GIFT City Funds for US NRIs and US Citizens: PFIC, Eligibility and Reporting (2026)
By Anup Vatyani, AMFI-registered Mutual Fund Distributor (ARN 106715)
Last reviewed October 2026
The short answer. Many GIFT City funds do not accept US persons at all, including US citizens and green card holders living anywhere. Where a fund does accept you, it will usually be a PFIC for US tax, which by default taxes gains harshly and needs Form 8621 every year. Check eligibility and PFIC treatment before anything else, and speak to a US tax adviser.
US NRIs and GIFT City: key facts
| Who counts as a US person | US citizens and green card holders wherever they live, and others who are US tax residents |
|---|---|
| US tax on your investment | Yes, on worldwide income; most foreign funds are PFICs |
| Yearly forms | Form 8621 for each PFIC; FBAR and Form 8938 above thresholds |
| LRS or TCS? | No. Those apply only to resident Indians. |
| Main thing to check | Whether the fund accepts US persons, and whether it provides QEF information |
| Tax treaty with India | Yes; credit for Indian tax is usually available |
How to invest in GIFT City from the US
- 1
Check US-person eligibility
Many funds say no
- 2
Ask about PFIC and QEF
Annual Information Statement?
- 3
Talk to a US tax adviser
Before you commit
- 4
KYC including Form W-9
FATCA self-certification
- 5
Report every year
Form 8621, FBAR, Form 8938
Which GIFT City funds accept NRIs in the US?
Based on each fund house's published eligibility, checked 24 October 2026. Offer documents can add conditions, and most exclude sanctioned or FATF-listed countries, so confirm with the fund house before you apply. Listing is not a recommendation.
For US persons, treat every fund on the list below as "ask first": offer documents often restrict US persons even where the fund's website does not say so.
Lower minimums (USD 500 to USD 10,000)
- ABSL India Growth Fund (Aditya Birla Sun Life, inbound): USD 500, then multiples of USD 100.
- Edelweiss Greater China Equity Fund (Edelweiss, outbound): USD 5,000; top-ups USD 500.
- Edelweiss US Technology Equity Fund (Edelweiss, outbound): USD 5,000; top-ups USD 500.
- Marcellus Global Equities Fund (Marcellus, outbound): USD 5,000; top-ups USD 2,000.
- Parag Parikh India Flexi Cap Fund (listed as coming soon) (PPFAS (Parag Parikh), inbound): USD 10,000; top-ups USD 1,000.
- Sundaram India Mid Cap GIFT (Sundaram, inbound): USD 5,000.
AIFs and restricted funds (higher minimums)
- Bandhan India Large and Mid-cap Fund, India Small Cap Fund and India Government Securities Fund (IFSC) (Bandhan): Not published; ask the fund house.
- Mirae Asset Global Advantage Fund (Mirae Asset): USD 151,000; USD 25,000 for accredited investors.
- Motilal Oswal GIFT City India Equity Fund of Funds (Motilal Oswal): USD 150,000.
- Nippon India Large Cap Fund GIFT (Nippon India): USD 150,000.
- Phillip India Billion Opportunities Fund (Phillip Capital): Not published; ask the manager.
- Rangoli India Fund (Unifi Capital): Not published; ask the manager.
Funds that say they do not accept US residents
- Tata India Dynamic Equity Fund (Tata). Source
- HDFC India Flexi Cap, Balanced Advantage, Midcap Opportunities, Small Cap, NIFTY 50 and Diversified Equity FOF (HDFC). Source
- The Wealth Company IFSC FoF (The Wealth Company). Source
Full details, minimums and sources: GIFT City fund list.
How US taxes GIFT City funds
A pooled fund based outside the US is usually a Passive Foreign Investment Company (PFIC). US persons who hold one file Form 8621 each year, and the tax depends on which of three regimes applies:
| Regime | How gains are taxed | What you need |
|---|---|---|
| Excess distribution (default) | Gains and large distributions spread over your holding period, taxed at the highest ordinary rate for each year, plus an interest charge | Nothing to elect; usually the most costly outcome |
| QEF (Qualified Electing Fund) | Your share of the fund's ordinary earnings and net capital gains each year, keeping capital gain treatment | A PFIC Annual Information Statement from the fund, and a timely election |
| Mark-to-market | Each year's rise in value taxed as ordinary income; losses allowed only up to earlier gains | The units must count as marketable stock |
Foreign account and asset reporting
- FBAR (FinCEN 114): required if your foreign financial accounts together exceed USD 10,000 at any time in the year.
- Form 8938 (FATCA): for an unmarried taxpayer living in the US, required above USD 50,000 at year-end or USD 75,000 at any time; higher thresholds apply if you live abroad or file jointly. Check the IRS for the current year.
Inbound vs outbound for a US person
An inbound GIFT City fund gives Indian market exposure in dollars. An outbound GIFT City fund investing in global markets usually makes little sense for a US person, who can buy US-domiciled funds without PFIC issues. More detail: PFIC explained.
Indian tax for NRIs in the US
Many GIFT City funds are structured so that non-resident investors bear little or no Indian tax, with tax handled at the fund level; the treatment depends on the fund, so ask for it in writing. Your Indian residential status decides the rest: you are generally non-resident if you spend fewer than 182 days in India in the financial year, but a 120-day test applies if your Indian income exceeds ₹15 lakh. See GIFT City taxation.
Documents NRIs in the US are usually asked for
- US passport or green card, plus Indian passport or OCI card where relevant
- Form W-9 and FATCA self-certification
- US address proof and a recent bank statement
- PAN, if you have one
Build your own list with the document checklist.
Sending money from the US
If a fund accepts you, transfer US Dollars by wire from your US bank account to the fund's subscription account; redemptions come back in dollars. The account in GIFT City and the fund holding both count towards your FBAR and Form 8938 totals. Keep the fund's statements for Form 8621.
Other countries
Guides for the UAE, the UK, the US, Singapore and Canada, and the Gulf and Australia on the main GIFT City for NRIs page.
Common questions
How to invest in GIFT City from the USA?
First find a GIFT City fund that accepts US persons; many do not. Then ask whether it provides PFIC Annual Information Statements, take US tax advice, complete the fund's KYC including Form W-9, and wire US Dollars from your US bank account.
Can US citizens invest in GIFT City funds?
Only in funds that accept US persons. Tata India Dynamic Equity Fund, The Wealth Company IFSC FoF and HDFC's inbound GIFT City funds are among those that state they do not. Where a fund does accept you, it is usually a PFIC for US tax.
What are the PFIC rules for GIFT City funds?
Most GIFT City funds are Passive Foreign Investment Companies for US tax. US persons file Form 8621 each year and, by default, pay tax at the highest ordinary rate plus an interest charge on gains, unless a QEF or mark-to-market election applies.
Do I need to file FBAR for a GIFT City investment?
If your foreign financial accounts together exceed USD 10,000 at any time in the year, you file an FBAR. Form 8938 may also apply above its own thresholds.
Can US-based NRIs invest in GIFT City funds?
An NRI living in the US is usually a US tax resident and is treated as a US person by fund houses, so the same restrictions and PFIC rules apply. Check eligibility before anything else.
Official sources
Rules change. Check the current position with the authority that sets it.
- IRS — About Form 8621 (PFIC reporting) — US reporting for shareholders of passive foreign investment companies.
- IRS — Report of Foreign Bank and Financial Accounts (FBAR) — Reporting foreign accounts above USD 10,000 in aggregate.
- IRS — Comparison of Form 8938 and FBAR requirements — FATCA asset reporting thresholds for US taxpayers.
- Income Tax Department, Government of India — The Income-tax Act, including Section 10(4D), and TCS rules.
- IFSCA Directory of regulated entities — Check that a Fund Management Entity is registered.
Have a question about how this works?
Anup Vatyani explains GIFT City fund structures and the investment process in plain English. Educational conversation only, not personalised advice.
Talk to AnupThis page is educational and is not investment, tax or legal advice. Figures and rules are as understood at the date shown and can change; check the official sources and the scheme's offer documents. Investments are subject to market risks; read all scheme-related documents carefully.