GIFT City Funds: Minimums, Tax and Returns Compared

On 22 Oct 2026, Sheetal Goel published a comparison of GIFT City funds and international mutual funds.

By Career Ahead AI — AI-assisted, fact-verified against cited sources. Readers should verify key facts.

GIFT City funds sit outside the domestic overseas-investment cap

On 22 Oct 2026, Sheetal Goel published a comparison of GIFT City funds and international mutual funds at 09:52 AM IST. The RBI imposed a $7 billion industry-wide limit on overseas investments by domestic mutual funds. GIFT City funds operate under a separate regulatory framework and do not count towards that limit. Resident individuals can remit up to $250,000 per financial year under the RBI’s LRS framework for permitted current and capital account transactions.¹²³⁴

GIFT City funds are foreign-currency products, almost always in US Dollars, regulated by IFSCA and run from India's International Financial Services Centre. Funds in GIFT City's IFSC are regulated by IFSCA, while SEBI regulates domestic Indian mutual funds. GIFT City inbound funds invest in Indian equities; outbound funds invest in international equities.¹²³⁴

Retail minimums start low, but many options require more

International mutual funds allow low minimum investments, often Rs 500–Rs 1,000 SIP in many schemes, and are regulated by SEBI. GIFT City retail mutual fund schemes are available with minimums as low as $500, and platform minimum investments are typically $500 onwards. The Parag Parikh S&P 500 and Nasdaq 100 GIFT City funds have a $500 minimum subscription; several other schemes require $5,000.¹²³⁴

GIFT City funds are foreign-currency products, almost always in US Dollars, regulated by IFSCA and run from India's International Financial Services Centre.

The low retail entry point does not apply to every GIFT City option. Most GIFT City investment options, particularly MFs, require a minimum investment threshold of $150,000, roughly AED 550,000 or ₹1.25 crore. Some AMCs restrict NRIs from the US and Canada from investing in Indian mutual fund schemes due to FATCA/CRS compliance requirements. US-based investors in GIFT City funds face PFIC rules.¹²³⁴

Fund-level tax rules and redemption treatment differ

GIFT City schemes levy 14.95% tax on long-term gains, for holdings of more than 24 months, and 42.74% on short-term gains, for holdings of less than 24 months. They also levy 35.88% on dividends at the fund level. The DSP Factsheet states that tax is paid at the fund level on income arising to the fund, and that investors should not face tax on gains at redemption in India.¹

Repatriation terms differ by route. Investments via NRO accounts are repatriable up to USD 1 million per financial year, while GIFT City investments are fully repatriable.⁴

Reported returns vary across schemes and periods

The Parag Parikh S&P 500 Fund of Fund delivered 18.89% since inception, against 18.08% for its benchmark. The Nasdaq 100 scheme returned 27.95%, compared with 27.53% for the Nasdaq 100 Notional Net Total Return Index. DSP Global Equity Fund returned 8.49% since inception, compared with 17.49% for its benchmark.¹

The Edelweiss Greater China Equity Fund, which invests in the JPMorgan Funds – Greater China Fund, delivered a 6.47% return since inception. Marcellus Global Equities Fund reported -1.27% since June 25, 2026, compared with 4.19% for the S&P 500 Net Total Return benchmark. HDFC's International Developed Markets Equity Fund and International Emerging Markets Equity Fund returned -1.01% and -0.37% since inception, respectively.¹³⁴

Among domestic international-fund examples, Nippon India Taiwan Equity Fund recorded a one-year return of 97.94% but remained closed to fresh investments. Baroda BNP Paribas Aqua Fund of Fund delivered a 9.36% return over a one-year period and is open for fresh investments.¹²³⁴

Investments via NRO accounts are repatriable up to USD 1 million per financial year, while GIFT City investments are fully repatriable.4

Minimums and tax decide your route

The entry point decides whether GIFT City works for you. Retail schemes start at $500, but most options demand $150,000, roughly ₹1.25 crore. If you cannot meet that threshold, domestic international funds with Rs 500–Rs 1,000 SIP minimums remain your route. Also note that GIFT City funds do not count toward the RBI's $7 billion overseas cap, and resident individuals can remit up to $250,000 per year under LRS — so these funds expand how much you can place abroad without hitting regulatory walls.¹²³⁴

Tax treatment differs sharply. GIFT City schemes pay 14.95% on long-term gains and 42.74% on short-term gains at the fund level, and per DSP, investors face no tax at redemption in India. That makes holding periods matter differently than in domestic funds. If you are a US-based investor, PFIC rules apply, and some AMCs restrict NRIs from the US and Canada due to FATCA/CRS — so verify your eligibility before committing. Fully repatriable GIFT City investments also beat NRO accounts, which cap repatriation at USD 1 million per year.¹²³⁴