How To Buy US Stocks Through GIFT City: Step-by-Step Guide, Capital Gains & Tax Benefits Explained

If you want to buy global stocks like Apple, Nvidia, Tesla, Microsoft etc - rather than going via a foreign brokerage house- Indian investors can trade via GIFT City where processes and regulations are simple and clear, and access to foreign assets remains within reach.

Located along the Sabarmati River in Gujarat, GIFT City is India's premier international financial hub, where global businesses and international trade operations are conducted. However, in this article, we will explain how investors from India can buy global stocks, including US stocks, easily through GIFT City without any hassles.

GIFT City (Gujarat International Finance Tec-City) is India's first smart city, which is divided into a Multi-Services Special Economic Zone (SEZ) for international business and a Domestic Tariff Area (DTA) for domestic operations, which aims to simply reclaim overseas financial operations or businesses.

The way it works is that, instead of dealing with the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), and the Insurance Regulatory and Development Authority of India (IRDAI), through GIFT City, investments and businesses can work under one regulatory authority called the International Financial Services Centres Authority (IFSCA).

This makes investments simple and somewhat hassle-free.

How To Buy US Stocks via GIFT City?

Step 1: Platform and Portal

• Direct Purchase: You can directly download the official NSEIX GA (NSE International Exchange) Global Access app, which is available on iOS and Android.

• Purchase Via Brokers: Regular brokerages like INDMoney, Zerodha IFSC, HDFC Securities IFSC are registered subsidiaries of IFSC. You can register via them.

Step 2: Complete KYC Verification and Application

• Upload your PAN and Aadhaar card.

• Fill the mandatory FATCA/CRS self-certification and tax residency forms.
• Digitally pre-fill the W-8BEN form (required by the US IRS to claim tax treaty benefits on dividends). The IRS Form W-8BEN is an official United States tax document used by non-US individuals to certify their foreign status and claim tax treaty benefits to lower or avoid a default 30% tax withholding.

Step 3. Fund the Account via LRS in US Dollars

• Transfer funds in US dollars by login to your Indian net banking portal or visiting your bank branch.

• File LRS Request: Complete an outward remittance under the Liberalised Remittance Scheme (LRS).

• Ensure you use the standard RBI Purpose Code S0001 ("Investment in overseas securities").

• You can transfer up to $250,000 per financial year. There is a 20% Tax Collected at Source (TCS) applies to total outward remittances exceeding Rs 7 lakh inside a single financial year, which you can later claim back during your ITR filing.

Step 4. Buy and Sell International Stocks, ETFs and Mutual Funds

• After remittance by your bank your wallet/dashboard will reflect the fund you have.

• You do not need to buy a whole stock. You can place value-based fractional orders starting as low as $10.

• The Best Part: Trading through GIFT City exempts you from domestic STT (Securities Transaction Tax), GST, and stamp duties.

• Timing of trading for US is US stock market trading hours which is between 7:00 PM to 1:30 AM IST.

US Stocks vs GIFT City UDRs: Tax Rules Explained

• Capital Gains Tax:
  The US does not charge capital gains tax on US stock sales by non-US residents. Similarly, GIFT City does not levy tax on gains from selling Unsponsored Depository Receipts (UDRs). Indian investors, however, must pay tax as per Indian tax rules.

• Tax for Indian Investors:

  1. Long-term gains (held for over 2 years): 12.5% LTCG tax applies.
  2. Short-term gains (held for 2 years or less): Taxed according to the investor's income tax slab.

• Dividend Tax:

  1. The US deducts 25% withholding tax on dividends from UDRs.
  2. HDFC IFSC charges an additional 10% service fee on the remaining amount.
  3. Example: A $10 dividend becomes $6.75 after deductions.

• India Tax on Dividends:

  Dividend income is taxed in India as per the investor's tax slab. Investors can use the India-US DTAA to claim credit for US tax paid and avoid double taxation.

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