening a foreign account.
But the real questions investors have today go beyond convenience.
They want to know:
Table of Contents
- Understanding GIFT City
- Which investor needs does GIFT City solve?
- Four ways to invest in global markets via GIFT City
- US Stock Receipts (NSE IFSC)
- Pooled Global Funds (AIF-style structures)
- AMC Global Fund of Funds (FoFs)
- Multi-Currency IBU Accounts
- Does GIFT City solve US Estate Tax?
- Does GIFT City Require Schedule FA Reporting?
- Conclusion
- FAQs
Understanding GIFT City
Even though GIFT City is located in India, investments made by resident Indians are still treated as foreign transactions. Money moves through the Liberalised Remittance Scheme, the same route used for funding a foreign brokerage or global mutual fund.
This means LRS limits apply, TCS apply above the government threshold and most IFSC holdings appear in Schedule FA because they are classified as foreign assets for reporting.
How money moves | Funds are sent via LRS, similar to investing abroad. |
Annual limit | Up to USD 250,000 per individual per financial year. |
TCS applicability | TCS applies if total remittances cross the government threshold. |
Why LRS applies | IFSC is treated as a separate financial jurisdiction for residents. |
Schedule FA reporting | Most GIFT City investments qualify as foreign assets and must be disclosed. |
What Is the IFSC?
The IFSC is a designated financial zone inside GIFT City that operates in foreign currency and functions as a separate financial jurisdiction, allowing banks, brokers and fund managers to offer global products from Indian soil.
How It Is Regulated (IFSCA)
The IFSC is overseen by the International Financial Services Centres Authority, a unified regulator created specifically for global-facing activity inside GIFT City. This single-authority structure keeps the rulebook cleaner than domestic India, where responsibilities are divided between SEBI, RBI, IRDAI and PFRDA. The unified model also helps GIFT City evolve faster, with clearer processes and quicker approvals for international products.
IFSCA is still a relatively young regulator compared to bodies like SEBI or the SEC. The framework is strong, but some parts of the ecosystem are still maturing, so investors should keep this context in mind while evaluating long-term global strategies through GIFT City.
Which investor needs does GIFT City solve?
GIFT City brings global access closer to home, but it is still an early ecosystem. It simplifies onboarding and offers a clean way to own a few US names, yet the global product universe remains narrow and estate tax is not fully resolved except through select pooled structures. It is a strong addition, not a full replacement for a mature offshore setup.
Investor Needs | GIFT City | Offshore Routes |
Simple access to popular US stocks | ✅ Yes (via IFSC receipts) | ✅ Yes (full US market) |
Access to the full US market | ❌ Limited list only | ✅ Complete universe |
Global diversification beyond the US (Europe, Japan, EM, factors, bonds) | ❌ Very limited | ✅ Full multi-country, multi-asset range |
Estate tax protection for US exposure | ⚠️ Possible only through certain pooled structures | ✅ Possible |
Low-cost global ETFs (~0.07 to 0.25 percent TER) | ❌ Not today | ✅ Widely available |
AIF-level active strategies | ✅ Yes for large tickets | ✅ Yes (offshore AIFs, PMS, managed portfolios) |
Minimum investment friendly for mass-affluent | ❌ High minimums for many funds | ✅ Flexible, works even with small tickets |
Liquidity and depth | ❌ Lower, early-stage markets | ✅ Strong global liquidity |
Tax clarity and long history | ⚠️ Evolving; fund-level taxation not fully standardised | ✅ Well understood worldwide |
Schedule FA reporting | ✅ Always needed (foreign assets) | ✅ Always needed (foreign assets) |
Suited for RSU diversification | ❌ Not ideal (limited global menu) | ✅ Yes (multi-market UCITS + estate tax protection) |
Suited for advanced asset allocation | ❌ No | ✅ Yes |
Regulated environment | ✅ Indian unified regulator (IFSCA) | ✅ Global regulators (SEC, FCA, ESMA) |
Future growth potential | ✅ Strong | ✅ Strong |
Four ways to invest in global markets via GIFT City
GIFT City offers a few clear pathways for Indians to access global markets. Each route works differently, comes with its own advantages and limitations, and is built for very different types of investors. Before we dive into the pros and cons, here are the four access routes GIFT City currently provides.
- US Stock Receipts (NSE IFSC)
A simplified way to own select US companies through unsponsored receipts listed on the NSE IFSC exchange. - Pooled Global Funds (AIF-style structures)
Funds set up in the IFSC that invest in offshore assets, sometimes including UCITS ETFs, usually targeted at higher-ticket investors. - AMC Global Fund of Funds (FoFs)
Retail-friendly schemes launched by Indian AMCs in GIFT City that feed into offshore funds for global exposure. - Multi-Currency IBU Accounts
Foreign currency banking units inside GIFT City that support custody, offshore bonds and global payments
US Stock Receipts (NSE IFSC)
US stock receipts in GIFT City are unsponsored depository receipts that mirror a curated list of US companies. They trade on the NSE IFSC exchange in USD and offer a simple way to hold select US names without opening a foreign brokerage account.
So far, around 50 US stocks are live through these receipts, and this universe is expected to expand steadily as the IFSC ecosystem grows. Since the receipts map to underlying US-listed securities, they do not automatically remove US estate-tax exposure. These holdings are also treated as foreign financial assets for reporting.
Liquidity | Low and still developing |
US Estate tax | Underlying exposure remains US-situs |
Reporting | Usually classified as foreign assets (Schedule FA) |
Best for | Basic exposure to a few US companies |
- If your primary goal is to invest meaningfully in the US market, it often makes sense to use platforms where the full US universe is already available. Platforms like INDmoney, Vested, IBKR and Paasa offer deeper access, broader product choices and a more complete investing experience than what is currently possible through the limited set of IFSC receipts.
- If your objective is US exposure without the estate-tax risk that comes with holding US-situs assets, then you should consider non-US domiciled instruments such as Ireland-domiciled UCITS ETFs. These provide the same exposure to US markets but are structured to avoid US estate-tax complications altogether.
Pooled Global Funds (AIF-Style Structures)
Pooled global funds in GIFT City are alternative-investment style structures set up within the IFSC to offer professionally managed global exposure. These funds invest in offshore assets, which can include global equities or debt, depending on how the scheme is constructed.
These pooled structures are not new, but GIFT City has made it possible to run them directly from Indian soil instead of relying on offshore hubs like Singapore, Dubai or Ireland.
A few well-known examples include the:
- Tata AIF structures launched under IFSC (Category III Global strategies)
- SBI Investment Opportunities Fund (IFSC)
Each of these uses a different structure, investor eligibility and minimum investment size. Most Category III AIF-style funds have higher minimums, while FoF formats from AMCs tend to be more accessible but come with higher expense ratios.
Although some pooled funds aim to reduce US estate-tax exposure by investing in non-US domiciled instruments, the benefit depends entirely on the fund’s underlying design. The ecosystem is still young, fee structures resemble AIFs and fund-level taxation continues to evolve.
What it is | Managed pooled global funds set up in the IFSC |
Minimums | Vary by structure; AIFs are often USD 150,000+ |
US Estate tax | Possible relief depending on underlying structure |
Reporting | Usually classified as foreign assets (Schedule FA) |
Best for | Larger-ticket investors seeking a managed global approach |
- These funds make sense if you are allocating a large corpus and prefer a managed approach, and if the higher minimums and fee structure fit within your plan.
- Investors should also be aware that pooled funds in GIFT City generally carry higher total expense ratios because of multiple fee layers and smaller fund sizes.
AMC Global Fund of Funds (FoFs)
AMC-run global Fund of Funds in GIFT City are designed to be the most accessible way for retail and mass-affluent investors to get offshore exposure from an Indian-regulated environment. These schemes are launched by Indian mutual fund houses through their IFSC branches and simply “feed” into an underlying offshore fund. The goal is to offer global diversification with lower minimums, simpler documentation and an easier experience than AIF-style pooled funds.
Because they are FoFs, the investment engine is actually the underlying global fund, while the IFSC FoF serves as the entry layer. Minimums are modest compared to AIF structures, but investors should note that FoFs often carry dual expense layers, since both the FoF and the underlying fund charge fees.
A few well-known examples include the:
What it is | Retail-friendly FoFs launched by Indian AMCs in the IFSC |
Minimums | Relatively low and more accessible than AIF structures |
Estate tax | Depends on the underlying fund. US-domiciled holdings retain estate-tax exposure. Non-US domiciled UCITS avoid it. |
Expense ratio | Higher due to layered FoF and underlying fund costs |
Best for | Investors seeking simple global access with small or mid-sized allocations |
FoFs are useful if you want basic global exposure with minimal onboarding friction, but the layered fee structure means you often pay more for the same underlying exposure.
Multi-Currency IBU Accounts
Multi-currency IBU (International Banking Unit) accounts are foreign currency banking accounts offered by banks that operate inside GIFT City. These accounts function similarly to offshore banking relationships and are typically used for custody, foreign-currency deposits, global remittances and access to certain offshore bonds or structured products.
For most retail investors, IBU accounts are not designed as a primary route for global investing. They cater more to corporates, family offices and larger-ticket individuals who need specialised banking facilities rather than broad market access. The minimums can be high, product menus vary by bank and investment options are limited compared to a full offshore brokerage.
Does GIFT City solve US Estate Tax?
A common assumption among Indian investors is that investing through GIFT City might remove US estate-tax risk. In reality, estate tax does not depend on whether you invest through GIFT City or an offshore platform. It depends on what you finally hold.
Under US rules, estate tax applies to US-situs assets held by non-resident, non-citizen investors above a small exemption threshold of USD 60,000. US-situs assets include shares of US corporations and units of US-domiciled mutual funds or ETFs or company RSUs/ESOPs, even if they are held through a foreign intermediary.
This means most GIFT City routes, such as US stock receipts or funds that invest into US-domiciled securities, continue to carry estate-tax exposure. The GIFT City wrapper does not change the nature of the underlying asset.
Estate-tax protection arises only when your end exposure is to non-US domiciled funds, such as Ireland-domiciled UCITS ETFs. In these cases, the investor legally holds shares of a non-US corporation, which is why these structures are commonly used worldwide to avoid US estate-tax complications.
Does GIFT City remove US estate tax? | No. Estate tax depends on the underlying asset. |
Do US stock receipts avoid estate tax? | No. They still reference US-listed securities. |
Do FoFs or AIFs avoid estate tax? | Only when the underlying holdings are non-US domiciled funds, for example Ireland-domiciled UCITS. |
What actually drives the outcome? | The domicile and nature of what you ultimately own. Not the platform or location of the intermediary. |
If your objective is US exposure without the estate-tax risk that comes with US-situs assets, then you should consider non-US domiciled instruments like Ireland-domiciled UCITS ETFs.
Paasa gives you simple, compliant access to UCITS and is already trusted by many senior professionals.
Does GIFT City Require Schedule FA Reporting?
Another assumption is that investments made through GIFT City do not need to be declared in Schedule FA because the IFSC is physically located in India. In practice, Schedule FA reporting depends on where your end exposure is, not where the platform sits.
All the below mentioned GIFT City routes ultimately represent foreign financial assets, especially when the underlying holdings are offshore. In these cases, Schedule FA disclosure is required.
- US stock receipts
- GIFT City FoFs that invest in offshore funds
- AIF-style pooled structures with global portfolios
- IBU foreign-currency accounts
Schedule FA reporting is important and often more complex than it appears.
Paasa simplifies this by clearly outlining what needs to be reported and helping investors keep their global portfolios fully compliant with Indian regulations.
Conclusion
GIFT City is one of the most important developments in India’s global investing landscape. It has made cross-border investing more accessible, more familiar and far better regulated than ever before. For investors who simply want to explore global markets or prefer the comfort of Indian onboarding and Indian oversight, GIFT City offers a useful starting point.
For larger allocations, especially through AIFs or pooled global vehicles, GIFT City also provides a credible onshore alternative that did not exist a few years ago.
At the same time, if your objective is to build a broad, long-term global portfolio with clean estate-tax treatment, deeper market access and simpler structures, offshore routes remain the most practical and reliable option today. As the GIFT City ecosystem matures, its offerings will continue to expand, but for now, many investors still use it alongside - not instead of - established offshore frameworks.
About Paasa
Paasa is an Indian investor’s gateway to global investing, trusted by HNIs, family offices, and institutions to diversify into markets across the US, Europe, China, Japan, and beyond.
What sets Paasa apart is its India-facing compliance layer:
- FEMA and LRS compliance embedded into every transaction.
- Tax reporting and analytics built for Indian investors (LTCG, STCG, dividend tax, TCS tracking).
- End-to-end support for remittance structuring, reconciliation, and compliance queries.
Whether it’s equities, ETFs, UCITS funds, managed strategies, or even helping you protect your RSUs from estate tax, Paasa provides a single transparent platform for global portfolios with the confidence that India-specific compliance is taken care of.
Disclaimer
This article is intended for information only and does not constitute investment, tax, or legal advice. The material is based on public sources and our interpretation of current regulations, which may change. Investing in global markets entails risks, including currency risk, political risk, and market volatility. Past performance does not predict future outcomes. Please seek advice from qualified financial, tax, and legal professionals before acting.
