Since March 2022, you could buy US stocks on NSE IFSC and hold them in a GIFT City demat account. What you held were NSE IFSC Receipts, not the shares themselves.
On 24 July 2026, NSE IFSC announced it is terminating the programme. You have until January 2027 to sell the receipts or convert them into US shares, and the Act leaves two tax questions open.
Here’s what the receipts are, what you can do, and how each option is taxed.
Quick Summary
- Convert by 20 January 2027 or sell by 29 January 2027
- Conversion covers only whole shares at the issuance ratio, so any remainder has to be sold
- Whether a receipt is long-term after 12 or 24 months is unclear, and the 24-month view is the conservative one
- Whether conversion is a taxable transfer is also unclear, but a sale is always taxable
What are NSE IFSC Receipts?
NSE IFSC Receipts are unsponsored depository receipts (UDRs) on US stocks. They trade in US dollars on NSE IFSC in GIFT City, and “unsponsored” means the US company isn’t involved in creating them. If you bought US stocks on NSE IFSC before 30 July 2026, you may hold them.
Market makers bought the US shares and issued receipts against them. A custodian holds the underlying shares in the US, and your receipt gives you a proportionate beneficial interest in them. You held the receipts in a GIFT City demat account, paid for with money remitted under the Liberalised Remittance Scheme (LRS).
Each receipt is a fraction of a share, and every stock has its own ratio. NSE’s launch FAQ gave an example: 100 receipts for one Tesla share. At that ratio, 250 receipts represent two and a half shares, and the fraction matters later because only whole shares can be converted.
This thread is for resident and ordinarily resident individuals. If you hold actual US shares through a GIFT City platform (a Global Access Provider), read US stocks through GIFT City: does it save tax for resident Indians? instead.
Why is NSE IFSC closing the programme?
NSE IFSC points to the Global Access framework that the International Financial Services Centres Authority (IFSCA) introduced after the receipts launched. Its circular calls that framework cost efficient, wider in market access, and scalable.
NSE IFSC has set up a subsidiary, NSEIX Global Access IFSC Ltd., to provide that access. After consulting stakeholders, it decided to end the receipts programme.
What are the NSE IFSC Receipts deadlines?
Circular NSEIFSC/TRADE/2698 of 24 July 2026 sets these dates. Conversion forms are on the NSE IFSC global stocks page.
| Date | What happens |
|---|---|
| 30 July 2026 | No new buy orders |
| 20 January 2027 | Last date to convert into US shares (whole shares only) |
| 29 January 2027 | Last date to sell on NSE IFSC |
| 1 February 2027 | Dealing ends |
Designated market makers can still buy, so that sellers can find a buyer. NSE IFSC has also waived its transaction charges on sales during this period.
Conversion closes nine days before selling does, so start early. You’ll need an account to receive the shares, and your broker may set a cut-off earlier than 20 January. Don’t plan on holding receipts past the deadlines: the circular doesn’t say what happens to them.
Before you decide
- Check what you hold: the number of receipts for each stock and its issuance ratio.
- Divide receipts by the ratio. The whole number can convert, and the remainder has to be sold. At 100 receipts per share, 250 receipts give two shares and 50 receipts to sell.
- If you plan to convert, find out where the shares will be credited and set up that account first.
- Keep your purchase dates, USD cost, LRS remittance details and TCS certificates. You’ll need them for the return whichever option you choose, and the TCS you paid on the remittance is adjustable against your tax. See TCS on LRS remittances.
Is a UDR long-term after 12 months or 24?
The Act doesn’t settle this directly, so here are both views.
The 12-month view. A UDR trades on NSE IFSC, which is in India. If a UDR is a “security” and NSE IFSC is a “recognised stock exchange”, section 2(101) makes it long-term after 12 months.
The 24-month view. Section 2(92) requires a recognised stock exchange to fulfil prescribed conditions and be notified by the Central Government. Rule 5 of the Income-tax Rules, 2026 sets the procedure for that notification. We could not confirm such a notification for NSE IFSC under the 2025 Act. There is also an argument that a receipt backed by a US share is, in substance, a foreign share, so the 24-month rule applies.
If the gain is long-term, the rate is 12.5% under section 197 either way. The ₹1.25 lakh exemption under section 198 (old 112A) is unlikely to apply, because a UDR is a depository receipt, not an “equity share in a company”.
Say Rhea, a resident under the new tax regime with ₹28 lakh of other taxable income, has a $1,500 gain on UDRs bought in June 2025 and sold in September 2026, 15 months later. She pays 30% at the margin. At an illustrative ₹88.00, the gain is ₹1,32,000.
| 12-month view | 24-month view | |
|---|---|---|
| Nature of gain | Long-term | Short-term |
| Tax plus cess | ₹17,160 | ₹41,184 |
The gap is ₹24,024. The 24-month view is the more conservative filing position: higher tax, lower dispute risk. If you file on the 12-month view, you are taking a position the department may question.
Is converting UDRs into US shares a taxable transfer?
Again, there are two views.
The no-transfer view. A UDR only records your beneficial interest in shares the custodian already holds. Cancelling it gives you the same shares directly, so nothing is sold or exchanged. Your cost and holding period carry over.
The transfer view. Section 2(109) defines “transfer” to include the extinguishment of any rights in a capital asset. Surrendering a UDR extinguishes it. Section 70 doesn’t exempt this conversion for residents, and we found no Rule that carries the holding period over. On this view, conversion creates a capital gain or loss, and the US shares start a fresh holding period.
Should you sell or convert NSE IFSC Receipts?
If you want the tax settled this year and don’t want a new account, sell. If you want to keep your US exposure, convert. The table shows what each option means.
| Sell | Convert (no-transfer view) | Convert (transfer view) | |
|---|---|---|---|
| Tax in tax year 2026-27 | On the gain or loss | None | On the gain or loss, likely at the value of the US shares |
| Cost and holding period | Not applicable | Carry over | Start fresh |
| Later sale of the US shares | Not applicable | Original cost and date | Short-term within 24 months |
| You hold afterwards | Cash | US shares, plus cash for any remainder | US shares, plus cash for any remainder |
Converting doesn’t cost more tax now than selling. What it can cost you is the holding period.
Converted shares are reported in Schedule FA like any other US shares. See Schedule FA & FSI.
FAQs
What if I miss the deadline?
The circular doesn’t say. Dealing ends on 1 February 2027 and the programme is terminated, so contact your broker well before the dates.
What happens to leftover receipts after I convert?
They don’t convert, so sell them on NSE IFSC by 29 January 2027.
Will I pay charges on selling?
NSE IFSC has waived its own transaction charges during the closure period. The circular doesn’t cover your broker’s charges.
What this means for you
- Convert by 20 January 2027 or sell by 29 January 2027, and don’t leave it to the last week.
- If you file a UDR gain on the 12-month view, know that the department may question it.
- Keep your purchase and remittance records, because on the transfer view a conversion can leave you with a gain or loss to report.
Old section numbers (Income-tax Act, 1961)
The 1961 Act still governs income up to financial year 2025-26. This thread applies the 2025 Act, which governs tax year 2026-27 onwards.
| Income-tax Act, 2025 | Income-tax Act, 1961 |
|---|---|
| Section 2(92), recognised stock exchange | Section 43(5), Explanation 1(ii) |
| Section 2(101), short-term capital asset | Section 2(42A) |
| Section 2(109), transfer | Section 2(47) |
| Section 70, transactions not regarded as transfer | Section 47 |
| Section 197, long-term gains | Section 112 |
| Section 198, long-term gains with STT | Section 112A |
Related threads:
- US stocks through GIFT City: does it save tax for resident Indians?
- TCS on LRS remittances: what Budget 2026 actually changed
- Tax on foreign stocks, MFs/ETFs and ESOPs in India
Holding NSE IFSC Receipts? Drop your questions below.