NRI Investing in India — A Complete Starting Guide

NRIs investing in India face a different rulebook than resident Indians — different accounts, different tax withholding, different repatriation rules. This is the starting map before you invest a rupee.

Start With the Right Bank Account — Everything Else Depends on It

NRE (Non-Resident External) and NRO (Non-Resident Ordinary) accounts serve different purposes and are frequently confused:

• NRE account — for money earned abroad and remitted to India. Fully repatriable (principal and interest can be freely moved back abroad). Interest earned is tax-exempt in India.
• NRO account — for income earned in India (rent, dividends, pension, or sale proceeds of Indian assets). Repatriation is allowed but subject to limits and requires a CA certificate (Form 15CA/15CB) for larger amounts. Interest is taxable in India, with TDS deducted at source.

Get this classification right at account opening — using the wrong account type for the wrong source of funds creates real complications later, both for tax filing and for repatriation.

What NRIs Can Invest In

• Mutual funds — most Indian AMCs accept NRI investment, via NRE or NRO account depending on fund source; a handful of AMCs restrict US/Canada-based NRIs specifically
• Direct equity — via the Portfolio Investment Scheme (PIS) route through a designated NRE/NRO account, with a broker offering NRI trading accounts
• PMS and AIF — available to NRIs, typically with higher minimum ticket sizes (regulatory minimums apply, same as for resident HNIs)
• Real estate — NRIs can buy residential and commercial property (agricultural land, plantation property, and farmhouses are generally restricted under FEMA)
• Fixed deposits — NRE, NRO, and FCNR (foreign currency) deposits, each with different tax and repatriation treatment
• Government schemes — NRIs face restrictions on some schemes (like PPF for genuinely new accounts) — check current eligibility per scheme, as rules have shifted over time

Repatriation — What Actually Moves Back Abroad Freely

NRE account funds are freely repatriable. NRO account funds are repatriable up to a limit (historically USD 1 million per financial year, subject to conditions and documentation) — this requires a CA-certified Form 15CB and a self-declaration Form 15CA before the bank processes the transfer. This is a genuinely important planning point: routing income correctly at the source (NRE vs NRO) avoids future repatriation friction.

How NRI Investment Income Is Taxed — the Broad Shape

Tax treatment varies by investment type and has TDS (tax deducted at source) implications that differ from resident investors — NRIs typically face TDS on most investment income at source, often at a higher rate than the final applicable tax, with the difference claimable as a refund when filing a return. Specific current rates for capital gains, dividends, and interest should be confirmed with a CA, since these are revised periodically and India's DTAA (Double Taxation Avoidance Agreement) with the NRI's country of residence can materially change the effective outcome.

DTAA — Don't Skip This Step

India has DTAA agreements with most countries NRIs live in (US, UK, UAE, Singapore, and many others). These agreements can reduce TDS rates or prevent the same income being taxed twice. Claiming DTAA benefit typically requires a Tax Residency Certificate (TRC) from the country of residence and Form 10F — worth setting up correctly from the start rather than trying to reclaim excess TDS later.

A Practical Starting Sequence