Non-Resident Indians have a wide range of investment avenues in India, but the route — and the account used — affects taxation, repatriation and compliance. Here's an overview of the main options and the account structures that underpin them.
| Account Type | Source of Funds | Repatriability | Taxation of Interest |
|---|---|---|---|
| NRE (Non-Resident External) | Foreign income remitted to India | Fully repatriable (principal + interest) | Interest exempt from Indian income tax |
| NRO (Non-Resident Ordinary) | Income earned in India (rent, dividends, pension, etc.) | Repatriable up to USD 1 million per financial year, subject to conditions and CA certification | Interest taxable in India, with TDS deducted |
Most investment routes for NRIs are linked to one of these accounts — NRE for funds you're bringing in from abroad and want to remain freely repatriable, and NRO for funds generated from Indian sources.
NRIs can invest in Indian mutual funds (subject to fund houses' country-specific restrictions — some funds restrict investments from NRIs in the US/Canada due to FATCA compliance requirements). Investments are typically made through an NRE or NRO account, and the taxation of gains follows the same mutual fund taxation rules as for resident investors, though TDS is deducted at source for NRIs (the rate and applicability can differ from resident investors).
NRIs can invest in listed Indian equities under the Portfolio Investment Scheme (PIS) framework via a designated NRE/NRO account linked to a PIS-enabled demat and trading account, or through certain non-PIS routes for specific transaction types. Gains are subject to capital gains tax — see our capital gains tax guide for the applicable rates, which generally mirror the rules for resident investors but with TDS deducted at source.
NRIs can purchase residential and commercial property in India (but generally cannot purchase agricultural land, plantation property, or farmhouses, except through inheritance or specific exemptions). Rental income from Indian property is taxable in India under "Income from House Property" (see our house property taxation guide if available, or general income tax slab guide), and proceeds from sale are subject to capital gains tax with TDS under Section 195 (a higher rate than the standard Section 194-IA TDS applicable to resident sellers — see our TDS on property sale guide).
NRE and FCNR (foreign currency) fixed deposits offer tax-free interest and full repatriability, while NRO fixed deposits have taxable interest. Most small savings schemes (PPF, SSY, SCSS, etc.) have restrictions on new accounts being opened by NRIs, though existing PPF accounts opened while resident can often be continued (without further tax benefit eligibility in some cases) until maturity — rules have changed over time, so current accounts should be checked against the latest regulations.