GIFT City ETFs and US Stocks: How Investing Through GIFT City Works
By Anup Vatyani, AMFI-registered Mutual Fund Distributor (ARN 106715)
Last reviewed October 2026
The short answer. GIFT City is now a route not only into pooled funds but also into individual US-listed stocks and ETFs. IFSCA-registered broker-dealers in GIFT IFSC let investors open a dollar account, fund it (residents under LRS) and buy US securities, often in fractions. It is a do-it-yourself route: you pick the investments, and you handle the tax reporting.
Two meanings of "GIFT City ETF"
ETFs listed in GIFT IFSC
IFSCA's fund management rules allow exchange-traded funds to be set up in GIFT IFSC and listed on its exchanges, NSE IX and India INX. The choice is still small; check the exchanges' websites for what is listed and how liquid it is.
US ETFs bought through a GIFT City broker
IFSCA-registered broker-dealers in GIFT IFSC give access to thousands of US-listed stocks and ETFs. This is what most people mean today, and the rest of this page explains how it works.
How it works for a resident Indian
- 1
Open an account with an IFSC broker
Online KYC; check its IFSCA registration
- 2
Remit under LRS
Rupees converted to USD; TCS above ₹10 lakh
- 3
Buy US stocks or ETFs
Whole or fractional units
- 4
Receive dividends in USD
US tax withheld at source
- 5
Report in your ITR
Schedule FA and foreign income
US ETFs via GIFT City vs a GIFT City fund vs an international mutual fund
| US ETFs via IFSC broker | GIFT City outbound fund | Indian international MF | |
|---|---|---|---|
| Who chooses holdings | You | Fund manager | Fund manager |
| Currency | USD | USD | INR |
| Minimum | Can be very small (fractional) | Set by scheme | Small |
| LRS / TCS (residents) | Yes | Yes | No |
| US dividend withholding | Applies to you directly | Handled inside the fund | Handled inside the fund |
| US estate tax exposure | Possible on large holdings | Depends on fund domicile | Generally not direct |
| Indian tax reporting | Schedule FA, each holding | Depends on structure | Normal capital gains |
Tax points to know
Dividends
US companies and ETFs withhold US tax on dividends paid to non-US investors. Under the India–US tax treaty the rate for Indian residents who file Form W-8BEN is 25%. The dividend is taxable in India at your slab rate, and you can usually claim credit for the US tax (Form 67 must be filed).
Capital gains
The US generally does not tax capital gains of non-resident aliens on shares. In India, foreign shares held for more than 24 months are long-term and taxed at 12.5%; shorter holdings are taxed at your slab rate. Rules change, so confirm with a chartered accountant.
Reporting
Resident and ordinarily resident taxpayers must report foreign assets in Schedule FA of the income tax return every year, even if nothing was sold. Missing this can attract heavy penalties under the Black Money Act.
Before you open an account
- Confirm the broker is registered with IFSCA as a broker-dealer in the IFSCA Directory.
- Ask about every cost: brokerage, currency conversion margin, remittance charges and withdrawal fees. "Zero account fee" is not the same as zero cost.
- Check who holds your securities (the custodian) and what happens if the broker closes.
- Decide whether you want to choose securities yourself or prefer a managed GIFT City fund.
Common questions
What is a GIFT City ETF?
The term is used for two things: exchange-traded funds launched under IFSCA rules and listed on the IFSC exchanges (NSE IX and India INX), and US-listed ETFs that Indian investors buy through brokers based in GIFT IFSC. The second is far more common today.
Can I buy US stocks and ETFs through GIFT City?
Yes. IFSCA-registered broker-dealers in GIFT IFSC offer access to US-listed stocks and ETFs, and the IFSC exchanges have offered receipts on selected US stocks. Residents invest under LRS; eligible NRIs can also use these platforms.
Is buying US ETFs through GIFT City the same as a GIFT City fund?
No. With an ETF or stock you choose and hold the securities yourself through a broker. A GIFT City fund is a pooled scheme run by a Fund Management Entity. The costs, tax and paperwork differ.
Do I pay TCS when buying US stocks through a GIFT City broker?
Yes, if you are a resident Indian. The money leaves India under LRS, so the ₹10 lakh threshold and 20% TCS above it apply in the same way as for any overseas investment.
What is US estate tax and why does it matter?
US-situated assets such as shares of US companies and US-domiciled ETFs held directly by a non-US person can be subject to US estate tax on death above a small exemption of USD 60,000. Holding through a non-US fund changes this. It is worth discussing with a tax adviser if your US holdings are large.
Official sources
Rules change. Check the current position with the authority that sets it.
- IFSCA — International Financial Services Centres Authority — The regulator for all financial services in GIFT IFSC.
- IFSCA Directory of regulated entities — Check that a Fund Management Entity is registered.
- RBI — FAQs on the Liberalised Remittance Scheme — The annual limit and permitted purposes for resident Indians.
- Income Tax Department, Government of India — The Income-tax Act, including Section 10(4D), and TCS rules.
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.