Can NRIs Invest in Indian Stock Markets?
Yes. NRIs can invest in Indian equity markets through the Portfolio Investment Scheme (PIS) — a framework established by the Reserve Bank of India under FEMA. NRIs can buy and sell shares of Indian companies listed on NSE and BSE through a designated PIS bank account.
What is the Portfolio Investment Scheme (PIS)?
PIS is an RBI-approved scheme that allows NRIs to invest in Indian shares and convertible debentures on a repatriation or non-repatriation basis. All PIS transactions must be routed through a designated PIS bank account — either NRE (repatriable) or NRO (non-repatriable).
How to Set Up NRI Stock Market Investment
- Open a PIS account: Apply to a designated PIS bank (SBI, HDFC, ICICI, Axis, Federal Bank etc.) for PIS permission from RBI
- Open NRI Demat account: Link with a SEBI-registered broker (Zerodha, ICICI Direct, HDFC Securities etc.)
- Open NRI trading account: With the same broker
- Link PIS bank account → Demat account → Trading account
NRE vs NRO PIS Account
- NRE PIS: Investments are repatriable; profits can be freely sent abroad
- NRO PIS: Investments are non-repatriable (subject to USD 1 million/year limit); suitable for reinvesting Indian income
Investment Limits for NRIs
NRIs can hold up to 5% of paid-up capital of any Indian company. The aggregate NRI holding in a company cannot exceed 10% (extendable to 24% with board approval). Sectoral caps apply for certain industries (banking, insurance, defence etc.).
Tax on NRI Stock Market Gains
- LTCG (held 12+ months): 12.5% above ₹1.25 lakh/year
- STCG (held under 12 months): 20%
- TDS is deducted by the broker on gains; excess TDS refundable via ITR
US & Canada NRI Restrictions
US and Canada-based NRIs face additional FATCA/FBAR reporting obligations. Some brokers do not accept US/Canada NRI clients. Check broker eligibility before opening accounts.
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