9 Facts About GIFT City Investing That Are Rarely Explained Clearly

Every week, someone in our WhatsApp community asks a question that should have been answered by the five articles they read before joining.

"Can I break my GIFT City FD early without losing all the interest?"

"Do I really need a PAN card?"

"Can my father in India be a joint holder?"

These aren't niche questions. They're basic facts about GIFT City that get glossed over or buried in fine print.

At Belong, we've spent years helping NRIs navigate GIFT City investments. What we've found is that most content either oversimplifies or overcomplicates. The practical details that affect your actual money decisions rarely get the attention they deserve.

This guide covers nine facts that are either poorly explained or completely missing from most GIFT City articles. 

If you're considering investing from the UAE, UK, or anywhere else, these details matter more than the generic "tax-free returns" headlines.

Fact #1: GIFT City FD Tenures Start at 7 Days (FCNR Requires 1 Year Minimum)

This single difference changes everything for NRIs who need flexibility.

FCNR (Foreign Currency Non-Resident) deposits have been the traditional choice for NRIs wanting to hold foreign currency in India. But FCNR deposits require a minimum tenure of 1 year. If you need your money before 12 months, you get nothing. The entire interest is forfeited.

GIFT City FDs operate differently.

ICICI Bank's IFSC Banking Unit allows deposits with tenure ranging from 7 days to 39 months in USD, GBP, EUR, CAD, AED, AUD, SGD, and HKD (ICICI Bank GIFT City). 

Other banks offer similar flexibility. You can park USD 10,000 for three months while you decide on a larger investment. Try doing that with FCNR.

Why this matters for you:

If you receive a lump sum (say, an annual bonus or property sale proceeds), GIFT City lets you earn interest while you evaluate longer-term options. You're not forced to commit for a year.

Compare current rates across all options using our NRI FD Rates comparison tool.

👉 Tip: If you need parking for short periods (3-6 months), GIFT City is your only realistic option among foreign currency deposits. FCNR and NRE FDs simply don't allow it.

Fact #2: Early Withdrawal Doesn't Mean Total Interest Forfeiture

Here's what most articles get wrong about premature withdrawal.

With FCNR deposits, breaking the deposit before maturity means you forfeit the entire interest. Not a penalty. The entire interest. You get back only your principal (RBI FCNR Guidelines).

GIFT City FDs follow international banking norms instead.

If you break a GIFT City FD early, you pay a penalty (typically 0.25% to 0.50% depending on the bank). You keep the rest of your earned interest. The penalty is deducted, not the entire interest.

Real example:

You deposit USD 50,000 for 1 year at 5.5% in a GIFT City FD. After 8 months, you need the money for an emergency.

Under FCNR rules: You get back USD 50,000. Zero interest. Eight months of potential earnings gone.

Under GIFT City rules: You get back USD 50,000 plus approximately USD 1,800 in interest (8 months of accrued interest minus the penalty). Significant difference.

This flexibility isn't free. GIFT City FDs lack the deposit insurance that DICGC provides to NRE/NRO/FCNR deposits. But for NRIs who value liquidity alongside returns, the trade-off is often worth it.

👉 Tip: If emergency access to funds matters to you, the penalty-based withdrawal structure of GIFT City FDs offers substantially better protection than FCNR's all-or-nothing approach.

Fact #3: You Don't Need a PAN Card for Certain GIFT City Investments

This surprises nearly everyone who asks.

For most Indian financial transactions, a PAN (Permanent Account Number) is mandatory. Opening a bank account, investing in mutual funds, buying property, PAN is required.

GIFT City has specific exemptions.

If you invest exclusively through Category I or Category II Alternative Investment Funds (AIFs) in GIFT City, and those AIFs have already deducted applicable taxes, you are exempt from obtaining a PAN in India (ICICI Bank GIFT City Guidelines).

You're also exempt from filing an Indian tax return.

This simplification is significant for NRIs who've never had Indian income and don't want to enter the Indian tax system. However, the exemption applies only to specific AIF investments, not to all GIFT City products.

When you DO need a PAN:

• Opening a GIFT City bank account (most banks require it)
• Investing in Portfolio Management Services (PMS)
• Direct equity trading on GIFT City exchanges
• GIFT City mutual funds (for most funds)

When you might NOT need a PAN:

• Category I and II AIF investments (if conditions are met)
• Certain FPI (Foreign Portfolio Investor) route investments

👉 Tip: Even if you qualify for the PAN exemption, we generally recommend getting one. It takes 2-3 weeks and simplifies future investment options. Don't let the exemption limit your flexibility.

Fact #4: You Cannot Open Joint Accounts with Resident Indians

This catches many families off guard.

NRIs often want to add a parent or spouse in India as a joint holder on their investments. It's convenient for management, estate planning, and day-to-day access.

GIFT City accounts don't allow this.

IFSC accounts are intended exclusively for Non-Residents. Joint accounts with Indian residents are restricted to maintain the "foreign currency" integrity of the zone. Mixing resident and non-resident status complicates the regulatory framework GIFT City operates under.

What you CAN do:

• Open joint accounts with other NRIs or OCIs
• Nominate resident Indians as beneficiaries (not joint holders)
• Use Power of Attorney for specific transactions

Comparison with other NRI account types:

If involving family in India is important for your financial management, you'll need to maintain separate NRE/NRO accounts alongside your GIFT City holdings.

👉 Tip: Many NRIs use a hybrid approach. Keep operational accounts (NRE/NRO) for family involvement. Use GIFT City for tax-efficient wealth accumulation that doesn't need day-to-day family access.

Fact #5: NRO Account Funds Cannot Be Used for GIFT City Investments

This is a compliance issue that gets people into trouble.

Your NRO account holds Indian-source income: rent from property, dividends from Indian stocks, pension payments. This money is considered "domestic" for regulatory purposes.

GIFT City investments must be funded with "foreign" money.

Mixing NRO funds with GIFT City investments complicates your tax status and potentially triggers regulatory scrutiny. The two pools of money have different repatriation rules, different tax treatments, and different documentation requirements (FEMA Guidelines).

Acceptable funding sources for GIFT City:

• Direct wire transfer from your overseas bank account (UAE, UK, US, etc.)
• Transfer from your NRE account (this holds foreign earnings converted to INR, but originated abroad)
• Transfer from your FCNR account

Not acceptable:

• Transfer from NRO account
• Mixed funds of unclear origin

The practical issue is documentation. When you eventually repatriate funds from GIFT City, clean documentation of the money's foreign origin simplifies the process enormously.

👉 Tip: Keep your foreign earnings completely separate from Indian-source income. Fund GIFT City directly from your overseas account. It's cleaner, compliant, and avoids future headaches.

Fact #6: Video KYC Means You Don't Need to Visit India

Until 2025, opening a GIFT City account required either:

• A physical visit to India, or
• Notarized documents through Indian embassies (which could take weeks)

IFSCA implemented Video-based Customer Identification Process (V-CIP) in July 2025, changing the game.

How video KYC works:

You schedule a video call with the bank's representative. During the 15-30 minute session, you display your original documents (passport, address proof, visa). The representative performs liveness checks and AI-based face matching. Your account can be approved within days, not weeks.

Requirements for video KYC:

• Stable internet connection
• Camera-enabled device
• Good lighting
• Physical documents ready for display
• Residence in a "low-risk" jurisdiction (UAE, UK, US, Canada, Singapore, Germany, France, Japan, South Korea qualify)

What you'll need to show:

• Valid passport (minimum 6 months validity)
• Overseas address proof (utility bill or bank statement, less than 3 months old)
• Residence visa or work permit
• PAN card (if required by the bank)

The process works well for most NRIs in established jurisdictions. If you're in a country not on the approved list, you may still need physical document submission.

Check our guide on how to open a GIFT City account for step-by-step instructions.

👉 Tip: Schedule your video KYC during Indian business hours for faster processing. Keep all original documents nearby. Mobile bills are often rejected as address proof, use a utility bill or bank statement instead.

Fact #7: Trading Hours Extend to 22 Hours Daily

GIFT City exchanges don't follow Indian Standard Time only.

NSE IFSC and India INX (the two main exchanges in GIFT City) operate for 22 hours daily, covering Asian, European, and US market timings. This allows NRIs across different time zones to trade efficiently without waking up at odd hours.

Why this matters:

If you're in Dubai and want to react to news affecting Apple or Tesla stock (both available on GIFT City exchanges), you don't need to wait for US markets to open. GIFT City's extended hours let you trade during your normal working day.

Available on GIFT City exchanges:

• Indian derivatives (index futures, options)
• Global equities through Unsponsored Depository Receipts (UDRs) - Apple, Amazon, Tesla, Microsoft, etc.
• Bonds and debt instruments
• Currency derivatives

This is particularly valuable for NRIs who want to invest in both Indian and global markets from a single platform while staying compliant with FEMA guidelines.

Track market movements with our Gift Nifty tool.

👉 Tip: Extended trading hours are useful, but liquidity varies throughout the day. The most active trading typically happens during Indian market hours (9:15 AM to 3:30 PM IST). Plan accordingly.

Fact #8: Resident Indians CAN Invest in GIFT City (With Limits)

Most articles frame GIFT City as "NRI-only." That's not entirely accurate.

Resident Indians can invest up to USD 250,000 per financial year in securities listed on IFSC exchanges under the Liberalised Remittance Scheme (LRS) (RBI LRS Guidelines). This includes GIFT City mutual funds and certain other instruments.

However, there's a catch:

Resident Indians can only invest in "outbound" funds - those that invest outside India (global equities, international bonds). 

They cannot invest in inbound GIFT City funds that invest in Indian equities. That would defeat the purpose of the "foreign" classification.

What this means practically:

If you're planning to return to India and become a resident, your GIFT City investment options narrow but don't disappear entirely. You can maintain existing investments (with changed tax treatment) and add new investments in outbound-only funds within LRS limits.

This is particularly relevant during the RNOR (Resident but Not Ordinarily Resident) transition period when you've returned to India but haven't yet become an ordinary resident.

👉 Tip: If you're returning to India soon, invest while you're still an NRI. Your options are broader, and the tax treatment is more favorable. Don't wait until you've changed status.

Fact #9: Eight Currency Options (Not Just USD)

Most GIFT City articles focus exclusively on USD. The reality is more flexible.

IFSC Banking Units accept deposits and investments in multiple currencies: USD, GBP, EUR, CAD, AED, AUD, SGD, and HKD. You can hold accounts in single or multiple currencies with the same bank.

Why currency flexibility matters:

If you're a UK NRI earning in GBP, converting to USD just to invest in GIFT City adds unnecessary forex risk and transaction costs. You can deposit GBP directly and earn interest in GBP.

If you're in the UAE earning AED, you have two choices. AED is pegged to USD (fixed at 3.67 AED per USD since 1997), so USD-denominated investments carry minimal currency risk. But you can also deposit directly in AED if your bank offers it.

Currency availability varies by bank:

Check with your specific bank for current offerings. Smaller banks may have more limited options.

This multi-currency flexibility is a key advantage over FCNR deposits, which while offering currency denomination, may not include all these options at every bank.

👉 Tip: Match your deposit currency to your earning currency. If you earn in GBP and plan to retire in India, you'll eventually need INR. But if you plan to stay abroad, keeping wealth in your earning currency avoids unnecessary conversions.

What Most Guides Also Skip: The April 2026 Fund Relocation Rule

Here's a development that matters if you're already invested in offshore funds elsewhere.

Budget 2025 introduced a tax-neutral relocation regime for mutual funds and ETFs. Starting April 2026, funds can relocate from offshore jurisdictions (Singapore, Mauritius, Luxembourg) to GIFT City without investors incurring capital gains tax.

What this means for you:

If you hold India-focused ETFs through a Singapore fund structure, the fund manager can now move the fund to GIFT City. You don't pay tax on the relocation. Your holding continues seamlessly.

This is driving significant interest from fund managers who previously chose Singapore for tax reasons. GIFT City's 9% capital gains rate (versus Singapore's treaty rate of 15% on Indian securities) makes relocation attractive.

For NRIs, this means more fund options at GIFT City in the coming years. The ecosystem is expanding beyond the current ~30 funds to potentially include major international players.

The Compliance Detail No One Mentions: Source of Funds Documentation

When you eventually repatriate money from GIFT City, you'll need to prove where it came from.

This isn't unique to GIFT City. But the documentation requirements deserve attention upfront, not when you're trying to move money.

What to keep:

• Bank statements from the last 6 months showing the source of funds
• Wire transfer confirmations showing money moved from overseas accounts
• If you claimed DTAA benefits, keep your Tax Residency Certificate (TRC) from your country of residence

What to avoid:

• Mixing NRO funds with GIFT City investments
• Undocumented cash deposits
• Transferring from accounts with unclear ownership

Clean documentation from day one saves enormous hassle later. When banks ask for source of funds proof during repatriation, you want to hand over a simple file, not reconstruct years of transactions.

👉 Tip: Create a dedicated folder (physical or digital) for each GIFT City investment. Store every transfer confirmation, every statement, every certificate. Future you will thank present you.

Understanding the Trade-Offs: What GIFT City Doesn't Offer

No investment is perfect. Here's what you give up by choosing GIFT City:

No deposit insurance: Unlike NRE/NRO/FCNR deposits covered by DICGC up to ₹5 lakh, GIFT City deposits have no government insurance. You're relying on the creditworthiness of the bank itself. Major banks (SBI, HDFC, ICICI) have strong credit profiles, but the safety net is absent.

Limited fund track records: Most GIFT City mutual funds launched between 2022-2025. You have 2-3 years of performance data at best. Compare this to established Indian funds with 10-15 year histories.

Higher AIF minimums: Despite the February 2025 reduction from USD 150,000 to USD 75,000, AIFs remain inaccessible to most NRIs. Retail mutual funds at USD 500 are new and limited in number.

Evolving regulations: IFSCA was established in 2020. Rules change. In 2024, certain US-based ETF investments were prohibited. Build flexibility into your strategy.

These aren't reasons to avoid GIFT City. They're reasons to approach it with realistic expectations and proper diversification.

Key Takeaway

GIFT City is more flexible than most articles suggest, but also comes with trade-offs that rarely get discussed.

The 7-day tenure option, penalty-based (not forfeiture-based) early withdrawal, and PAN exemptions for certain investments represent real advantages. 

The inability to add resident Indians as joint holders, the requirement for clean foreign-source funds, and the absence of deposit insurance represent real limitations.

Your job is to understand both sides and structure your investments accordingly.

We've helped thousands of NRIs navigate these details through our WhatsApp community. The questions that seem obvious after you know the answer are often the hardest to find answered clearly beforehand. Join the conversation if you're evaluating GIFT City options.

Download the Belong app to compare GIFT City FD rates across banks, explore GIFT City mutual funds, and access tools built specifically for NRIs. We track every regulatory change so you don't have to.

Sources:

• IFSCA Fund Management Regulations 2022 (Amended 2025)
• RBI FCNR Guidelines
• ICICI Bank GIFT City Product Documents
• Income Tax Act Sections 10(4D), 80LA
• IFSCA Video KYC Guidelines (July 2025)
• RBI Liberalised Remittance Scheme Circular
• DICGC Deposit Insurance Limits