NRI Investment Guide: How to Invest in India from Abroad

NRI Investment in India: Overview

Non-Resident Indians (NRIs) can invest in most Indian financial instruments. The key is understanding which accounts and routes to use.

Bank Accounts for NRIs

• NRE Account (Non-Resident External): Holds foreign earnings in INR. Fully repatriable. Interest is tax-free in India.
• NRO Account (Non-Resident Ordinary): Holds Indian income (rent, dividends). Interest taxable in India at 30% TDS. Limited repatriation ($1 million/year).
• FCNR Account (Foreign Currency Non-Resident): Holds foreign currency (USD, GBP, EUR). Fully repatriable. Tax-free interest.

Mutual Funds

NRIs can invest in Indian mutual funds via NRE or NRO accounts.

• Complete KYC with passport, overseas address proof, and foreign bank account
• USA/Canada NRIs: Most AMCs don't accept investments due to FATCA compliance burden (exceptions: UTI, PPFAS, SBI MF)
• SIP via standing instruction on NRE/NRO account
• LTCG tax: 10% on equity gains above ₹1 lakh (same as resident Indians)

Direct Equity (Stocks)

NRIs can invest in Indian stocks via PIS (Portfolio Investment Scheme):

1. Open NRE/NRO bank account with PIS designation
2. Open Demat + trading account with NRI-approved broker (ICICI Direct, HDFC Securities, Zerodha)
3. Invest within RBI-set sector limits

Fixed Deposits

• NRE FD: Repatriable, tax-free in India, excellent for foreign currency parking
• NRO FD: Indian income; interest taxable at 30%
• FCNR FD: In foreign currency, no currency risk

Real Estate

NRIs can buy residential and commercial property in India. Not allowed to buy agricultural land without special RBI permission. Rental income taxable in India; TDS of 30% applies.

Tax for NRIs

• Taxable in India on India-sourced income
• DTAA (Double Taxation Avoidance Agreement) prevents double taxation
• File ITR if Indian income exceeds ₹2.5 lakh
• TDS deducted at source; refund can be claimed via ITR