You have probably seen the headlines about GIFT City and wondered whether you can invest your own money there and what rules apply. This guide explains who regulates GIFT City, who can invest, how much they need, and how tax works, all in simple language.
What is GIFT City, and why should you care about its regulations?
GIFT City stands for Gujarat International Finance Tec-City. It is located in Gandhinagar, Gujarat. Inside GIFT City is GIFT IFSC, India’s first International Financial Services Centre.
An IFSC is a special financial zone where financial activity can take place in foreign currencies, such as US dollars, instead of Indian rupees.
The law treats an IFSC unit as if it were outside India, even though GIFT City is physically in Gujarat.
This is why investing through GIFT City is different from buying a regular Indian mutual fund. A separate set of rules applies. These rules determine who can invest, how much they can invest, and how the income is taxed.
If you want to understand what you can actually buy through GIFT City, our guide to the top GIFT City investment products covers the available options. This article focuses on the regulations.
Who regulates GIFT City?
GIFT City is regulated by the International Financial Services Centres Authority, or IFSCA. IFSCA was established in 2020 under the IFSCA Act, 2019. It is headquartered in GIFT City.
Before IFSCA was created, four regulators handled different parts of the financial activity in the zone. These were the RBI, SEBI, IRDAI and PFRDA. IFSCA now brings these regulatory powers under one roof for activities carried out within an IFSC.
You may still come across RBI, SEBI and IRDAI rules when reading about GIFT City. That is not unusual. Some older guidelines continue to apply while IFSCA takes over the regulatory framework.
Here is what each regulator means from your point of view:
Regulator | What does it cover for you? |
IFSCA (primary) | The main regulator. It licenses and supervises banks, fund managers, market intermediaries and insurance offices operating inside GIFT City. |
RBI | The FEMA (IFSC) rules that treat IFSC units as “outside India”. This is why a resident uses the LRS route to send money. |
SEBI | Older SEBI (IFSC) guidelines still influence some fund and eligibility rules, although IFSCA now handles day-to-day supervision. |
IRDAI | Regulates insurance offices operating in the IFSC. This matters if you are looking at an IFSC insurance product. |
IFSCA, the Primary Regulator
IFSCA registers and supervises banks, fund managers, brokers, advisers and insurance offices operating inside the IFSC. If a fund manager or scheme is regulated, you should be able to find it on the IFSCA register.
RBI and the FEMA (IFSC) Regulations, 2015
The RBI rule that matters most here is the FEMA (IFSC) Regulations, 2015. These regulations treat a financial unit inside the IFSC as a “person resident outside India”.
In simple terms, the law treats the IFSC unit as an overseas entity for foreign-exchange purposes. This is why a resident Indian cannot simply transfer rupees into a GIFT City fund. The money has to follow the applicable foreign-exchange route.
SEBI’s Legacy Guidelines
SEBI issued the early IFSC guidelines in 2015. These included rules covering funds operating in the zone. Some of these older rules still influence fund structures and eligibility, even though IFSCA now supervises IFSC activities.
IRDAI’s Role
IRDAI regulates insurance offices operating inside the IFSC. It matters mainly if you are considering an insurance product based in GIFT City. Otherwise, it is not something you need to focus on.
Anuj says: People often assume that a relatively new financial centre must have lighter regulation. That is not the case. GIFT City has a dedicated regulator that was created specifically for the IFSC. What is still young is the rulebook itself. It continues to evolve. So the real question is not whether GIFT City is regulated. It is whether you understand the rules that apply today before committing your money.
The rule behind every other rule: FEMA (IFSC) Regulations, 2015
An IFSC unit is treated as being outside India for foreign-exchange purposes. This means transactions are carried out in foreign currency rather than rupees. For an NRI, this is relatively straightforward because they are already treated as being outside India for these rules.
For a resident Indian, there is an additional step. The money has to leave India in foreign currency before it can be invested.
The money remains yours and GIFT City remains physically in India, but for foreign-exchange purposes, the transaction crosses a regulatory line. That is why the rules for sending money overseas become relevant.
Who can actually invest in GIFT City? Eligibility by investor type
The answer depends on who you are and which investment route you are using. Here is the quick picture:
Investor type | How do they invest? | Rough cap or ticket |
Resident Indian individual | Sends money under the LRS and then invests | Up to USD 250,000 per financial year across all overseas uses |
NRI | Invests using an overseas or NRI bank account | No LRS cap; scheme minimums still apply |
High-net-worth resident | Uses the LRS route to access AIFs and other offshore products | Subject to the same USD 250,000 LRS limit |
Foreign investor / FPI | Uses its own registration route with IFSCA | Subject to registration and scheme rules |
Resident Indian individuals, through the LRS
A resident Indian can invest in GIFT City through the Liberalised Remittance Scheme, or LRS.
The LRS is an RBI framework that allows resident individuals to send money abroad for permitted purposes without seeking separate RBI approval each time. This is how the Liberalised Remittance Scheme works.
The current limit is USD 250,000 per financial year, which runs from April to March. This limit covers all permitted overseas uses together. That includes travel, education and investments.
So, if you use part of your LRS limit for an overseas holiday or education expenses, less remains available for an investment through GIFT City.
There are two practical points to remember-
- The LRS limit applies separately to each individual. So, a spouse has a separate limit.
- A PAN is also mandatory for LRS remittances. Your bank will also ask you to complete the required declaration form.
Non-Resident Indians (NRIs)
As an NRI, you have a simpler route. You are already treated as being outside India for foreign-exchange purposes. This means the LRS limit does not apply to you.
You can generally fund a GIFT City investment through your overseas account or an existing NRI account.
The main requirements are account opening and completing the required KYC process with the GIFT City bank or fund manager.
Our detailed guide on GIFT City investments for NRIs covers the account setup in greater detail.
High-Net-Worth Residents
A resident with a larger net worth can also use the LRS route to access offshore products such as AIFs (Alternative Investment Funds).
AIFs pool money from investors and invest in assets beyond traditional stocks and bonds. The minimum investment limit of USD 150,000.
Foreign Investors and FPIs
Foreign investors, including Foreign Portfolio Investors, have their own registration route with IFSCA.
There are high chances that you may not fall into this category as an individual.
However, it is useful to understand the distinction if you are comparing how foreign money enters GIFT City with how it enters mainland India.
Investment routes under the IFSCA Fund Management Regulations
Every GIFT City investment route is not available to everyone. The IFSCA (Fund Management) Regulations, 2025 divide fund managers and schemes into different categories.
The category determines who can invest and the minimum investment required. Here is how the main routes compare:
Route | Smallest investment | Who is it really for? |
Retail schemes and ETFs | Low; for a listed close-ended retail scheme, listing is optional if each investor invests at least USD 5,000 | Retail investors, including first-time investors |
Restricted schemes (AIF-type) | USD 250,000, waived for accredited investors | Wealthier or experienced investors |
Venture Capital schemes | USD 150,000, close-ended, with at least a 3-year tenure | Those looking to back early-stage start-ups |
Portfolio Management Services (PMS) | USD 75,000 | Those who want a manager to run a customised portfolio |
Retail Schemes and ETFs
Retail schemes are open to all investors, including first-time investors. They are the closest GIFT City equivalent to a regular mutual fund in India.
ETFs, or exchange traded funds, are also part of this category. They trade on an exchange in a similar way to a share.
Retail schemes generally have a much lower entry requirement than the higher investment categories.
If mutual funds are new to you, our comprehensive guide to mutual funds in India is a simpler starting point before you explore GIFT City versions.
Restricted Schemes and AIFs: The Higher-Ticket Route
Restricted schemes are the IFSC equivalent of Alternative Investment Funds. The minimum contribution is USD 150,000 for a regular investor. However, there is an exception for accredited investors.
An accredited investor is someone who meets the financial criteria set by IFSCA for accessing certain higher-risk products.
For an individual, the main test is net assets of at least USD 1 million. At least USD 500,000 of this must be in financial assets. Your residential property does not count towards this requirement.
You can read more about the IFSCA accredited-investor criteria.
Accreditation is not automatic. You need to be certified as an accredited investor.
Venture Capital Schemes
Venture Capital schemes have a high minimum investment.
They are close-ended, which means your money is committed for the life of the fund. They invest in early-stage businesses and therefore sit towards the higher-risk end of the investment spectrum.
They are worth understanding if you are exploring the full range of GIFT City products. They are not usually the starting point for someone new to investing.
Portfolio Management Services (PMS) in GIFT City
With PMS, a licensed manager manages a portfolio built specifically for you.
Your money is not pooled into a common portfolio in the same way as a mutual fund.
The minimum PMS investment in GIFT City is USD 75,000.
The route is available to eligible residents investing offshore, NRIs, foreign persons and family offices managing money for one wealthy family.
So which route fits?
A smaller investment amount and a preference for simplicity point towards a retail scheme.
A larger amount and a preference for a manager to actively manage the portfolio could point towards a PMS or an AIF.
This is simply a way to understand the available routes. It is not advice on which route you should choose.
That decision depends on your goals, existing investments and wider financial plan.
Banking Regulations for GIFT City Investors
To move money into and out of GIFT City, you may deal with an IFSC Banking Unit, or IBU.
An IBU is a banking unit established inside GIFT City that operates in foreign currency.
There are a few features worth knowing before opening an account.
- Accounts are held in foreign currency. These can include US dollars rather than Indian rupees. Banks offer current, savings and fixed-deposit accounts. Both residents and NRIs can open them.
- There is no chequebook. Money is transferred electronically through systems such as SWIFT rather than through cheques.
- DICGC deposit insurance does not apply. Domestic bank deposits are insured up to ₹5 lakh by DICGC if a bank fails. This protection does not extend to GIFT City deposits.
Protection for an IFSC deposit instead depends on the financial strength of the parent bank and the capital requirements imposed by IFSCA.
This does not automatically make an IBU unsafe.
It means the protection framework is different from what you may be used to with a domestic bank account.
Tax regulations you should know before investing
GIFT City has several tax benefits that help- you keep more of what you earn through your investments but the benefits are not the same for everyone. They can also differ between residents and non-residents.
The figures below are based on the rules applicable at the time of writing. Tax rules can change with each Budget. Here is the picture:
Tax head | Treatment on IFSC transactions |
STT, CTT, stamp duty | Nil on trades carried out on IFSC exchanges. These charges generally apply on domestic exchanges. |
GST | Financial services within the IFSC are exempt, so the usual 18% GST on fees does not apply. |
PAN / Income-tax return | Certain eligible non-residents earning only specified capital-gains income on IFSC exchanges, or investing in certain funds where tax is deducted at source, may not need a PAN or tax return. |
Capital gains | Residents generally remain subject to normal Indian tax rules. Certain specified funds and non-resident income have specific exemptions. |
Dividends and interest | Residents are generally taxed at their applicable slab rate. Non-residents face withholding tax. Interest on foreign-currency deposits is tax-free for non-residents. |
The key point is that many of the strongest tax benefits are designed for non-residents.
If you are a resident investing through the LRS, you may benefit from lower transaction costs and the GST exemption.
However, your capital gains, dividends and interest are largely taxed under the rules that apply to your other investments.
That distinction matters. You should not assume that investing through GIFT City automatically makes your investment tax-free.
The IFSCA/EY note on GIFT City tax benefits provides further detail on the tax treatment.
There is another point to consider. An NRI who later becomes a resident may see their tax treatment change.
So, the tax position is not necessarily fixed for the entire period of an investment.
Compliance Checklist: What you need before investing?
Here is the regulatory detail turned into a checklist you can actually use.
Confirm your investor category
Work out whether you are a resident, NRI or accredited investor. This determines which route you can use and the applicable minimum investment.
Complete your KYC and AML requirements
You will need to complete the required know-your-customer and anti-money-laundering checks with the relevant GIFT City bank or fund manager.
Complete the LRS paperwork if you are a resident
If you are sending money from India, your bank will require the relevant LRS declaration, including Form A2.
Check the IFSCA registration
Confirm that the fund manager or scheme is registered with IFSCA. You can check the IFSCA register yourself.
If you cannot find the entity there, treat that as a warning sign.
Understand the scheme terms
Check the lock-in period and understand how often the scheme publishes its NAV, or net asset value, before committing your money.
What about the risk?
There are three points worth keeping in mind-
- The regulatory framework is still consolidating. IFSCA continues to take over functions from the older regulators, and the rules can change. Though, the direction is positively healthy.
- Your money may be held in foreign currency. This creates currency risk if you will eventually need the money in rupees.
- GIFT City bank deposits do not have domestic DICGC deposit insurance. Though, anyway the DICGC offers insurance up to ₹5 lakhs only, so it has no material impact even if not available.
So, none of these points automatically makes GIFT City unsuitable. They simply mean you should understand what you are getting into before committing money.
Anuj says: The tax headlines attract a lot of attention. But I always ask a resident client one question first. Does using your LRS limit for GIFT City actually fit your goals, or are you chasing a benefit that is mainly designed for non-residents? Sometimes, a straightforward domestic fund can do the job with less to manage. GIFT City is a tool, not a trophy.
How can Zenith Finserve help you?
Choosing a GIFT City mutual fund is not really about picking the fund with the best-looking return or the lowest cost.
The better question is whether GIFT City belongs in your portfolio at all, and if it does, how much. That is where our GIFT City investment services can help.
We start with your full picture: what you already own in India and abroad, your goals, time horizon, risk comfort and residency status.
From there, we work out whether you need global exposure, India exposure in dollars, or simply do not need another investment at this stage.
That decision then feeds into your wider investment planning services. We look at GIFT City alongside your existing investments, rather than treating it as a standalone product decision.
This helps to find the role GIFT City investment should play in your portfolio before choosing the fund. There is no reason to invest just because a new option is available.
We suggest what is in your best interest, exactly what we would have done had we been in your place with our knowledge. Sometimes the right answer is to invest. Sometimes it is to wait. Both are valid planning decisions.
Conclusion
GIFT City is regulated, but the framework has several layers. IFSCA is now the primary regulator, while older RBI, SEBI and IRDAI rules continue to form part of the framework as the transition takes place.
Your eligibility and minimum investment depend on the route you choose. That could be a retail scheme, an AIF, or a PMS. The tax benefits also need to be understood carefully.
Many of the strongest tax benefits are designed for non-residents. A resident should therefore check the actual numbers rather than assume that GIFT City is automatically tax-efficient.
If you are considering GIFT City, start with a simple question: does it belong in your wider financial plan?
You can book a no-pressure meeting with us to help you decide.
Also read: A Detailed Guide on GIFT City Investments for NRIs
FAQs
1. Is GIFT City regulated by SEBI or RBI?
The primary regulator today is IFSCA. It was given the combined powers of RBI, SEBI, IRDAI and PFRDA for activities within the IFSC in 2020. RBI’s FEMA (IFSC) rules and some older SEBI guidelines continue to apply in the background while IFSCA completes the transition.
2. Can a resident Indian invest directly in GIFT City funds, or does the money have to leave India first?
The money has to be sent out first in foreign currency through the Liberalised Remittance Scheme, or LRS. GIFT City is treated as being outside India for foreign-exchange purposes. A resident therefore cannot simply invest in a GIFT City fund using rupees.
3. What is the minimum investment for a GIFT City retail scheme or ETF?
Retail schemes are the everyday investment route and have a much lower entry requirement than higher-tier schemes. For a listed close-ended retail scheme, listing is optional if each investor invests at least USD 10,000. Open-ended retail schemes can have lower minimums. The exact amount depends on the scheme.
4. Do NRIs need any special approval to invest in GIFT City?
No special approval is generally required. However, you still need to complete the required account-opening and KYC process on the GIFT City side. NRIs are not subject to the LRS limit that applies to resident Indians because they are treated as being outside India for foreign-exchange purposes.
5. Are deposits with a GIFT City IFSC Banking Unit covered by deposit insurance?
No. Domestic bank deposits are insured up to ₹5 lakh by DICGC. This cover does not extend to GIFT City deposits. For an IFSC deposit, protection instead depends on the parent bank’s financial strength and the capital requirements imposed by IFSCA.
6. Is income from GIFT City investments taxable for an Indian resident?
Largely, yes. A resident may benefit from lower transaction costs and the GST exemption, but capital gains, dividends and interest are generally taxed under the rules applicable to their investments. Many of the strongest tax benefits are designed for non-residents.
