If you’re an NRI trying to invest back home, you’ve probably run into a wall of unfamiliar acronyms — NRE, NRO, PIS, Non-PIS — often explained inconsistently across different broker websites.
Worse, much of the content on this topic is genuinely outdated, since the RBI has quietly simplified several rules over the last couple of years, and Budget 2026 added significant changes on top of that.
This guide clears up the confusion properly —what PIS actually is, when it’s genuinely mandatory (and when it isn’t), how NRE and NRO accounts fit into the picture, and what’s changed most recently. By the end, you’ll know exactly which route fits how you actually want to invest.
Why NRIs Need a Different Investment Route
Resident Indians can walk into any broker, complete standard KYC, and start investing within a day.
For NRIs, the process involves an extra layer — because investments made from outside India by non-residents fall under FEMA (Foreign Exchange Management Act) and RBI oversight, designed specifically to track and regulate foreign ownership limits in Indian companies and control how money moves in and out of the country.
This isn’t bureaucracy for its own sake — RBI needs visibility into how much of a listed Indian company is owned by non-residents, since regulatory caps apply at both an individual and aggregate level.
Understanding this context makes the PIS/Non-PIS distinction much easier to follow.
NRE vs NRO Accounts — The Foundation You Need First
Before anything else, every NRI investor needs to understand the two account types that everything else in this guide builds on:
NRE (Non-Resident External) Account: Holds foreign income you’ve earned abroad and remitted to India. Funds here are fully repatriable — you can move both the principal and any returns back to your country of residence without restriction.
NRO (Non-Resident Ordinary) Account: Holds income earned within India (rent, dividends, interest, or sale proceeds of Indian assets). Funds here are repatriable only up to USD 1 million per financial year, subject to proper certification (Form 15CA/15CB) and applicable tax clearance.
Every NRI investment route ultimately traces back to one of these two accounts — which one you fund your investments through determines your repatriation rights from day one, so it’s worth getting this decision right before you start investing, not after.
What is PIS and When is It Actually Mandatory?
PIS (Portfolio Investment Scheme) is an RBI framework that allows NRIs to buy and sell shares and convertible debentures listed on Indian stock exchanges, while ensuring every such transaction is reported to the RBI — this reporting is precisely what allows PIS-route investments to remain fully repatriable.
Here’s the part that clears up most of the confusion: PIS is mandatory only for one specific activity — repatriable, delivery-based equity trading (buying and holding listed shares) through your NRE account. It is genuinely not required for:
- Mutual fund investments
- IPO applications
- Government bonds
- Non-repatriable investments made through an NRO account
If you’ve read conflicting information suggesting PIS applies to everything an NRI invests in, or that it’s been scrapped entirely — both are inaccurate. PIS remains fully active for its specific, narrow purpose: repatriable secondary-market equity trading.
A genuine simplification arrived in 2025: NRIs no longer need separate NRE PIS and NRO PIS accounts. A single NRE PIS account now covers both repatriable and non-repatriable investment routing.
If you still hold an older, separate NRO PIS account from before this change, it’s worth confirming its current status with your bank, since these have generally been re-designated as standard NRO accounts.
Every trade routed through PIS is automatically reported to RBI by your designated bank, and RBI continuously monitors aggregate NRI shareholding in every listed company against the regulatory caps — a process this reporting mechanism exists specifically to support.
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What is a Non-PIS Account? What Can You Invest In Without PIS?
A Non-PIS route simply means investing outside the RBI’s Portfolio Investment Scheme — typically through your NRO account, on a non-repatriable basis.
What you can access without PIS:
| Investment Type | PIS Required? |
| Mutual Funds | No |
| IPO Applications | No |
| Government Bonds | No |
| Non-repatriable equity trading (via NRO) | No |
| F&O (Futures & Options) trading | No – PIS route does not cover F&O at all |
| Repatriable delivery-based equity trading (via NRE) | Yes – PIS mandatory |
An important, often-missed detail: the PIS route covers only delivery-based equity trading—it does not extend to Futures & Options trading at all.
NRIs interested in F&O typically trade through their NRO account on a non-repatriable basis instead, since F&O sits entirely outside PIS’s scope regardless of which account you use.
In 2026, the Non-PIS (NRO) route has become the more commonly chosen option for many NRIs, largely due to its simplicity — lower bank charges, no RBI transaction-level reporting requirement, and broader access (including F&O), provided you’re comfortable with the USD 1 million annual repatriation cap that applies to NRO funds.
PIS vs Non-PIS — Side-by-Side Comparison
| Parameter | PIS (via NRE Account) | Non-PIS (via NRO Account) |
| Repatriability | Fully repatriable | Repatriable up to USD 1 million/year, with certification |
| RBI Reporting | Every transaction reported by the bank | No transaction-level RBI reporting required |
| Applicable To | Repatriable delivery-based equity trading only | Mutual funds, IPOs, bonds, non-repatriable equity, F&O |
| F&O Trading | Not covered | Available |
| Charges | Generally higher (PIS permission + transaction charges) | Generally lower |
| Complexity | Higher – requires PIS permission letter from RBI-designated bank | Lower – simpler onboarding |
| Best Suited For | NRIs prioritising ability to move investment gains abroad freely | NRIs comfortable reinvesting in India or within USD 1M cap |
Budget 2026 Changes — Higher Limits & a New Direct Equity Route
Budget 2026, announced on February 1, 2026, introduced two genuinely significant changes for NRI investors:
- Individual investment limit raised: The individual investment limit for Persons Resident Outside India (PROI), including NRIs, in a single listed Indian company was doubled from 5% to 10% of that company’s paid-up capital.
- Aggregate limit raised: The aggregate limit across all such non-resident investors combined in a single company was raised from 10% to 24%.
- A new direct equity investment pathway was introduced for overseas individuals — NRIs, OCIs, and foreign nationals — under the PIS framework, intended to simplify direct access further.
Separately, the RBI’s Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Amendment) Regulations, 2026 expanded flexibility around where sale proceeds can be credited — previously restricted specifically to the NRE PIS account; sale proceeds of equity instruments can now be deposited into any designated rupee account, giving NRIs more flexibility in how they manage post-sale funds.
Together, these changes reflect a broader, ongoing trend: RBI and the government have been steadily simplifying and liberalising the NRI investment framework over the past two years, moving away from the more rigid, narrowly-defined rules that made this area confusing for so long.
How to Open an NRI Trading & Demat Account
The process closely mirrors opening a demat account as a resident Indian, with a few NRI-specific additions:
1. Choose a broker that supports NRI accounts — not all brokers do; check our broker comparison guide for which major brokers currently offer NRI account support.
2. Open an NRE and/or NRO bank account with a bank authorised to handle NRI banking, if you don’t already have one.
3. Apply for PIS permission from an RBI-designated bank if you intend to trade repatriable equity via your NRE account — this is a separate approval from simply opening the bank account itself.
4. Complete NRI-specific KYC, which typically includes your passport, visa/OCI card, overseas address proof, and PIS permission letter (if applicable).
5. Open your NRI demat and trading account with your chosen broker, linking it to your NRE and/or NRO account as appropriate.
6. Complete In-Person Verification (IPV), usually via video call, since physical verification isn’t practical for an overseas applicant.
7. Start investing — through PIS (repatriable equity), or Non-PIS (mutual funds, IPOs, bonds, non-repatriable equity, F&O), based on your chosen route.
Taxation for NRI Investors
NRI taxation on Indian investments follows broadly the same capital gains structure as resident Indians — the same STCG and LTCG rates apply — but with a few NRI-specific differences:
TDS is deducted upfront on most NRI investment transactions, often at a higher rate than the final applicable tax, so many NRIs file a return to claim a refund of excess TDS.
DTAA (Double Taxation Avoidance Agreement) benefits may apply if your country of residence has a tax treaty with India, potentially reducing the effective tax rate or avoiding double taxation on the same income — this requires submitting a Tax Residency Certificate (TRC) and other documentation to claim.
The underlying capital gains rates themselves are the same as those applicable to resident Indians — see our detailed STCG and LTCG tax guide for the exact current rates.
Given the added complexity of TDS and DTAA claims, most NRIs benefit meaningfully from working with a Chartered Accountant experienced in NRI taxation, rather than navigating this independently.
Restrictions & Country-Specific Exclusions
A few restrictions apply specifically based on your country of residence:
- Residents of Pakistan and Bangladesh generally require prior specific approval from RBI before investing in Indian securities.
- Residents of Nepal and Bhutan may face different or additional restrictions compared to NRIs elsewhere.
- US and Canada-based NRIs face specific restrictions on investing in certain Indian mutual funds, due to the compliance burden that FATCA (for the US) and similar reporting requirements place on Indian fund houses — many AMCs simply choose not to accept fresh investments from NRIs based in these countries as a result, though existing investments are typically unaffected.
If you fall into any of these categories, it’s worth confirming your specific eligibility with your bank and broker before assuming a standard NRI investment process applies to you.
Which Route Should You Choose?
- You want the flexibility to move investment returns back to your country of residence freely, and you’re focused on delivery-based equity investing: The PIS route via your NRE account is built exactly for this, despite its slightly higher complexity and cost.
- You’re comfortable reinvesting in India, or working within the USD 1 million annual NRO repatriation cap, and want access to F&O, mutual funds, or IPOs: The Non-PIS route via your NRO account is simpler, cheaper, and increasingly the more popular choice among NRIs in 2026.
- You want exposure to India’s growth without picking individual stocks: Mutual funds via the Non-PIS route are among the simplest entry points — no PIS permission needed at all.
- You’re a sophisticated investor with significant capital: Consider whether AIF or PMS structures (both generally accessible to NRIs, subject to FEMA compliance) might suit your goals better than direct equity investing alone.
Many NRIs ultimately use a combination — an NRE PIS account for direct equity positions they may want to fully repatriate, alongside an NRO Non-PIS account for mutual funds, IPOs, and other investments where the USD 1 million cap isn’t a practical constraint.
Frequently Asked Questions
Is a PIS account mandatory for all NRI investments in India?
No. PIS is mandatory only for repatriable, delivery-based equity trading through your NRE account. Mutual funds, IPO applications, government bonds, non-repatriable equity trading, and F&O trading all fall outside PIS’s scope.
Can NRIs trade F&O in the Indian stock market?
Yes, but not through the PIS route—F&O trading is generally done through the NRO account on a non-repatriable, non-PIS basis, since PIS covers delivery-based equity only.
Do I need separate PIS accounts for repatriable and non-repatriable investments?
No, not since the 2025 simplification. A single NRE PIS account now covers both repatriable and non-repatriable investment routing, replacing the older system that required separate NRE PIS and NRO PIS accounts.
What changed for NRIs in Budget 2026?
The individual investment limit for NRIs (and other non-resident investors) in a single listed Indian company doubled from 5% to 10% of paid-up capital, and the aggregate limit across all such investors rose from 10% to 24%. A new direct equity investment pathway was also introduced for overseas individuals.
Can I invest in Indian mutual funds as an NRI based in the US or Canada?
Some Indian mutual fund houses restrict fresh investments from US/Canada-based NRIs due to FATCA-related compliance requirements, though this varies by fund house — check directly with your chosen AMC or mutual fund distributor before assuming access.
Which is cheaper — PIS or Non-PIS?
Non-PIS is generally cheaper, since it avoids PIS-specific permission and transaction-reporting charges. This is a major reason many NRIs now prefer the Non-PIS (NRO) route for investments where full repatriability isn’t a priority.
Do NRIs pay TDS on stock market gains in India?
Yes, TDS is typically deducted upfront on NRI investment transactions, often at a rate higher than the final applicable tax liability — many NRIs file an Indian income tax return specifically to claim a refund of the excess TDS deducted.
Final Thoughts
The PIS vs Non-PIS decision isn’t really about which one is “better” — it’s about matching the right account structure to how you actually want your money to move. If freely repatriating your Indian equity investment gains matters most to you, the PIS route via your NRE account remains the right (if slightly more involved) tool for that job.
If you’re comfortable reinvesting in India or staying within the NRO account’s repatriation cap, the simpler and increasingly popular Non-PIS route likely serves you better — especially now that it also covers F&O access that PIS never included.
Whichever route you choose, make sure your NRI demat and trading account is set up with a broker that genuinely supports NRI clients, and keep an eye on RBI’s continuing simplification of this framework — 2025 and 2026 alone brought several meaningful changes, and more are likely as India’s capital markets continue opening up to overseas investors.
Disclaimer: This article is for general educational purposes and reflects RBI/FEMA rules and Budget 2026 changes as understood at the time of writing. Regulations affecting NRIs can vary by country of residence and change periodically — always confirm current requirements with your bank and broker, and consult a professional for guidance specific to your situation.