Can NRIs Invest in NCDs in India?

Yes, NRIs can invest in non-convertible debentures (NCDs) in India. However, this depends on whether the issuing company permits NRI investments. Typically, investments are made through NRE or NRO bank accounts and are subject to specific holding periods and applicable taxation rules.

Investment & Financial Planning

What Are NCDs (Non-Convertible Debentures): Eligibility, Benefits & Taxation

By Sanskriti Saxena |Last Updated: February 3, 2026

What Are NCDs (Non-Convertible Debentures): Eligibility, Benefits & Taxation

For Non-Resident Indians (NRIs), non-convertible debentures (NCDs) are a reliable, long-term investment option. According to the credit risk of the issuing company, these offer fixed returns to investors. It is a perfect options for individuals looking beyond NRI mutual funds and stocks. Along with Indian residents, subject to FEMA and issue-specific terms, NRIs and people of Indian descent are also eligible to invest in NCDs.

Further, want to know more about non-convertible debentures? Read the blog and get all the information about the NRI investment in NCDs, eligibility rules, and tax implications.

Sanskriti Saxena(Tax Expert)

Miss Sanskriti is a certified Tax Expert. She has her expertise in US GAAP, Taxation, SOX, IRS, Accounting, and Auditing standards. Miss Saxena is an intellectual blend of a high-end auditor, tax consultant, and accountant

Frequently Asked Questions

Yes, income earned from NCDs is taxable in India for NRIs. Tax applies to both interest income and capital gains arising from the sale of NCDs. Generally, tax deducted at source (TDS) on interest is levied at 20%, and long-term capital gains are taxed at 20% without indexation benefits, subject to applicable tax laws.

The best investment scheme for an NRI depends on individual financial goals, risk appetite, and investment horizon. Popular options include NRE and NRO fixed deposits, Public Provident Fund (PPF), equity-oriented and debt mutual funds, direct equity investments through PIS, and real estate for long-term asset creation.

Yes, NRIs are permitted to invest in Indian mutual funds in compliance with FEMA regulations. Investments must be funded through NRE or NRO accounts, and completion of KYC is mandatory. NRIs can invest in various fund categories, including equity, debt, and ELSS mutual funds.

Yes, NRIs can invest in market-linked debentures and other securities, such as debentures and shares, through the Portfolio Investment Scheme (PIS). Investments must be routed via designated NRE or NRO bank accounts and executed through registered brokers on recognized Indian stock exchanges.

Yes, NRIs can invest in the Indian bond market through approved routes such as the Fully Accessible Route (FAR) for government securities, non-convertible debentures (NCDs), public sector undertaking (PSU) bonds, and other eligible fixed-income instruments. These investments can be accessed via authorized brokers or platforms like RBI Retail Direct, offering relatively stable returns.

What Are NCDs (Non-Convertible Debentures): Eligibility, Benefits & Taxation

Frequently Asked Questions

Is Income From NCDs Taxable in India for an NRI?

Which Is the Best Investment Scheme for an NRI?

Are NRIs Allowed to Invest in Mutual Funds in India?

Can NRIs Invest in Market-Linked Debentures?

Can an NRI Invest in the Indian Bond Market?

What Are NCDs (Non-Convertible Debentures): Eligibility, Benefits & Taxation

Frequently Asked Questions

Is Income From NCDs Taxable in India for an NRI?

Which Is the Best Investment Scheme for an NRI?

Are NRIs Allowed to Invest in Mutual Funds in India?

Can NRIs Invest in Market-Linked Debentures?

Can an NRI Invest in the Indian Bond Market?