Global investing is now easier than ever for Indians. From buying international stocks directly through a broker or investing through GIFT City (Gujarat International Finance Tec-City), there are multiple ways to access markets abroad. But which route suits your specific needs and financial profile best?
While both options provide global exposure, they differ significantly in terms of accessibility, taxation, investment flexibility, and costs. Here’s how the two routes compare and which route suits which type of investor.
GIFT City vs direct overseas investing through a broker: What’s the difference?
Direct overseas investing offers a wider range of investment opportunities. Investors can access a multitude of global stocks, exchange-traded funds (ETFs), bonds, and alternative investment products through international brokerage platforms.
In case of a direct route, where you actually remit dollars, either through a foreign broker (Schwab International, Saxo) or through an Indian platform (such as Vested, INDmoney) that gives you access to US markets.
“That's where you get the widest universe, more or less the full market rather than a curated list. It's under the Liberalised Remittance Scheme (LRS), and you'd be reporting those holdings under Schedule FA when you file,” says Viram Shah, Founder & CEO, Vested Finance, a platform that facilitates access for Indian investors to global markets.
“This route is often preferred by experienced investors who want complete control over security selection, portfolio construction, and access to specific markets or sectors,” says Ankur Choudhary, Co-Founder & CEO, Belong, a Bengaluru-based fintech platform.
GIFT City, on the other hand, offers a more structured route to global investing through entities regulated by the International Financial Services Centres Authority (IFSCA). “Investors can access global mutual funds, alternative investment funds (AIFs), international equities, ETFs, bonds, and global portfolios through IFSCA-regulated entities. For many investors, the biggest advantage is convenience,” he explains.
Onboarding, compliance, dispute resolution, and investment access are all handled within a familiar Indian regulatory ecosystem. Certain GIFT City products can also provide exposure to US markets without creating direct ownership of US securities, which may help investors avoid US estate tax exposure, he adds.
Additionally, GIFT City’s outbound mutual funds are not constrained by the overseas investment limits that have periodically impacted domestic mutual funds investing internationally.
GIFT City vs direct overseas investing: How taxation works for both routes
Taxation is one of the most important factors investors consider before investing, as it directly impacts net returns. Here’s how GIFT City and direct overseas investing compare in terms of taxation:
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Particulars
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GIFT City Outbound Mutual Funds
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Direct US Stocks / ETFs
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UCITS Funds (Investing in US Stocks via Non-US Exchanges)
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US Stocks (UDRs) listed on NSE IX Exchange
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| STCG (Holding ≤ 2 years) | ~42.74%* | Slab Rate | Slab Rate | Slab Rate |
| LTCG (Holding > 2 years) | ~14.95%* | 12.5%–14.95% depending on surcharge | 12.5%–14.95% depending on surcharge | ~13%-14.95% |
| Dividend Tax | Fund-level taxation (~35.88%*) | Taxable at slab rate in India; US withholding tax of 25% may apply, credit claimable | Accumulating funds: Nil distributions; Dividend funds taxed at slab rate | Slab Rate |
| US Estate Tax (Inheritance Tax) | No | Yes, on US holdings exceeding $60,000; rates may range from 25%-40% | No | No |
*Fund-level taxation: For certain GIFT City outbound mutual funds, taxation is handled at the fund level. The tax is paid by the fund before NAV declaration, meaning investors do not separately pay capital gains tax at redemption.
Note: Brokerage charges vary across platforms and apps and need to be checked individually. Indicative costs involved include brokerage per trade, FX markup on the remittance (over the interbank rate), and bank wire/SWIFT fees for each outward remittance.
Regardless of whichever route you choose, resident Indians remain subject to the Reserve Bank of India’s LRS.
“Both routes run on the same underlying: the RBI’s Liberalised Remittance Scheme; $250,000 annual limit; 20% TCS above Rs 10 lakh in a year (and that TCS is reclaimable when you file). GIFT City does not let a resident skip LRS, despite what some marketing suggest,” says Shah
Which route is better for which type of investor?
The answer largely depends on the investor’s experience, investment amount, and preference for convenience versus flexibility. For most retail investors, direct investing offers greater accessibility.
“Through a direct platform, you can start with about $1 using fractional shares or run an SIP (systematic investment plan) for as little as $1. That means a salaried investor can begin global investing this month with pocket-money amounts and build the position gradually,” says Shah.
A GIFT City fund, by contrast, asks for $5,000 (roughly Rs 4.3 lakh) just to open, with $500 top-ups after that. For someone allocating 10-15% of a modest portfolio overseas, that upfront ticket is the single biggest hurdle, he adds.
That’s not to say that direct investing also doesn’t come with its own added complexity. Investors must deal with foreign brokerage accounts, tax-reporting requirements, withholding taxes, and estate-planning considerations.
For first-time investors, young earners, or those starting with small amounts, direct investing is likely to be the better fit due to its low entry barriers and access to fractional shares. It is also more suitable for hands-on investors who prefer to build and manage their own portfolios by selecting individual global stocks, says Shah.
On the other hand, investors seeking a simple, set-and-forget approach to global diversification through index exposure and who can commit at least Rs 4.3 lakh upfront may find either route suitable, with GIFT City offering a more streamlined, managed structure, he adds.
