NRI Investment in India
Complete Guide 2026

NRE (Non-Resident External) account: holds foreign earnings brought into India; fully repatriable — you can transfer the entire balance (principal + interest) back to your foreign country without any RBI permission; interest is completely tax-free in India; suitable for NRIs who want to invest in India and repatriate easily. NRO (Non-Resident Ordinary) account: holds India-sourced income (rent from Indian property, dividends, pension, business income); repatriation limited to USD 1 million per financial year subject to CA certificate; interest is taxable in India at 30% plus surcharge (TDS deducted at source); suitable for managing income generated within India. Key rule: all foreign earnings brought to India must go into NRE account (or FCNR for foreign currency deposits); income earned within India goes into NRO. NRIs can invest in Indian mutual funds, real estate, PPF (if started before becoming NRI), and stock markets through either NRE or NRO accounts.

NRIs can invest in most Indian mutual funds (with some restrictions based on country of residence). Process: (1) Complete India KYC with Indian broker or AMC — in-person video KYC may be required; (2) Use NRE or NRO account for investment — NRE account investments are fully repatriable; NRO-funded investments repatriation limited to USD 1M/year; (3) Country restrictions: NRIs based in USA and Canada face restrictions — many AMCs have suspended US/Canada-based NRI mutual fund investments due to FATCA compliance complexity; check with specific AMC before investing; (4) SIP: set up SIP from NRE or NRO account via Net banking; (5) Tax: equity fund LTCG taxed at 12.5% (above Rs 1.25L/year); STCG at 20%; TDS on equity fund gains at 15% (short-term) and 10% (long-term) — file ITR to claim refund if TDS exceeds liability; debt fund gains taxed at slab rate. NRE account-funded investments: interest, dividends, and capital gains are fully repatriable; no separate RBI permission needed for repatriation.

NRIs can purchase residential and commercial property in India freely under FEMA (Foreign Exchange Management Act). Key rules: (1) No RBI permission required for purchase of residential/commercial property by NRI; (2) Agricultural land, plantation property, and farmhouse purchase by NRI requires RBI approval — generally restricted; (3) Payment must be made through NRE/NRO account or inward remittance from abroad — direct foreign currency payment is not permitted; (4) Rental income from Indian property is deposited in NRO account; TDS is deducted by tenant at 30%; (5) Property sale proceeds: if purchased via NRE account funds, capital gains (LTCG/STCG) can be repatriated after TDS (after obtaining CA certificate); if via NRO funds, subject to USD 1M/year repatriation limit; (6) Tax: same as resident Indians — LTCG at 20% with indexation (held 24+ months); STCG at slab rate; TDS at 20% (LTCG) or 30% (STCG) deducted by buyer; (7) Home loan: NRIs can take home loans from Indian banks at standard rates; repayment from NRE or NRO account.

NRI tax status in India depends on residential status under Income Tax Act: non-resident Indian pays tax only on India-sourced income (income received in India, income deemed to accrue in India). India-sourced income for NRIs: rental income from Indian property; business income from India; capital gains on Indian assets; interest on NRO account; dividends from Indian companies. NOT taxable in India for NRIs: salary earned abroad; interest on NRE accounts; income from business conducted entirely outside India; foreign-currency deposits (FCNR). Tax rates for NRIs: flat rate approach available — NRI can opt for flat 20-30% tax on specified incomes without deductions (simpler ITR); alternatively can apply normal slab rates with available deductions. Double Tax Avoidance Agreement (DTAA): India has DTAA with 90+ countries — prevents paying tax on same income in both India and the foreign country; claim relief under DTAA when filing Indian ITR. NRI must file Indian ITR if Indian income exceeds Rs 2.5 lakh in a financial year.

Repatriation rules determine how much NRIs can take their India money back abroad: NRE account balance: fully repatriable without limit; no RBI permission; any amount can be transferred back; interest is also fully repatriable; NRO account: repatriation limited to USD 1 million per financial year; requires Form 15CA and CA certificate (Form 15CB) certifying taxes have been paid; property sale proceeds: NRI can repatriate up to the original foreign currency cost of property purchased from NRE funds; additional amounts subject to NRO limits; capital gains from property sale: deduct TDS; balance repatriable subject to limits and CA certification. FCNR (Foreign Currency Non-Resident) deposits: 100% repatriable; principal and interest in the same foreign currency; ideal for NRIs who want to park foreign currency in India with guaranteed return. Common mistake: mixing NRE and NRO funds — keep accounts strictly separate; co-mingling creates repatriation complexity.

NRIs cannot open new PPF accounts — only resident Indians can open PPF. However, if you opened PPF as a resident Indian and subsequently became an NRI: you can continue contributing to the existing PPF account until its maturity (15 years from account opening); interest continues to accrue tax-free; you cannot extend the PPF beyond the original 15-year maturity after becoming NRI; on maturity, the balance can be repatriated through NRO account. NRIs often have existing PPF accounts opened before migrating — these are worth maintaining until maturity as the guaranteed 7.1% EEE returns compound tax-free even for NRIs. After PPF matures for an NRI: withdraw entirely; do not extend (NRIs cannot extend PPF); invest the proceeds through NRE/NRO account in Indian mutual funds or foreign investments.