Answers before you invest.

Yes. NRIs can purchase shares of an Indian company on a stock exchange in India under the Portfolio Investment Scheme, on a repatriation and/or non-repatriation basis. A PIO is treated as an NRI and all benefits and conditions apply accordingly.

Secondary-market equity investments by NRIs/PIOs are monitored under the Portfolio Investment Scheme (PIS) by the Reserve Bank of India through Authorised Dealer banks. For repatriable (NRE) investments, an NRI can approach an Authorised Dealer bank (such as Axis Bank Ltd) to open a savings and PIS account; upper limits apply from time to time.

For non-repatriable (NRO) investments, an NRI can open bank accounts with an Authorised Dealer bank; no upper limits apply.

Yes, following amendments by the Reserve Bank of India in February 2016.

No. There can be only one PIS account for repatriable funds.

Sale proceeds, dividends etc. are credited (net of taxes) to the NRE account for investments made on a repatriation basis, and to the NRO account for investments on a non-repatriation basis.

Investments made through a Non-Resident External (NRE) rupee account, and their proceeds, are on a repatriation basis and freely repatriable. Investments made through a Non-Resident Ordinary (NRO) rupee account are on a non-repatriation basis.

Funds from an NRO account can be repatriated if the amount does not exceed USD 1 million per financial year, subject to an undertaking and a certificate by a Chartered Accountant in the prescribed form.

For purchases on a repatriation basis, payment is made by inward remittance of foreign exchange through normal banking channels or from funds held in an NRE account. For non-repatriation purchases, NRIs may also use funds in their NRO account.

Apart from the repatriation conditions above, there is practically no difference as far as investments are concerned. However, interest income earned on NRO accounts attracts tax deduction at source.

From NRE: freely permitted, subject to applicable taxes.

From NRO: permitted within an overall ceiling of USD 1 million (or equivalent) per financial year (April–March), subject to applicable taxes. Forms 15CA (online) and 15CB (Chartered Accountant certificate) must be submitted to your branch.

Actual tax liability may be lower than the TDS deducted, for example, income up to the basic exemption limit, income that is not taxable but on which tax was deducted, capital losses not set off at the time of deduction, or lower rates under a Double Taxation Avoidance Agreement. Filing a return allows excess tax to be claimed as a refund, and allows capital losses to be carried forward against future gains.

Equity shares held for less than 365 days are short-term capital assets; shares held for more than 365 days qualify as long-term capital assets.

Under Budget 2024, long-term capital gains on shares and equity-oriented mutual funds are taxed at 12.5% (plus applicable surcharge and cess) on gains exceeding ₹1.25 lakh in a financial year.

Gains on shares held for less than 365 days and sold at a profit are subject to short-term capital gains tax at 20%.

Dividend income from shares in Indian companies is subject to tax deduction at source at 10% for resident individuals where total dividend income exceeds ₹10,000. Please consult your tax adviser for your specific situation.