GIFT City (Gujarat International Finance Tec-City), located between Ahmedabad and Gandhinagar in Gujarat, is India's first international financial services centre (IFSC).
GIFT City has been conceptualised with the primary objective of attracting foreign capital into India, especially from NRIs, and to become a global financial centre like Singapore or Dubai.
As of 2025, over 750+ entities operate here, including major banks, insurance providers, stock exchanges, and fintech startups.
GIFT City provides a comprehensive suite of financial products and services specifically designed to cater to the needs of NRIs. These financial products offer significant advantages in terms of currency protection, tax efficiency, and global accessibility.
In this blog, we will look into the tax benefits available through different financial products in GIFT City.
Regulatory Structure in GIFT City
The Foreign Exchange Management Act (FEMA) governs the banking and financial transactions for NRIs in India. The FEMA treats GIFT City entities (banks, fund houses, etc.) as “non-resident”. This means that the financial transactions taking place in GIFT City are considered to be offshore in nature, even though they’re happening within India’s borders.
This design is especially useful for NRIs and global investors who want to access India's economy via an offshore structure that is completely regulated. This makes GIFT City a simplified and liberal investment channel.
This arrangement in GIFT City has certain advantages which are not available when the NRI invests through the India side. NRIs can invest in GIFT City’s financial products in 15 different international currencies, without any NRE/NRO account, PAN Card, and with tax benefits across products.
All the activities in GIFT City are regulated by the International Financial Services Centres Authority (IFSCA) that combines the regulatory powers of the RBI, SEBI, PFRDA, and IRDA under one roof.
Tax Incentives for Foreign Investors & NRIs
GIFT City offers various financial products for NRIs to invest in India. They include Fixed Deposits, Alternative Investment Funds (AIFs), International Stock Exchanges, and Insurance Products.
Fixed Deposits in GIFT City
The banking ecosystem in GIFT City is built on International Banking Units (IBUs). They are branches of Indian and foreign banks in GIFT City, regulated by IFSCA. As of 2025, there are 30 operational IBUs, including prominent Indian banks (State Bank of India, ICICI, HDFC, RBL Bank) and international institutions (Citibank, HSBC, Bank of America).
The IBUs offer fixed deposits in GIFT City. The interest earned from these deposits is tax-free in India, and there is no tax deducted at source (TDS) on them. The interest is taxable in the NRI’s country of residence.
You can also compare GIFT City USD FD rates using Belong's NRI FD Comparison tool
Alternative Investment Funds (AIFs) in GIFT City
Alternative Investment Funds (AIFs) pool money from sophisticated and high-net-worth investors. They invest this money in less liquid assets, like private equity, venture capital, distressed assets, or complex trading strategies. At present, there are about 200 AIFs registered in GIFT City managing billions of dollars worth of funds, including NRIs.
There are two kinds of AIFs in GIFT City: Inbound funds and Outbound funds. The inbound funds invest in Indian equities, and the outbound funds invest in foreign equities.
Category-3 AIFs that invest in Indian equity mutual funds (not stocks directly) are fully exempt from capital gains tax.
International Stock Exchanges in GIFT City
GIFT City hosts two international stock exchanges: NSE International Exchange (a subsidiary of the National Stock Exchange) and India INX (a subsidiary of the Bombay Stock Exchange).
NSE IX offers trading in index derivatives and top 50 US stocks, giving Indian investors access to companies like Apple, Amazon and Tesla (meant for Indian investors).
The derivatives available for trade on NSE IX are GIFT Nifty futures based on the Nifty 50 index.
India INX offers derivative trading on the Bombay Stock Exchange’s indices like the Sensex and India 50.
There is no capital gains tax on the profits of derivatives trading on both of these exchanges. In addition to this, there is no securities transaction tax, no stamp duty or GST on these trades.
Insurance in GIFT City
The insurance sector in GIFT City has been growing over the past few years. Insurance policies are USD-denominated. GIFT City insurance policies are denominated in USD and offer global coverage.
There is a wide range of insurance products available, like term insurance, health insurance, investment products like ULIPs and endowment plans available out of GIFT City.
The maturity amount from ULIPs and endowment plans is tax-free in India if the premium amount is not more than 10% of the sum assured.
Other Financial Products
There are other financial products like retail mutual funds and ETFs of a smaller ticket size in the pipeline, which would be available for investment soon.
These products would also offer similar types of tax benefits, which are available in GIFT City.
How NRIs Can Avail GIFT City Tax Benefits
For the NRIs and foreign investors, they can choose the product or service they want from GIFT City, like banking, capital markets or insurance. They need to undergo the onboarding and KYC process requirements for the product. The tax benefits are there in the product itself (fixed deposits, insurance, etc.). They do not need to file separate documentation for that.
GIFT City: An Emerging Financial Hub for NRIs
GIFT City has been conceptualised to compete with international offshore financial centres like Singapore, Dubai, Hong Kong, etc. GIFT City products, with their tax benefits, international currency denomination, and easy repatriation, offer a compelling case for NRIs wanting to be a part of India's growth story.
