A community member from Manchester called us last week with a simple question: "Ankur, everyone's talking about GIFT City. Should I move my savings there?"
My answer, as always: it depends.
GIFT City isn't universally better or worse than UK investment options. It's different.
And understanding those differences helps you make the right choice for your situation. Here's an honest breakdown of the pros and cons.
The Pros: Why GIFT City Works for UK NRIs
Zero TDS on Interest in India
When you earn interest on NRE or NRO fixed deposits in India, banks deduct Tax Deducted at Source (TDS). NRO FDs face 30% TDS. Even tax-free NRE FDs require paperwork to claim exemptions.
GIFT City FDs? Zero TDS. The interest lands in your account without deductions. You still owe UK tax (more on that later), but you avoid the hassle of chasing TDS refunds from Indian authorities.
Protection from Rupee Depreciation
Over the past 20 years, the rupee has fallen from ₹43 to ₹86 against the dollar-roughly 3.5% annual depreciation. Source: Belong
If you'd invested ₹10 lakh in an NRE FD earning 7% annually, your real returns after converting back to GBP would be significantly lower once currency erosion is factored in.
GIFT City FDs are denominated in USD, EUR, GBP, or other foreign currencies. Your principal stays protected from INR depreciation. For UK NRIs planning to return, this matters less. For those staying abroad long-term, it's significant.
Simplified Repatriation
Sending money out of India can be painful. NRO accounts have a $1 million annual repatriation limit. You need Form 15CA and Form 15CB. CA certifications. Bank visits.
GIFT City operates outside India's domestic tax and exchange control framework. Repatriation is 100% free, unlimited, and doesn't require Form 15CA/15CB. Your money moves as easily as any international transfer.
Flexible Tenures
FCNR deposits require a minimum 1-year lock-in. Withdraw early and you forfeit all interest.
GIFT City FDs start from just 7 days. Need your money in 3 months? No problem. This flexibility suits NRIs who want foreign currency exposure without long commitments.
Access to Global Investment Products
Beyond FDs, GIFT City offers Alternative Investment Funds, PMS, and global equity trading on NSE IFSC. No STT, no CTT, no stamp duty on many transactions.
DTAA Benefits Apply
The India-UK Double Taxation Agreement ensures you're not taxed twice. Since GIFT City has zero TDS, claiming UK tax credits is straightforward.
The Cons: What Could Trip You Up
No Deposit Insurance
This is the biggest trade-off. UK savings accounts come with FSCS protection-£85,000 per person (rising to £120,000 from December 2025). If your bank fails, the government guarantees your money.
GIFT City FDs have no equivalent protection. They're not covered by India's DICGC scheme. The banks operating there-SBI, HDFC, ICICI-are reputable. But there's no government backstop.
👉 Tip: If safety is paramount, consider splitting funds between GIFT City and UK savings accounts or ISAs.
You Still Pay UK Tax
"Tax-free in India" doesn't mean tax-free in the UK. As a UK tax resident, you must report all foreign income to HMRC, regardless of amount. From April 2025, even small foreign earnings require declaration. Source: GOV.UK
If you're a higher-rate taxpayer (40%), your 4% GIFT City return becomes 2.4% after UK tax. A UK ISA paying 4.3% remains fully tax-free. The ISA might actually leave you with more.
Interest Rates Aren't Always Higher
Current GIFT City USD FD rates hover around 3.7-4.05% for 6-12 month tenures. UK best-buy savings accounts offer 4.3-4.5%. Source: MoneySavingExpert
The UK rate advantage isn't huge. But when you factor in FSCS protection, no currency conversion costs, and ISA tax benefits, UK options can be competitive-especially for short-term savings.
Transfer Costs Eat Into Returns
Moving money to GIFT City involves SWIFT transfers. Bank fees (£25-50), intermediary charges ($10-30), and exchange markups (1-3%) add up. On £10,000, you might lose £250-400 before earning interest. This favours larger, less frequent transfers.
Evolving Regulatory Environment
GIFT City is young. IFSCA was established only in 2020. Rules change-the AIF minimum dropped from $150,000 to $75,000 in 2025, but regulators also restricted certain US ETF investments. Mature centres like London have decades of stability.
High Minimums for Premium Products
FDs are accessible from around USD 1,000. But GIFT City's sophisticated products-AIFs, PMS, global funds-require USD 75,000 to USD 150,000 minimum investments. For most retail NRIs, these remain out of reach.
Currency Conversion Complexity
As a UK NRI earning in GBP, you'll convert GBP to USD when investing in GIFT City, then USD to GBP when withdrawing. If the pound strengthens against the dollar, your GBP returns shrink. This adds currency risk that doesn't exist with UK savings accounts.
Quick Comparison Table
Factor | GIFT City | UK Savings/ISA |
|---|---|---|
Interest Rate (current) | 3.7-4.05% USD | 4.3-4.5% GBP |
Deposit Insurance | None | £85,000-£120,000 FSCS |
Tax on Interest | Zero in India; taxable in UK | Tax-free in ISA; PSA applies |
Repatriation | Free, unlimited | N/A (already in UK) |
INR Depreciation Protection | Yes (USD-denominated) | N/A |
Minimum Investment | ~USD 1,000 | £1 |
Tenure Flexibility | 7 days onwards | Varies |
Who Should Consider GIFT City?
GIFT City makes sense if you're staying abroad long-term, have savings exceeding UK ISA limits, value hassle-free repatriation, or want global equity exposure via Indian platforms.
It may not suit you if deposit insurance is a priority, your savings fit within ISA limits, you need funds short-term, or you're returning to India soon.
Making Your Decision
There's no universal "better" option. GIFT City offers genuine advantages-zero TDS, currency protection, easy repatriation. But it comes with trade-offs-no deposit insurance, UK tax liability, transfer costs.
The smart approach? Don't put all eggs in one basket. Use UK ISAs for tax-free, protected savings. Use GIFT City for long-term, currency-hedged growth. Use our NRI FD comparison tool to compare rates across all options.
Need help deciding? Join our WhatsApp community where UK NRIs share their experiences. Or download the Belong app to explore GIFT City products with clear, transparent guidance.
