GIFT City Funds for Resident Indians: What You Can and Can’t Buy

If you live in India and have money to invest, you have probably heard the pitch: go global through GIFT City. The pitch is half right. GIFT City does give resident Indians a regulated way to hold dollar assets. What it leaves out is that most GIFT City funds were built for someone else.

The International Financial Services Centre (IFSC) at GIFT City was designed mainly to bring foreign and NRI money into India. Many of its best-known funds invest in Indian shares and accept only non-residents. Other products are open to resident Indians, but with minimums, tax treatment and time limits that differ from product to product.

Residents are already there in numbers. IFSCA's funds brochure of February 2026 shows residents as 45% of the individual investors in IFSC funds at the end of December 2025, against 51% for NRIs and OCIs.

This guide to GIFT City funds for resident Indians goes product by product: what you can buy, what you cannot, the minimum, and how each is taxed. It is written as on 15 October 2026 and leaves the NRI side to other guides. Foreign exchange and tax rules change often, and several points below are disputed, so confirm your own case with your bank and a tax adviser.

For foreign exchange purposes, a financial institution in an IFSC is treated as a person resident outside India. That 2015 FEMA regulation on IFSCs is why a resident cannot simply transfer rupees to a GIFT City fund. The money has to be converted and remitted abroad, and for an individual the legal basis is the Liberalised Remittance Scheme (LRS), which allows USD 250,000 per financial year for all purposes combined.

The door opened in stages.

• 16 February 2021. RBI first allowed residents to remit under LRS to IFSCs. The permission covered only securities issued in the IFSC, the account could not earn interest, and idle money had to go home within 15 days.
• 26 April 2023. RBI withdrew the 15-day condition and put idle balances under the general LRS rule.
• 10 July 2024. RBI widened the route to all permissible LRS purposes: any financial service or product under the IFSCA Act within the IFSC, and any current or capital account transaction in another country routed through a foreign currency account held in the IFSC.
• 13 December 2024. IFSCA told IFSC banks how to run these accounts and capped the length of a resident's deposit.
• February 2025. The IFSCA (Fund Management) Regulations, 2025 replaced the 2022 regulations.
• July and August 2026. Business Standard counted five retail outbound funds from four fund houses, NSE's IFSC exchange announced the end of its US stock receipts, and PPFAS cut the minimum on its two funds to USD 500.

The menu for resident Indians is new and still moving, which is why guides written even a year ago now mislead on specific products.

A resident's purchase has to pass three separate tests, set by three different rule-makers.

Test one: does FEMA allow the remittance? RBI's Master Direction on LRS, last updated on 6 September 2024, lets a resident remit to an IFSC for financial services and products there. RBI's Overseas Investment Directions, 2022 limit what counts as an overseas portfolio investment: not unlisted debt, not any security issued by a person resident in India who is not in an IFSC, not derivatives unless RBI permits, and not commodities.

Test two: do IFSCA's rules admit you? The IFSCA (Fund Management) Regulations, 2025 sort schemes into retail schemes, restricted schemes and venture capital schemes, each with its own investor minimum. The same regulations say an IFSC portfolio manager may take an individual resident in India as a client "to the extent allowed under the liberalised remittance scheme".

Test three: does the product itself accept residents? A fund's offer document can exclude residents even when the first two tests are passed. Many do, usually for tax reasons explained below.

A product has to clear all three.

Outbound funds collect money from resident Indians and invest it outside India. Among GIFT City funds, these are the ones designed for resident money.

They exist because the domestic route is rationed. Indian mutual funds work under an industry ceiling of USD 7 billion for overseas investment and a further USD 1 billion for overseas ETFs, and Business Standard reported on 29 July 2026 that no international mutual fund in India remained open for new SIPs. Funds in the IFSC sit outside that ceiling.

The paper counted five such funds from four fund houses. The names confirmed in press and fund-house sources are:

• Parag Parikh IFSC S&P 500 Fund of Fund and Nasdaq 100 Fund of Fund. Passive funds that hold index ETFs and UCITS funds. The minimum was cut from USD 5,000 to USD 500 with effect from 25 August 2026.
• DSP Global Equity Fund. An actively managed fund that DSP describes as India's first IFSCA-registered retail equity fund, with a minimum of USD 5,000 and top-ups from USD 500.
• A US small-cap fund from Baroda BNP Paribas, named by Business Standard in December 2025.
• Edelweiss, which The Economic Times described in July 2026 as the third retail asset manager in GIFT City.

These are examples and not recommendations. The regulations set no minimum for ordinary open-ended retail schemes, so the USD 500 and USD 5,000 figures are the fund houses' own. You do not need a GIFT City bank account for these outbound funds: DSP's page says the remittance goes from your regular bank to the fund's account.

A restricted scheme is IFSCA's term for a privately placed fund, filed as a Category I, II or III alternative investment fund. It may have at most 1,000 investors, and each must invest at least USD 150,000 unless accredited. Two close relatives, such as spouses or a parent and child, may invest jointly to reach that figure.

Residents can invest if the scheme invests abroad and its placement memorandum admits them. One example is the Mirae Asset Global Allocation Fund, which its April 2026 presentation describes as a close-ended Category III AIF whose target investors include resident investors. One such ticket uses 60% of a year's LRS limit.

IFSC portfolio management works like a PMS at home: the securities sit in your name and a manager runs them under an agreement. The regulations set a minimum of USD 75,000, waived for accredited investors, and list resident individuals among permitted clients within the LRS limit.

For a resident the portfolio should hold overseas securities. The regulations do let an IFSC portfolio manager invest in India as well as abroad, but a resident's money arrives as an overseas portfolio investment, which excludes securities of Indian companies. One law firm puts it this way: the textual answer is yes and the regulatory reality is effectively no. Treat IFSC portfolio management as a global mandate.

Since July 2024 a resident may open a foreign currency account with an IFSC Banking Unit and use it for IFSC products or for onward payments abroad. IFSCA's circular of 13 December 2024 sets the working rules for banks:

• All money from India must come through an authorised dealer under LRS.
• The bank takes a declaration that you will not use the account to settle domestic transactions with other residents.
• Fixed deposits may be offered to a resident only if the tenure is less than 180 days.

That rules out a multi-year dollar deposit. ICICI Bank's GIFT City page for resident Indians shows the same cap and adds that only simple interest is paid, that interest is subject to TDS, and that the deposits are not covered by deposit insurance. Check your own bank's terms.

Older guides tell residents to buy US stocks as depository receipts on NSE's IFSC exchange. That route is closing. By its circular of 24 July 2026, NSE IFSC stopped accepting buy orders in these receipts from 30 July 2026. Existing holders can sell on the exchange until 29 January 2027 or convert whole-share holdings into the underlying US stocks until 20 January 2027. Dealing ends on 1 February 2027.

The exchange gave IFSCA's Global Access framework of 12 August 2025 as the reason. A Global Access provider is an IFSC subsidiary of a stock exchange, or an IFSCA-registered broker-dealer, that connects clients to foreign exchanges. A law-firm summary of July 2026 says residents may use it only for products permitted under LRS: in practice, listed foreign shares, bonds and fund units.

Securities listed on the IFSC exchanges themselves are open to residents where the issuer is in the IFSC or abroad.

RBI's 2024 wording covers any financial product under the IFSCA Act, which includes insurance, and some lawyers wrote that this could open IFSC policies to residents. We found no RBI or IFSCA text that settles it. If you are offered a dollar policy, ask the insurer and your bank to confirm in writing that the premium can go under LRS.

Inbound funds take foreign currency from people outside India and invest it in Indian shares, mutual funds or bonds. Business Standard's July 2026 report says they are meant for NRIs, OCIs and foreign investors.

The main reason is tax. To qualify as a "specified fund", with concessional tax for the fund and exemption for its investors, all units other than the sponsor's or manager's must be held by non-residents, so offer documents shut residents out. When The Wealth Company launched an IFSC fund of funds investing in Indian mutual funds in August 2026, the report said plainly that resident Indians cannot invest.

There is also little point: a resident can buy Indian equities at home in rupees without using any LRS limit or paying TCS.

Can a resident send money to GIFT City and bring it back into Indian shares? Not as a direct purchase.

Until July 2024 the IFSC permission was limited to securities other than those issued by entities or companies resident in India outside the IFSC. The 2024 circular widened the purposes, but the definition of overseas portfolio investment still excludes any security issued by a person resident in India who is not in an IFSC. That covers shares of Indian companies and, on a plain reading, their bonds listed on IFSC exchanges.

This is the round-tripping concern: money that leaves under an outbound allowance and returns as foreign investment. Lawyers flagged it in 2021 with the example of an LRS-funded AIF that invests back into India. For pooled funds we found no RBI sentence that states the bar in so many words, so the position rests on the investment rules, the tax condition above and each fund's eligibility clause. Do not rely on a verbal assurance.

GIFT City is home to GIFT Nifty and other derivative contracts, but they are not for resident LRS money.

• RBI's FAQ on the scheme lists remittance "for margins or margin calls to overseas exchanges" and trading in foreign exchange abroad as prohibited under LRS.
• Overseas portfolio investment excludes derivatives unless RBI permits them.
• Banks may not extend credit to help a resident make a capital account remittance.
• An IFSC portfolio manager may not borrow funds or securities on a client's behalf.

Funds are limited too. Retail schemes may borrow only to meet redemptions, up to 20% of assets and for no more than six months. A restricted scheme may use leverage as disclosed in its placement memorandum, so a leveraged strategy is possible only inside such a fund.

Minimums are from the IFSCA (Fund Management) Regulations, 2025 as amended up to 10 September 2026, and from fund-house disclosures.

Minimums by route. USD 500 for the cheapest retail schemes, USD 75,000 for IFSC portfolio management and USD 150,000 for a restricted scheme. The USD 250,000 annual limit also covers travel, tuition and gifts abroad, so a large ticket can crowd out other plans.

Fund costs. Outbound funds often invest through other funds, so there are two layers of expense. Business Standard's cost box of December 2025 put passive or feeder-style funds at 0.30% to 0.80% a year and active global equity funds at 1% to 2.5%.

Remittance costs. There is no rupee SIP, so every purchase is a fresh remittance. The same report put the bank's forex spread at 0.5% to 2%, plus SWIFT charges and, at some banks, a flat fee of Rs 500 to Rs 1,000. Advisers suggest fewer, larger remittances.

Currency. Units are in dollars. A weaker rupee lifts your rupee value and a stronger one cuts it, which is a second risk on top of the market.

A resident is taxed in India on worldwide income, so nothing held through GIFT City is outside the tax net. What changes by product is who pays and when.

Your bank collects tax at source on LRS remittances under section 394(1) of the Income-tax Act, 2025, the successor to section 206C(1G) of the 1961 Act. For investment, the rate is 20% on the amount above Rs 10 lakh in a financial year. A remittance to GIFT City is an LRS remittance, so plan for it.

TCS is a credit against your tax for the year. The cost is cash flow: a Rs 50 lakh remittance needs Rs 8 lakh more upfront.

The retail outbound funds are generally set up as trusts that pay tax themselves and declare a post-tax NAV. DSP's public page gives the rates the fund pays, including surcharge and cess: 14.95% on gains from holdings of more than 24 months, 42.74% on shorter holdings, and 35.88% on dividends. It says redemptions are not taxed again in the investor's hands and no TDS is deducted. DSP calls this "tax-efficient, not tax-exempt".

Two things follow. A fund that churns its portfolio inside 24 months pays the higher rate, and that drag does not show in the expense ratio. And a loss inside the fund cannot be set against your other gains.

Not everyone describes it the same way. One adviser quoted by Business Standard in July 2026 said gains are taxed in the investor's hands, while another in the same article described fund-level tax. It depends on the scheme's structure, so read the tax section of the offer document. An outbound fund with resident unit holders cannot be a specified fund, so the exemptions marketed to NRIs do not apply.

Where the securities are yours, as with IFSC portfolio management or shares bought through a Global Access provider, you are taxed directly. The general position described by advisers is that gains on foreign shares held for 24 months or less are taxed at your slab rate and longer holdings at 12.5%. Foreign dividends are taxed at slab rates, with credit for tax withheld abroad. Category I and II AIFs are pass-through vehicles, so their income is also taxed in your hands. Interest on IFSC deposits is ordinary income.

Schedule FA is the part of the tax return where residents list foreign assets. Do units of a GIFT City fund belong there? The answer is unsettled.

• GIFT City is foreign territory under FEMA and domestic territory under the Income-tax Act.
• The Economic Times reported on 17 July 2026 that Parag Parikh advises its investors to disclose the holdings as foreign assets, while DSP's FAQ says disclosure in that schedule is not required because the fund is domiciled in India.
• A Deloitte partner quoted in the report called disclosure the conservative approach in the absence of guidance. A chartered accountant quoted there took the opposite view.
• Business Standard said in December 2025 that disclosure is not required. In July 2026 it quoted two advisers who said it is.

We found no official clarification as of 15 October 2026. Holdings in your own name, such as foreign shares or a foreign currency account, are more clearly foreign assets. Ask a tax adviser before you file.

LRS lets you keep and reinvest what you earn abroad. It does not let you park foreign currency indefinitely. RBI's Master Direction says foreign exchange that is received, realised, unspent or unused must, unless reinvested, be repatriated and surrendered to an authorised person within 180 days.

Is there a relaxation for the IFSC? No. The IFSC first had a stricter 15-day rule, which RBI withdrew on 26 April 2023 so that the general rule applies. IFSCA's December 2024 circular then built the 180-day rule into account opening: the bank takes a declaration that unused money, unless reinvested within 180 days, will be sent back through an authorised dealer.

What this means in practice:

• Redemption proceeds can sit in your foreign currency account while you decide, but only for 180 days.
• Deposits for residents must be shorter than 180 days, and maturity proceeds that are not reinvested fall under the same rule.
• Money brought back does not restore the year's LRS limit.

• Access when domestic funds are shut. GIFT City funds are outside the mutual fund industry's overseas ceiling.
• An Indian regulator. The fund, the manager and the bank are supervised by IFSCA under an Indian statute.
• Low entry in some funds. USD 500 now buys a passive US index fund.
• Tax handled in the fund. In the trust-type retail schemes there is no capital gains computation for you at redemption and no TDS.
• No US estate tax exposure, according to fund executives quoted in the press.
• Digital onboarding. Fund houses report digital onboarding and daily NAVs, and IFSCA has asked banks to offer account opening and remittance through internet and mobile banking.
• Separate limits for family members. Each resident family member has a limit, though RBI allows clubbing for investments only among co-owners.

These make the process easier. They do not make any fund a better investment.

Start with what PMS Sahi Hai does not do. Its GIFT City pages are written for NRIs. The site has no page on the Liberalised Remittance Scheme, no TCS calculator, and no label on a strategy page telling you whether a fund is inbound or outbound or whether it accepts resident money. Those answers come from your bank and the fund house.

Where the platform helps is the step after eligibility. Once you know a product is open to you, you still have to judge it, and most GIFT City funds for resident Indians are young.

• One shelf to browse. The comparison shelf describes itself as "every PMS, AIF & GIFT City strategy, on one shelf" and lets you shortlist up to four strategies side by side. The GIFT City class mixes India-focused and global funds, so use this article's table to sort them first.
• Strategy pages with the numbers that matter early. For the funds it lists, a page shows track record length, returns, drawdown, volatility and exit load. Treat the eligibility and minimum as something to confirm in the placement memorandum.
• Nyra, a research tool that cites its sources. The site describes Nyra as grounded only in SEBI, AMC and IFSCA primary sources, and says it will not state a number it cannot tie to a public document. Ask it what a fund holds, what it charges and how often it trades, and ask for the source each time.
• A score with stated limits. The Nyra methodology rates strategies from 0 to 10 on five pillars and marks a strategy "Not Rated" when it has under 12 months of track record. For a new outbound fund, a missing score is information in itself.

Two cautions from the site. Nyra is "an analytical tool, not a SEBI-registered Investment Adviser", and its output is informational. And PMS Sahi Hai is an APMI-registered distributor, so use it to research and compare, and take tax and FEMA advice separately. For background, see its explainer on what IFSCA regulates and its GIFT City fund vs mainland PMS comparison, which makes the point that for residents the case is currency diversification and not tax.

• Cash locked in TCS. 20% above Rs 10 lakh is recovered only through your tax filing.
• A short menu. Five retail outbound funds is a small shelf, and several have brief track records.
• High tax on short holdings inside funds. At 42.74%, a fund that trades often gives up a large part of its gains.
• Short deposits only, without deposit insurance at the bank whose disclosure we read.
• No leverage and no derivatives for LRS money.
• Unsettled reporting. The Schedule FA question may mean a longer return form either way.
• Higher cost than a domestic index fund once fund expenses, spread and bank charges are added.

Start from what you want.

• A small, long-term allocation to global shares. A passive outbound retail fund. Check total cost and plan to hold well beyond 24 months.
• A larger, managed global portfolio in your own name. IFSC portfolio management at USD 75,000 or more. You carry the tax computation and the foreign asset reporting.
• A specific strategy or individual foreign shares. A restricted scheme at USD 150,000 if its documents admit residents, or a Global Access provider.
• A short-term dollar parking place before a known expense. A foreign currency account with a deposit under 180 days.
• Indian equity exposure. Stay onshore. GIFT City adds cost and uses your LRS limit for something you can buy at home.

For each product, ask the same three questions: does the remittance fit LRS, does the scheme category admit me at this ticket size, and does the offer document accept residents? Once those are settled, a comparison shelf such as PMS Sahi Hai and a source-citing tool such as Nyra can help you judge the fund itself.

Before you send a dollar, get three answers on paper. From your bank: how much of this year's LRS limit is left, and how much TCS the remittance will carry. From the fund house or manager: whether the scheme accepts resident individuals investing under LRS, and how it is taxed. From a tax adviser: how the holding goes into your return, including the Schedule FA question.

If any answer is vague, wait. Correcting a foreign exchange mistake afterwards is slow and costly.

When eligibility is clear and you want to compare strategies, browse GIFT City funds on PMS Sahi Hai, ask Nyra to show its sources on holdings and fees, or book a 15-minute call with the team.