Dhan launched US stocks via GIFT City: what it means and how it differs from a regular US brokerage account

The June 2026 change that matters for high-income Indian investors

In June 2026, Dhan became the first mainstream Indian retail platform to offer US stock investing through GIFT City's IFSC route rather than the standard LRS framework. This is not a minor product update — it is a structural difference in how your money moves, how it is taxed, and what compliance obligations follow.

If you invest ₹25 lakh per year in US stocks via the standard LRS route, your bank collects ₹3.6 lakh in TCS (20% on ₹18L above the ₹7L threshold). That money sits blocked until you file your ITR and claim it back. Via Dhan's GIFT City route — zero TCS collected, all ₹25L deployed on day one. For larger investors, the saving is proportionally higher.

And if the Section 10(4D) capital gains exemption holds for your situation — which requires CA verification — the tax advantage compounds further. This article explains what GIFT City actually is, how Dhan's product works mechanically, what the genuine advantages are, and what the real caveats are.

What GIFT City is — and why it exists

Gujarat International Finance Tec-City (GIFT City) is a special economic zone on the outskirts of Gandhinagar, Gujarat. The Indian government created it to bring financial services activity back to India that was migrating to Singapore, Dubai, and Mauritius due to their more flexible regulatory frameworks.

GIFT City's financial district — the International Financial Services Centre (IFSC) — is regulated by the International Financial Services Centres Authority (IFSCA), a unified regulator created in 2020 that oversees all financial services within GIFT City. IFSCA sits separate from the RBI, SEBI, IRDAI, and PFRDA — it has jurisdiction over banking, securities, insurance, and fund management activity within the IFSC.

Entities set up in GIFT City IFSC are legally incorporated in India but operate under IFSCA's regulatory framework rather than the domestic Indian framework. They transact in foreign currency. They are designed to compete with offshore centres, which means the regulatory perimeter around them is different in important ways.

For investors, the key consequence is that money sent to an IFSCA-regulated GIFT City entity is not classified as a foreign remittance under FEMA (Foreign Exchange Management Act). It is a transfer within India — just to a special-purpose domestic zone.

The two routes for US stock investing from India

Understanding the GIFT City advantage requires understanding the standard LRS route first.

Route 1: LRS (the standard route used by Vested, INDmoney, Tickertape)

Under LRS, your Indian bank account sends a foreign remittance — your money crosses India's borders and arrives at a US or foreign entity. FEMA classifies this as an overseas investment.

Consequences:

• $250,000 annual cap: You can remit a maximum of $250,000 per financial year for LRS purposes (shared across all LRS categories — education, travel, overseas investment, etc.)
• TCS collection: Your bank collects TCS at 0% on the first ₹7L invested, 20% on the amount above ₹7L (reclaimable at ITR but capital is blocked)
• Schedule FA disclosure: The foreign account must be disclosed as a foreign financial asset in your ITR
• FEMA compliance: Standard overseas investment FEMA guidelines apply

Route 2: GIFT City IFSC (Dhan's route via Raise IFSC Pvt. Ltd.)

Under GIFT City, your money goes to Raise IFSC Pvt. Ltd. — Dhan's IFSCA-regulated GIFT City subsidiary. This is a transfer to a domestic Indian entity, not a foreign remittance.

Consequences (based on prevailing market interpretation — verify with your CA as guidance is still evolving):

• LRS cap: Transfers to a domestic IFSC entity are generally not counted as LRS remittances, so the $250,000 limit may not apply
• TCS: TCS under Section 206C(1G) applies to LRS remittances; transfers to domestic IFSC entities are generally not classified as LRS, so TCS may not apply — banks and Dhan operate on this basis
• Schedule FA: Status evolving — see below
• Section 10(4D) potential: IFSC-qualifying securities may attract capital gains exemption

The TCS math — what the difference looks like in numbers

Let us make the TCS saving concrete.

Scenario: You invest ₹25 lakh in US stocks in a financial year.

Via standard LRS (Vested, INDmoney, etc.):

• TCS-free amount: ₹7L (combined threshold across all LRS)
• Amount attracting TCS: ₹25L – ₹7L = ₹18L
• TCS at 20%: ₹3.6 lakh blocked until ITR refund/credit
• Capital actually deployed on day one: ₹21.4L

Via Dhan GIFT City:

• TCS collected: ₹0
• Capital deployed on day one: ₹25 lakh

The ₹3.6L that would otherwise be blocked can instead be deployed in markets. If US markets return 12% and that ₹3.6L stays invested rather than being blocked for 6–9 months (the typical ITR processing cycle), the deployment advantage compounds.

At ₹50L/year: TCS blocked via LRS = ₹8.6L. Via GIFT City: zero.

For high-income investors sending large amounts annually, this is a meaningful and recurring advantage.

Section 10(4D) — the potential capital gains exemption

The Income Tax Act's Section 10(4D) provides an exemption on income arising from the transfer of securities listed on IFSC exchanges, subject to conditions. The provision was introduced to attract global financial activity to GIFT City.

Whether US-listed stocks accessed via Dhan's Raise IFSC entity qualify for this exemption is not a simple yes or no. It depends on:

• How the securities are legally structured within the IFSC entity
• Whether the relevant conditions under Section 10(4D) and associated rules are met
• CBDT guidance and circulars issued on IFSC investments (which continue to evolve)

If it applies: Capital gains on qualifying IFSC securities could be fully exempt from Indian income tax. For an investor realising ₹10L in gains, that is potentially ₹1.25L saved (at LTCG rate of 12.5%) to ₹3L saved (at a 30% STCG slab rate).

If it does not apply in your case: You are taxed identically to any other foreign equity investment — STCG at slab (≤24 months), LTCG at 12.5% (>24 months).

The potential upside is real. The uncertainty is also real. Consult a CA who specialises in IFSC taxation before assuming Section 10(4D) applies to your Dhan GIFT City investments. Do not make large investment decisions based on an assumed tax exemption you have not verified.

Schedule FA — the evolving compliance question

Schedule FA requires Indian residents to disclose foreign financial assets. The core question for Dhan GIFT City investors: are holdings at Raise IFSC (a domestic Indian entity) considered "foreign" assets?

The argument that they are not: Raise IFSC is incorporated in India, regulated by IFSCA (an Indian authority), and your transfer to it is not a foreign remittance. The assets are, in a structural sense, "Indian."

The argument for caution: the underlying securities are US-listed stocks. The economic exposure is to foreign assets. Income tax law and FEMA definitions do not always move in lockstep.

IFSCA regulations and income tax guidance on GIFT City are relatively new and continue to be developed. The prudent position until there is explicit clear guidance: disclose in Schedule FA, and consult your CA. The cost of over-disclosure is minimal. The cost of under-disclosure, if the tax authority takes a different view, could be significant.

How Dhan's product works in practice

The entity structure

• Dhan (the app and Indian entity you interact with): well-known for options trading and Indian equity; launched US stocks in June 2026
• Raise IFSC Pvt. Ltd.: Dhan's IFSCA-regulated GIFT City subsidiary that holds your US securities
• ViewTrade International: the IFSC-side clearing and execution partner (IFSCA-registered as a Global Access Partner)

What you can buy

• NYSE and NASDAQ listed stocks and ETFs
• Fractional shares (buy less than one full share)
• US stock SIPs — recurring investment instructions, e.g., ₹5,000 per week into SPY

Fees

• Brokerage: 0.25% per trade (same as Vested and INDmoney)
• No account opening fee
• No annual maintenance fee
• No withdrawal fee
• FX conversion handling: part of the Raise IFSC/ViewTrade infrastructure; verify current FX markup directly with Dhan before investing large amounts

The Dhan UX advantage

Dhan has a large existing user base from its Indian equity and derivatives trading. If you already use Dhan for Nifty options or Indian stock trading, the US stocks feature integrates into the same app you already have on your phone. One portfolio view. One app for both markets. This seamless integration is a genuine quality-of-life advantage over platforms that require a separate app for US stocks.

Launched June 2026 — what "very new" means for investors

Dhan's US stocks via GIFT City launched in June 2026. At the time of this writing, the product has been live for weeks, not years.

This matters for several reasons:

Track record: There is essentially none yet. Platform reliability, repatriation speed, customer support quality under stress, and dispute resolution processes have not been tested at scale.

Regulatory evolution: IFSCA's regulatory framework for retail investors in GIFT City IFSC is still being refined. Rules around repatriation, reporting, and investor protection for IFSC investments may change.

Edge cases: What happens if there is a dispute about a trade execution? How is a foreign account transfer from ViewTrade International handled if there is a mismatch? These operational questions get answered over time. For early adopters, there is inherently less certainty.

None of this means Dhan's GIFT City product will fail — Dhan is a well-funded, legitimate company and GIFT City is a serious regulatory initiative. But early-adopter risk is real, and investors should size their initial allocation accordingly.

What Dhan does NOT do

• No ACATS inbound (cannot move existing US stock holdings from another broker)
• No RSU consolidation or equity grant management
• No options or futures on US securities
• No OTC or pink-sheet stocks
• No London-listed ETFs for US estate tax mitigation
• No Schedule FA helper tool (you handle compliance yourself or via CA)

Who should use Dhan's GIFT City route

Best for:

• High-income investors sending ₹15L+ per year to US stocks, where the TCS saving is substantial
• Investors who already use Dhan for Indian equity/derivatives and want a unified app experience
• Investors willing to explore the potential Section 10(4D) advantage (with CA guidance)
• Early adopters comfortable with a very new product in a relatively new regulatory framework

Look elsewhere if:

• You are investing ₹5–10L/year in US stocks (the TCS impact is manageable and the newness risk may not be worth it)
• You need a proven multi-year track record on your US investing platform
• You need RSU consolidation → Rovia
• You need the most extensive research tooling → Tickertape
• You need options or global market access → IBKR

How GIFT City compares to the standard LRS platforms

For investors in the ₹25L+/year bracket, the Dhan GIFT City route deserves a serious look. The TCS saving alone (potentially ₹3–4L+ per year) justifies the evaluation. If the Section 10(4D) exemption holds in your situation (verify with CA), the advantage compounds further.

For investors below ₹10L/year, the smaller TCS impact combined with the newness of the product may mean the established LRS platforms (Vested, INDmoney, Tickertape) offer better risk-adjusted convenience. The full platform comparison for 2026 covers where each platform makes sense by investment size and needs.

The GIFT City route's advantages are structural — they are baked into the regulatory framework, not dependent on Dhan's pricing decisions. Whether other platforms follow Dhan into GIFT City will be one of the more interesting developments to watch in Indian retail investing over the next 12–24 months.

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Vested.blog is the editorial publication of Rovia.