Can I Exit GIFT City Investments Anytime

A member of our WhatsApp community once asked: "I want to put $50,000 into GIFT City. But what if I need it back in six months?"

Fair question. And one most blogs skip over while praising GIFT City's tax benefits.

At Belong, we help NRIs navigate GIFT City every day. The honest answer? It depends on what you invest in. Some products let you exit within days. Others lock your money for three years. A few won't let you exit at all until maturity.

This guide breaks down exit rules for every GIFT City product. You'll learn what penalties you'll actually pay, how fast money reaches your overseas account, and what changes if you're returning to India.

The Short Answer: Not All GIFT City Products Are Equally Liquid

Think of GIFT City like a supermarket. You can pick up milk (highly liquid) or buy a wine that needs aging (locked in). Both are in the same store. But they serve very different needs.

Here's the liquidity spectrum:

High liquidity: Listed securities on NSE IFSC, ETFs, global equities. These settle in T+1 days, just like any stock exchange.

Moderate liquidity: Mutual funds and USD fixed deposits. You can exit, but you may pay a small penalty or exit load.

Low liquidity: Alternative Investment Funds (AIFs). Most have three-year lock-in periods. Close-ended AIFs won't let you exit until the fund matures.

Very low liquidity: Real estate in GIFT City. Selling takes months, like any property transaction.

The product you choose determines how quickly you can get your money back. Let's look at each one.

👉 Tip: Before investing, match each product's lock-in period to when you'll actually need the money. Don't put emergency funds into AIFs. Don't put long-term wealth into savings accounts earning minimal interest.

USD Fixed Deposits: Yes, You Can Exit Early

USD fixed deposits are the most popular GIFT City product for NRIs. The good news? Most banks allow premature withdrawal. The better news? Penalties are surprisingly low compared to traditional NRE or FCNR fixed deposits.

Here's what the major banks charge:

Minimum deposit tenure across most IBUs starts at 7 days.

Source: Axis Bank GIFT City FD FAQs, ICICI Bank GIFT City FD Rates, IDFC First Bank GIFT City FD Rates

The penalty works like this. If you booked a 12-month FD at 4.5% and break it after six months, Axis Bank pays you the 6-month rate minus 0.15%. So if the 6-month rate was 4.0%, you'd get 3.85%.

Your principal is always protected. You just earn slightly less interest.

Compare FD rates across GIFT City banks using Belong's NRI FD Rate Explorer before locking in your deposit.

👉 Tip: If liquidity matters to you, consider IDFC First Bank's GIFT City FDs. As of September 2025, they charge zero premature withdrawal penalty. That's rare.

The Non-Callable Trap: When You Literally Cannot Exit

Here's something most GIFT City guides don't mention.

Some banks offer "non-callable" deposits. These pay slightly higher interest rates.

The catch?

You cannot withdraw before maturity. Period. No exceptions. No penalties. Just no exit.

RBL Bank's non-callable deposits require a minimum of USD 500,000 and a tenure of at least 91 days (Source: RBL Bank GIFT City). HDFC Bank's GIFT City branch also offers non-callable options for corporate and professional clients (Source: HDFC Bank GIFT City).

If you're an NRI putting a large sum into GIFT City, always confirm whether your FD is "callable" or "non-callable" before signing.

For callable deposits, ICICI Bank's terms include multiple factors in premature withdrawal calculations.

These include the cost of arranging funds from alternative sources, the original deposit rate, and any penal rate prescribed by the IBU (Source: ICICI Bank GIFT City T&C).

👉 Tip: Always ask your relationship manager one specific question: "Is this deposit callable or non-callable?" If they say non-callable, understand that your money is fully locked until maturity. No emergency access. No partial withdrawal.

GIFT City Mutual Funds: Exit Loads Apply, But No TDS

GIFT City mutual funds are more liquid than FDs in some ways and less liquid in others.

Most GIFT City mutual funds do not have mandatory lock-in periods. You can redeem whenever you want. But if you redeem within a certain window, an exit load applies.

Here's how it typically works:

Equity-oriented funds: 1% exit load if redeemed within 12 months of purchase. After 12 months, zero exit load.

Debt-oriented funds: Exit loads vary. Some charge 0.5% within 3 months, others have no exit load at all.

Thematic and sectoral funds: Higher exit loads are possible. Check the scheme information document before investing.

The real advantage of GIFT City mutual funds over regular Indian mutual funds is what happens after exit load.

With mainland India mutual funds, NRIs face 12.5% to 30% TDS on capital gains at the time of redemption.

That money gets deducted before it reaches your account. You then file an ITR to claim refunds if excess TDS was deducted.

With GIFT City mutual funds, there's no TDS on redemptions for NRIs. No Securities Transaction Tax. No Commodity Transaction Tax. For UAE-based NRIs with zero capital gains tax at home, this means you keep 100% of returns minus any exit load.

Even if you pay exit load, you save far more by avoiding the 12.5-30% TDS that applies to mainland funds.

For a detailed breakdown of how exit loads work, see our guide on entry load vs exit load in mutual funds.

👉 Tip: GIFT City mutual fund liquidity is currently lower than mainstream Indian funds. Trading volumes are still growing. If you're investing large amounts (above $50,000), check with the AMC about typical redemption processing times before committing.

AIFs: The Three-Year Reality Check

Alternative Investment Funds in GIFT City are the least liquid product in the ecosystem. And that's by design.

AIFs pool money from sophisticated investors and deploy it into private equity, venture capital, hedge fund strategies, or structured debt.

These strategies take time to generate returns. Fund managers need certainty that capital won't be pulled out mid-strategy.

Here's the lock-in landscape:

Open-ended AIFs let you enter and exit, but with specified lock-in periods. Typically, you cannot redeem for the first three years. After the lock-in, redemption windows open periodically, perhaps quarterly or semi-annually.

Close-ended AIFs do not allow any exit before the fund matures. If the fund has a seven-year life, your money is committed for seven years.

The minimum investment dropped from USD 150,000 to USD 75,000 in February 2025 (Source: IFSCA Circular, February 2025). That's still a significant commitment to lock away for three or more years.

For NRIs exploring advanced investment options like AIFs, REITs, and bonds, understanding the lock-in is just as important as understanding the returns.

One client shared this with us: "I put $150,000 into a Category III AIF expecting hedge-fund-like flexibility.

I didn't realize I couldn't touch that money for three years. My daughter's university fees came due, and I had to arrange funds from elsewhere."

That's a planning failure, not a product failure. AIFs clearly state their lock-in terms. Read the Private Placement Memorandum (PPM) before signing.

Listed Securities: The Most Liquid Exit

If you trade global equities, ETFs, or derivatives through NSE IFSC or India INX, your exit is as smooth as any international stock exchange.

Settlement follows T+1 cycle. You sell today, and funds settle in your IBU account the next business day. From there, you can wire the money to your overseas account within 2-3 business days.

No lock-in. No exit load. No penalty.

The only cost is brokerage fees. These are typically lower than mainland India because there's no Securities Transaction Tax, no Commodity Transaction Tax, and no stamp duty on GIFT City exchange transactions (Source: IFSCA Regulations).

Track market movements using Belong's GIFT Nifty Tracker before timing your exit.

👉 Tip: While listed securities are technically the most liquid GIFT City product, liquidity depends on trading volume. Popular indices and blue-chip stocks will have tight spreads. Niche or thinly traded securities may take longer to sell at your desired price.

The Biggest GIFT City Exit Advantage: No Form 15CA/15CB

Here's what makes exiting GIFT City fundamentally different from exiting mainland India investments.

When NRIs repatriate money from regular Indian investments (NRE accounts, NRO accounts, property sales), they face a paperwork gauntlet:

Form 15CA: An online declaration filed with the Income Tax Department for every outward remittance.

Form 15CB: A certificate from a Chartered Accountant, required when remittance exceeds ₹5 lakh. The CA verifies tax compliance, applicable DTAA rates, and TDS deductions.

This process can take days or weeks. It costs money. And it creates friction every single time you want to move money out.

GIFT City eliminates this entirely.

Since GIFT City is treated as "foreign territory" under FEMA (the RBI amended FEMA regulations in October 2025 to clarify this treatment), funds held in IBU accounts are already "outside India" from a regulatory perspective.

You don't need a CA certificate. You don't file Form 15CA or 15CB. Capital flows as freely as moving money between banks in Dubai and London.

For a deeper comparison, see our guide on repatriation rules for NRIs after selling investments in India.

This is one of the strongest reasons NRIs choose GIFT City. The entry is easy. And the exit is equally easy. No bureaucratic delays. No CA fees. No waiting for tax clearances.

👉 Tip: If you've ever struggled to repatriate funds from an NRE account, you'll appreciate how streamlined GIFT City repatriation is. It's genuinely frictionless for most products.

How Fast Does Money Actually Reach Your Overseas Account?

Knowing you can exit is one thing. Knowing when the money hits your bank account abroad is another.

Here are realistic timelines based on what our community members report:

USD Fixed Deposits (premature withdrawal): 4-7 working days. Axis Bank states 4-5 working days for processing (Source: Axis Bank GIFT City). Add 2-3 days for the SWIFT transfer to reach your overseas bank.

Mutual Fund Redemptions: 3-5 working days for redemption processing (varies by fund type; equity funds typically T+3, liquid/debt funds T+1 to T+2). Then 2-3 days for international wire.

Listed Securities: T+1 settlement to your IBU account. Then 2-3 days for SWIFT transfer. Total: roughly 3-5 working days.

AIFs (after lock-in ends): Processing can take 2-4 weeks depending on the fund's redemption cycle and underlying asset liquidity.

Insurance policies: Surrender or withdrawal processing: 7-15 working days depending on the insurer.

Compare this to mainland India. Selling a property as an NRI and repatriating the proceeds can take 3-6 months between sale completion, tax clearances, Form 15CB certification, and bank processing.

What If You Need Emergency Cash?

Life doesn't wait for lock-in periods. Medical emergencies, job loss, or unexpected family needs can create urgent cash requirements.

Here's an emergency liquidity plan for GIFT City investors:

First line of defense: Keep 3-6 months of expenses in a GIFT City savings account or short-tenure FD (7 days to 1 month). These give you near-instant access.

Second line: Redeem liquid or debt mutual fund units. These process within 1-2 business days.

Third line: Break a longer-tenure FD. The penalty is small (0.15% to 1%), and your principal is protected.

Last resort: If your money is locked in an AIF, you won't have access to it. This is why we always tell our community: never put emergency funds into AIFs.

Some IBU banks also offer loans against your GIFT City fixed deposits. ICICI Bank's IBU terms mention that loans may be available against FDs at the bank's discretion (Source: ICICI Bank GIFT City T&C). This lets you access cash without breaking your deposit.

For a broader look at emergency planning, see our guide on emergency fund planning for NRIs.

👉 Tip: A simple rule we share with our community: invest in AIFs only with money you genuinely won't need for 3-5 years. For everything else, stick to FDs and mutual funds that offer reasonable exit flexibility.

Exiting GIFT City When You Return to India

This is where exit rules get more nuanced.

When you return to India and become a resident, your GIFT City investments don't automatically close. But your tax status and eligibility may change.

During RNOR period (typically 2-3 years after returning): Your GIFT City investments continue with the same tax benefits. Income from GIFT City is treated as foreign income and remains exempt from Indian tax during RNOR status.

After becoming ROR (Resident and Ordinarily Resident): The tax treatment changes. Your global income becomes taxable in India. GIFT City gains may now attract Indian capital gains tax depending on the specific product and structure.

Eligibility restrictions: Some GIFT City schemes are restricted to NRIs only. Once your status changes to resident, you may be required to exit those schemes. Check the offering document of each fund.

What most blogs miss: You don't have to exit everything immediately upon returning. The transition gives you time. But you must update your KYC with each AMC, bank, and fund manager. Failing to update your residential status can create compliance issues.

For the complete financial checklist, read our guide on closing mutual fund accounts before moving to India.

Exit Costs: GIFT City vs Mainland India Investments

Here's a comparison that puts GIFT City exit costs in perspective.

The real exit cost difference isn't the penalty. It's the tax. A UAE-based NRI redeeming ₹10 lakh in equity mutual fund gains from mainland India loses ₹1.25 lakh to TDS immediately (12.5% LTCG rate). The same gain from a GIFT City mutual fund faces zero TDS.

Even after filing an ITR and claiming DTAA benefits, the mainland route involves more paperwork, more waiting, and more professional fees.

👉 Tip: For a complete comparison of GIFT City products versus traditional NRI investments, see our analysis of GIFT City vs traditional NRE/NRO investments.

Product-by-Product Exit Decision Framework

Use this framework to match your investment to your liquidity needs.

Never invest your entire GIFT City allocation into a single product category. Diversify across liquidity tiers so you always have access to some portion of your capital.

Our Suggestion

GIFT City gives NRIs something rare: the ability to invest in India's growth story with exit flexibility that rivals any global financial centre. No currency conversion headaches. No CA certificates. No weeks-long repatriation waits.

But "flexible exit" doesn't mean "exit without planning."

Match your product choice to your liquidity timeline. Keep emergency funds in short-tenure FDs or savings accounts. Use mutual funds for medium-term goals. Reserve AIFs for long-term wealth that you truly won't need for years.

Many NRIs in our community share their GIFT City exit experiences, compare bank processing times, and help each other navigate the nuances. Join Belong's WhatsApp community to ask questions and learn from thousands of NRIs who've done this before you.

Ready to explore GIFT City products that match your liquidity needs? Download the Belong app to compare FD rates, explore mutual fund options, track GIFT Nifty, and get started with your first investment.

Disclaimer: This article is for educational purposes only and does not constitute financial advice. Investment decisions should be based on individual risk tolerance, financial goals, and consultation with a qualified financial advisor. Mutual fund investments are subject to market risks. Read all scheme-related documents carefully before investing. GIFT City regulations are evolving; verify current rules with IFSCA or your advisor before acting.