Home / Business and Economy / Beyond Limits: GIFT City Funds Open Overseas Doors
Beyond Limits: GIFT City Funds Open Overseas Doors
20 Dec
Summary
- GIFT City funds offer an alternative to overseas investments after domestic limits.
- Tax benefits and no TCS make GIFT City funds attractive.
- Investors must adapt to LRS remittance process for GIFT City funds.
Indian investors are increasingly utilizing GIFT City as a pathway to global markets, driven by regulatory caps on traditional international mutual fund routes. The $7 billion industry-wide limit for overseas investments through domestic mutual funds has been reached, prompting a search for alternatives. GIFT City funds, overseen by the IFSCA, now provide a viable solution for accessing international indices and diversifying portfolios beyond Indian borders.
These funds present distinct tax advantages, typically structured as trusts where tax is paid at the fund level, simplifying the investor's tax liability upon redemption. Furthermore, the absence of Tax Collected at Source (TCS) enhances liquidity compared to direct overseas stock investments. Investors will need to become comfortable with remitting funds abroad via the Liberalised Remittance Scheme (LRS) to utilize these dollar-denominated assets.
