1Foreign investors
Generally no Indian tax
Does the investor pay Indian tax on income from a specified fund?
Nothing they receive from a specified fund, and no gain on transferring its units, is included in their income in India.
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Schedule VI, Sl. 9
9. Any income accruing or arising to, or received from a specified fund or on transfer of units in a specified fund. A unit holder of a specified fund. Nil.
Income-tax Act, 2025 as amended by the Finance Act, 2026 · text as notified, amendment footnote numbers omitted · checked 24 October 2026 · Official text
2GIFT IFSC fund (specified fund)
Fund pays tax on its Indian income
Does the fund pay tax on its Indian income?
The fund pays tax itself on its Indian income: 10% on income from securities such as Indian dividends and interest, and capital gains on Indian securities at the rates in section 210.
Gains on transfers made on an IFSC stock exchange, paid in convertible foreign exchange, are left out of its income, to the extent they belong to non-residents’ units.
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Section 210(1)
210. (1) The income-tax payable on the total income of an assessee, being a specified fund or Foreign Institutional Investor, which includes income referred to in column B of the Table below, shall be the aggregate of income-tax computed at the rate specified in the column C applied on the corresponding income specified in column B. TABLE Sl. No. Income Rate of Income-tax payable A B C 1. Income in respect of securities other than units referred to in section 208. (a) 20% in case of Foreign Institutional Investor; (b) 10% in case of specified fund. 2. Short-term capital gains (not being short-term capital gains referred to in section 196) arising from the transfer of such securities. 30% 3. Short-term capital gains referred to in section 196 arising from the transfer of such securities. 20% 4. Long-term capital gains (not being long-term capital gains referred to in section 198 arising from the transfer of such securities). 12.5% 5. Long-term capital gains referred to in section 198 arising from the transfer of such securities which exceeds ₹125000. 12.5% 6. Total income as reduced by income referred to against serial numbers 1 to 5. Rates in force.
Income-tax Act, 2025 as amended by the Finance Act, 2026 · text as notified, amendment footnote numbers omitted · checked 24 October 2026 · Official text
Schedule VI, Sl. 1
1. Any income accrued or arisen to, or received, as a result of transfer of capital asset referred to in section 70(1)(r) where such transfer takes place on a recognised stock exchange located in any International Financial Services Centre. Any specified fund. (a) Consideration is paid or payable in convertible foreign exchange; (b) Income shall not be included in the total income to the extent such income is attributable to–– (i) units held by non-resident (not being the permanent establishment of a non-resident in India); or (ii) the investment division of offshore banking unit; and (c) The income exempt shall be computed in such manner as may be prescribed.
Income-tax Act, 2025 as amended by the Finance Act, 2026 · text as notified, amendment footnote numbers omitted · checked 24 October 2026 · Official text
3Indian investments
No separate tax for investors
Does investing in India mean a second tax at investor level?
No separate tax arises here for the investors: the fund is the taxpayer on its Indian income.
