India Markets
NRI Investing in India
How Non-Resident Indians can invest in Indian stocks, mutual funds, and real estate — routes, accounts, and taxes.
Non-Resident Indians (NRIs) can invest in Indian financial markets through FEMA (Foreign Exchange Management Act) compliant routes. The key accounts are NRE (Non-Resident External) and NRO (Non-Resident Ordinary) accounts. NRIs can invest in stocks, mutual funds, real estate, fixed deposits, and government bonds — each with specific rules and tax implications.
NRE vs NRO Account: The Foundation
The type of account determines what you can invest in and how you can repatriate money.
| Feature | NRE Account | NRO Account |
|---|---|---|
| Currency | Foreign currency deposits, INR balance | INR only |
| Source of funds | Foreign income only | Indian income (rent, dividends) |
| Repatriation | Fully repatriable | Limited ($1M/year with CA certificate) |
| Tax on interest | Completely exempt in India | Taxable in India |
| Joint holding | With another NRI only | With resident Indian allowed |
Investing in Stocks & Mutual Funds
NRIs can invest in Indian equities through the Portfolio Investment Scheme (PIS) — a SEBI-mandated route through a designated bank.
- NRE PIS account: Investments from foreign funds, repatriable
- NRO account: Investments from Indian income — not fully repatriable
- Most AMCs allow NRI investments in mutual funds (some restrict US/Canada-based NRIs)
- Important: US and Canada NRIs face restrictions from many AMCs due to FATCA compliance costs
- SIP via NRE/NRO: Auto-debit SIPs are fully supported by most fund houses
NRI Tax on Indian Investments
NRIs are taxed only on income earned or received in India. Tax rates are generally the same as residents for capital gains.
- Equity LTCG (>1 year): 12.5% above ₹1.25 lakh exemption — same as residents
- Equity STCG (<1 year): 20% — same as residents
- Dividend income: Taxable at slab rate; 20% TDS withheld at source
- FD interest (NRO): 30% TDS withheld; NRE FD interest is tax-free in India
- DTAA benefit: If India has a tax treaty with your country of residence, you may be able to claim credit for taxes paid in India
Key Takeaways
- ✓NRE accounts allow tax-free interest and full repatriation — ideal for long-term Indian investments
- ✓US/Canada-based NRIs face mutual fund restrictions — many AMCs refuse due to FATCA
- ✓PIS account is mandatory for NRI stock market investments through designated bank
- ✓DTAA treaties can reduce double taxation — always check the treaty between India and your resident country
- ✓Consult a CA experienced in NRI taxation before making significant investment decisions
Related Topics
Put Knowledge into Action
Use our free calculators to plan your finances.