Investment & Financial Planning

Can Joint NRI Account Holders Invest in GIFT City?

Updated on: April 30, 202618 mins Editorial Standards

Among NRIs, GIFT City has become a popular investment destination. Along with major tax benefits, it offers global investment options to NRIs. However, many NRIs often remain confused whether they can invest jointly in GIFT City, specifically when they have a joint NRI bank account. The answer to this question is yes, joint NRI account holders can invest in GIFT City.

Further, to help you understand this better, this blog clearly explains how joint investments work in GIFT City. Additionally, who is allowed to invest and what rules and regulations NRIs need to follow.

Key Takeaways

Yes, joint NRI account holders can invest in GIFT City if both are NRIs.
You cannot include resident Indians in joint NRI accounts.
Joint account holders can invest in Foreign currency deposits, FDs, and international equities.
Both account holders need their passports, PAN cards, and overseas address proof for investment.
Tax benefits available in GIFT City investments include no TDS, low dividends, and capital gains tax.

Understanding Joint Investment in GIFT City

Joint investment refers to two people investing together using a single bank account. Considering this, joint NRI account holders can also invest in GIFT City, but only under specific conditions.

When both joint account holders are NRIs, it works smoothly. You and your parent, spouse, or sibling can open a joint GIFT City savings account. Additionally, can also open a joint FD in foreign currency.

Further, this makes it convenient for NRI family members or couples living overseas to collectively manage their investments.

Moving ahead, let's know how NRIs can open a joint GIFT City savings account.

How NRIs Can Open a Joint GIFT City Savings Account?

NRIs can open a joint GIFT City savings account by completing their KYC (Know Your Customer) separately. For KYC, both the joint account holders need their passports, PAN cards, and overseas address proof. Additionally, for the US, UK, UAE, Canada, and other FATF-compliant countries, video KYC is also available.

Once the joint GIFT City savings account is open, NRIs can simply invest in multiple GIFT City funds available there, such as:

Foreign currency deposits
Fixed deposits

Apart from this, one of the biggest advantages NRIs get when investing through GIFT City funds is the tax benefit. Considering this, Interest earned from specified IFSC units may be exempt under Section 10(4E), subject to conditions defined under the Income Tax Act. It further helps NRIs in increasing their investment returns.

This was all about how NRIs can open a joint GIFT City savings account. Moving further, let's know when a joint account investment becomes complicated.

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When Joint Account Investment Becomes Complicated?

Joint account investment becomes complicated when one account holder is an NRI, and the other is a resident Indian.

In such scenarios, joint account investments are typically not allowed in GIFT City. It is because GIFT City operates as a "non-resident zone" under the Foreign Exchange Management Act (FEMA). Additionally, the NRI joint accounts are treated similarly to a foreign jurisdiction.

Furthermore, the rules are mainly designed for NRIs, which is why resident Indians cannot generally be joint holders in these accounts.

So, considering the above information, things become complicated in a joint account investment when there is one NRI and one Indian resident partner. Moving forward, now, let's know alternative investment options for the resident family members of an NRI.

Alternative Option for Resident Family Members

If NRIs still want to include a resident family member in their joint NRI account investments, there is a simple way to do so. Instead of making them a partner in the joint account, NRIs can:

Open the account in their name
Add the resident family member as a nominee in the joint account

This certifies that the resident family members receive the funds or their related benefits without violating FEMA regulatory rules. Now, let's move on to the investment rules for mutual funds and AIFs.

Investment Rules for Mutual Funds and AIFs

While many IFSC investment platforms offer individual investments, joint holding in mutual funds may depend on the fund structure and platform rules. Considering this, if both spouses want to invest in GIFT city mutual funds, they need to invest individually. To invest in the funds, first complete the KYC compliance. Additionally, separate investment actually works in favour of diversification.

For instance, a husband and wife who are both NRIs, one spouse invests in the Tata India Dynamic Equity Fund while the other chooses a different fund. Here, the couple gets double the exposure.

So from the above information, it is clear that mutual funds and AIFs do not all joint investment to NRIs. Moving further, let's know how joint accounts operate.

How Joint Accounts Operate?

Joint accounts in GIFT City generally follow standard operating rules. In this, the most common types include:

Former or Survivor: The primary account holder has control.
Either or Survivor: The account is operated by both account holders independently.

Further, while opening the account, it is advisable to confirm the mode of operation with the bank. It is because it determines how withdrawals and transactions are made.

Moving forward, let's know the tax benefits of investing in GIFT City for NRIs.

Tax Benefits of Investing in GIFT City

One of the key reasons to invest in GIFT City for NRIs is tax benefits. Income earned by NRIs through GIFT City funds is not subject to TDS. It helps NRIs to enhance their post-tax returns. Additionally, dividend income is generally taxed as per applicable income tax rates unless specific IFSC exemptions apply.. Compared to similar investments made in India, this investment rate is low.

Apart from this, capital gains on IFSC-listed securities may be exempt or taxed at concessional rates depending on the nature of the transaction. It is more favorable than the general applicable tax rates available in the domestic Indian tax laws. Also, transactions carried out within GIFT City are exempt from paying GST. This further reduces the overall investment cost.

Moreover, as all the transactions are done in foreign currency, NRIs under the DTAA can claim the tax benefits. It helps them avoid paying taxes or reduce the tax obligations on the same income.

This was all about the tax benefits of investing in GIFT City funds for NRIs. Moving ahead, let's know the best investment strategy for NRI investors.

Best Strategy for NRI Investors

NRIs should follow the following approach to get more benefits from GIFT City investments:

If both individuals are NRIs, open a joint NRI investment account.
Use the joint account for low-risk and stable investments like fixed deposits.
Additionally, to get exposure to the market, individually invest in mutual funds or other market-linked instruments.

This investment strategy helps in balancing growth and safety while staying compliant with regulations.

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Final Thoughts

Lastly, from the above blog, it is clear that joint NRI account holders can invest in GIFT City. However, it is only possible when both individuals are NRIs. Considering this, if one person is a resident Indian, generally, a joint investment is not permitted. Although you can use nomination as an alternative. Overall, to invest globally while offering tax benefits, GIFT City provides an attractive opportunity to NRIs. By knowing the rules and correctly structuring the investments, NRIs can take complete advantage of the investment options available in the city.

Further, as an NRI, if you are looking for NRI-friendly investment experts or consultants, connect with Savetaxs. Our professionals provide personalized investment guidance to you as per your financial goals and risk appetite. So contact us and start your investment journey today in India without any hassle.

Glossary

Double Taxation Avoidance Agreement (DTAA): DTAA, an Agreement Signed Between the Countries to Avoid Double Taxation.
Advance Tax : Advance Tax is a Tax Paid in Advance, in Installments, During the Same Financial Year.
Gift Tax: Gift Tax, Imposed on Gifts, Like Cash, Bonds, Jewellery, Buildings, Lands, Checks, Etc.
Taxation: Taxation, the Process of Collecting Revenue From People, Used to Fund the Public Services by the Government.
Tax Deducted at Source (TDS): The Full form of TDS is Tax Deducted at Source, which is a way to collect the income tax.

Disclaimer

Note: This guide is for information purposes only. The views expressed in this guide are personal and do not constitute the views of Savetaxs. Savetaxs or the author will not be responsible for any direct or indirect loss incurred by the reader for taking any decision based on the information or the contents. It is advisable to consult either a CA, CS, CPA or a professional tax expert from the Savetaxs team, as they are familiar with the current regulations and help you make accurate decisions and maintain accuracy throughout the whole process.

About Author

Hatim Dudhiyawala Certified Public Accountant (CPA)

Hatim Dudhiyawala is a Certified Public Accountant (CPA) with SaveTaxs and specializes in Indian and NRI taxation. He advises individuals, NRIs, and businesses on income tax filing, capital gains taxation, DTAA benefits, fund repatriation, and tax compliance. With experience in cross-border tax matters, Hatim helps taxpayers understand complex regulations and make informed decisions. Through his articles, he shares practical insights to help readers stay compliant and manage their tax obligations with confidence. See Full Bio

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Frequently Asked Questions

GIFT City (Gujarat International Finance Tec-City) is the first operational greenfield snart city and International Finance Services Centre (IFSC) in India, located in Gandhinagar, Gujarat. It is designed as a global IT and financial hub. Additionally, it operates as a multi-service SEZ providing tax incentives, high-class infrastructure, a liberalized regulatory environment for capital markets, banking, fintech, and insurance firms.

Yes, you can open a joint account with one or more NRI individuals, such as a spouse, parent, or business partner. Generally, both account holders have equal access to funds, with options of "jointly" (signature of both partners required) or "either or survivor" (independent access) operating modes.

Yes, the nomination facility is available for all types of NRI savings accounts, such as NRE, NRO, and FCNR. It allows account holders to appoint beneficiaries for the balance funds.