{"id":8916,"date":"2026-05-25T20:13:55","date_gmt":"2026-05-25T14:43:55","guid":{"rendered":"https:\/\/tradebrains.in\/money\/?p=8916"},"modified":"2026-05-25T20:13:59","modified_gmt":"2026-05-25T14:43:59","slug":"gift-city-vs-direct-global-investing-which-option-saves-more-tax-for-resident-indian-investors","status":"publish","type":"post","link":"https:\/\/tradebrains.in\/money\/gift-city-vs-direct-global-investing-which-option-saves-more-tax-for-resident-indian-investors\/","title":{"rendered":"GIFT City vs Direct Global Investing: Which Option Saves More Tax for Resident Indian Investors?"},"content":{"rendered":"\n
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Synopsis: <\/em><\/strong>The Indian investors who are seeking global diversification, at present have two options, one being direct overseas investing via the Liberalised Remittance Scheme (LRS) and other being investment through GIFT City’s International Financial Services Centre (IFSC). But the tax implications of each route is critical for making informed investment decisions.<\/em><\/p>\n<\/blockquote>\n\n\n\n

Depreciating Indian rupee and the global growth has led many Indian investors to diversify their portfolio by including global assets, either, by remitting money abroad directly under LRS to invest in foreign markets or routing investments through GIFT City which is India’s International Financial Services Center (IFSC) in Gujarat. While both routes offer global exposure, their tax implications on investors differ, hence understanding both will propel the investors to make informed decisions.<\/p>

\"scapia<\/a><\/div>\n\n\n\n

Taxes for Indian Investors in Direct Global Investing<\/strong><\/h2>\n\n\n\n

When investments are made directly in foreign markets by the Indian investors, then the tax rules are applicable under the Income Tax Act, 1961, which are:<\/p>\n\n\n\n

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  • Capital Gains Tax:<\/strong>\n
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    • LTCG is 12.5% gains which are taxed under Section 112.<\/li>\n\n\n\n
    • The shares of those companies that are not listed on a recognised Indian stock exchange and if held for more than 24 months according to the Section 2(42A), are classified as long-term.<\/li>\n\n\n\n
    • Short-term capital gains (STCG) is applicable for holdings less than or equal to 24 months, and are taxed according to the investor’s applicable income tax slab rate.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
    • Dividend Income- <\/strong>Dividends from the foreign investments are taxed under \u201cIncome from Other resources\u201d and is as per the marginal tax slab rate.<\/li>\n\n\n\n
    • Tax Collected at Source (TCS) on Remittances:<\/strong>\n
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      • The TCS threshold under LRS is \u20b910 lakh and remittances up to this limit are TCS-free. For amounts exceeding this, TCS applies at 5% for education and medical remittances, and 20% for other purposes (including investment remittances).<\/li>\n\n\n\n
      • TCS is adjustable against final tax liability when filing the ITR.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
      • Reporting & Compliance:<\/strong>\n
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        • Resident investors holding foreign assets must file ITR-2 applicable for individuals and ITR-3 for business and professional income.<\/li>\n\n\n\n
        • Declare under Schedule FA, Schedule FSI, Schedule FSI for foreign assets, foreign income and capital gains from foreign respectively.<\/li>\n\n\n\n
        • Misreporting may invite a penalty of up to \u20b910 lakh per year, and per default.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n

          Taxes for Indian Investors Through GIFT City<\/strong><\/h2>\n\n\n\n

          GIFT City-IFSC is considered as a “foreign jurisdiction” for financial purposes under FEMA, 1999, and offers a preferential tax regime under the Income Tax Act, which are following: <\/p>