Investments in India for NRIs — Routes & Tax | Savlana Init

International Tax & Estate · Investments

Investments in India — The Route Matters as Much as the Return.

Equity, funds, deposits, property and bonds are all open to non-residents — but each has its own route, its own repatriability and its own tax. Choose the wrapper before the asset.

Non-residents have wide access to Indian investments, but access runs through defined routes rather than open doors. Listed equity is bought under the Portfolio Investment Scheme through a designated bank branch, on either a repatriation or a non-repatriation basis, with the two held in separate accounts and never mixed. Mutual funds are bought outside that scheme, directly with the fund house, again on a repatriation or non-repatriation footing depending on the source of funds. Unlisted shares, limited liability partnership contributions and other direct investments come under the Non-Debt Instruments Rules with their own sectoral caps, pricing rules and reporting.

Some doors are closed. Agricultural land, plantation property and farmhouses cannot be purchased, although they may be inherited. Public Provident Fund, National Savings Certificates and the Sukanya Samriddhi scheme are not open to non-residents; an existing PPF account may generally be run to maturity but cannot be extended. Certain small savings instruments and some cooperative deposits are similarly unavailable. Investing through a route that is not open is not merely ineffective — it is a contravention with a penalty measured against the sum involved.

Tax then differs by wrapper as much as by asset. NRE and FCNR interest is exempt; NRO interest suffers deduction at thirty per cent plus surcharge and cess. Equity and equity-oriented fund gains are taxed under the concessional regime for listed securities with securities transaction tax paid, while debt fund, property and unlisted share gains follow different rules. Deduction at source applies to non-resident redemptions and distributions in a way it does not for residents, which is why an NRI portfolio and a resident portfolio holding identical assets can produce very different net outcomes. We structure the route, the account and the tax position together.

Our India Investment Services

Investment Route Structuring

Selection of the correct route and account for each asset class — Portfolio Investment Scheme, direct, repatriable or non-repatriable — before any money is committed.

PIS Account Set-Up

Coordination with the designated bank branch for Portfolio Investment Scheme permission, demat and trading account linkage and the reporting that follows.

Mutual Fund and Bond Investing

Advice on fund and bond investing outside the Portfolio Investment Scheme, including the KYC and account requirements applicable to non-residents.

Real Estate Advisory

Acquisition, funding and holding of Indian residential and commercial property, including the restrictions and the repatriation position on eventual sale.

Deposit Structuring

Allocation across NRE, NRO and FCNR deposits by reference to tax treatment, currency risk and repatriability rather than headline interest rate.

Direct and Unlisted Investment

Investment in unlisted companies, startups and limited liability partnerships under the Non-Debt Instruments Rules, with pricing, cap and reporting compliance.

Withholding and TDS Management

Management of deduction at source on redemptions, distributions, rent and sale proceeds, including Section 197 certificates where the rate overshoots.

Portfolio Tax Reporting

Annual computation of gains and income across the portfolio, reconciliation to the Annual Information Statement, and reporting in the return.

Our Process

Objective and Status Review

We establish your residential status, repatriation intentions and time horizon, since those decide the wrapper long before the asset selection does.

Route Mapping

Each intended investment is matched to its permitted route and to a repatriable or non-repatriable basis, with prohibited categories ruled out at the start.

Account and Approval Set-Up

Bank, demat, Portfolio Investment Scheme and KYC arrangements are established so that transactions settle without being rejected mid-way.

Execution Support

Funding, pricing, valuation and documentation are handled for each transaction, with the required exchange control filings made within their deadlines.

Annual Reporting

Income and gains are computed, deduction at source is reconciled, the return is filed, and the repatriation position is reviewed each year.

Why It Matters

✓The right wrapper chosen before the asset, not after

✓Repatriable and non-repatriable holdings kept properly separated

✓Prohibited investments identified before money is committed

✓Deduction at source on redemptions managed rather than absorbed

✓Section 197 certificates used where withholding exceeds real liability

✓Exchange control reporting filed with each transaction, not in arrears

✓Portfolio income reconciled to the Annual Information Statement

✓Repatriation planned at entry, so exit is not blocked years later

Frequently Asked Questions

It is the route through which a non-resident buys and sells listed shares and convertible debentures on Indian stock exchanges, operated through a designated branch of an authorised dealer bank. Investment may be on a repatriation basis, funded from NRE or FCNR sources, or on a non-repatriation basis funded from NRO sources. The two must be held under separate accounts and cannot be combined.

Yes, directly with the asset management company on either a repatriation or a non-repatriation basis, and outside the Portfolio Investment Scheme. Some fund houses restrict investors resident in particular jurisdictions, notably the United States and Canada, because of their own registration and reporting obligations. Deduction at source applies on redemption by a non-resident, which is a significant difference from resident treatment.

A non-resident cannot open a new Public Provident Fund account. Where an account was opened while resident and status changed later, it may generally be continued until maturity on the existing terms but not extended beyond it. National Savings Certificates and the Sukanya Samriddhi scheme are similarly closed to non-residents, and this is one of the more common areas where residents-turned-NRIs continue investing without realising the position has changed.

By asset class. Listed equity shares and equity-oriented fund units on which securities transaction tax has been paid attract the concessional long-term and short-term regimes. Other assets — debt funds, unlisted shares, immovable property, gold — follow different rules on holding period and rate. Deduction at source applies to non-residents on most of these transactions, often at rates exceeding the eventual liability.

Residential and commercial property may be purchased; agricultural land, plantation property and farmhouses may not. Where the property was acquired in accordance with the exchange control rules and paid for from foreign currency or NRE or FCNR funds, sale proceeds of up to two residential properties may be repatriated. Otherwise the proceeds fall within the annual remittance limit. Planning this at purchase is far easier than at sale.

It depends on repatriation intent rather than yield. NRE-funded investment is held on a repatriation basis and both the capital and the returns can be sent abroad freely. NRO-funded investment is non-repatriable except within the annual limit. Where funds will eventually be needed abroad, the extra care at entry is worth far more than any difference in return.

Planning to invest in India as a non-resident?

Tell us what you want to hold and whether the money needs to come back out. We will select the route, set up the accounts, and keep the reporting and tax position clean.