The Indian economy is the 4th-largest in the world as of 2025. With such a strong economy, it's no surprise that NRIs are attracted to invest in India. The reasons for this can be numerous, such as currency value, portfolio diversification, better interest rates, and more.
However, every NRI investment in India is governed by the RBI, and hence, understanding the RBI rules for NRI investments is crucial.
In this blog, we will discuss the RBI rules governing NRIs' investments in India, including how these rules apply to NRIs, the benefits of these regulations, and the risks and limitation measures NRIs must consider.
Key Takeaways
- The RBI has simplified the PIS for NRIs. You need a single NRE PIS-enabled account for both repatriable and non-repatriable investments.
- As per RBI rules for property investments, NRIs can now repatriate up to $2 million in sale proceeds annually without requiring RBI approval.
- In case of non-compliance with any RBI rule for any investment category, immediate action is to be taken. Regarding the action, your account may be frozen, and an RBI audit may be imposed.
- RBI rules differ across investment categories; hence, before making any investment, NRIs must be aware of these rules. Additionally, stay up to date, as the rules are sometimes subject to change each year.
Myth 1: "I am an NRI and I can use my regular NRE account to invest in Indian Stocks."
Reality: NRIs need a separate Portfolio Investment Scheme (PIS) account to invest in the Indian stock market. In other words, to trade in equity segments, an NRI will need a PIS-enabled NRE account.
Having a PIS-enabled account is mandatory under the FEMA for NRIs regulatory framework. PIS enables RBI to monitor foreign investments in the Indian equity market.
Myth 2: "There are no limits on how much an NRI can invest."
Reality: As per the RBI's regulatory framework, individual NRIs can invest up to 5% of the company's total paid-up capital. Additionally, the aggregated NRI investment is restricted to 10%.
Myth 3: "I can repatriate my entire investment proceeds freely to my country of residence."
Reality: The RBI has clearly stated that NRI investment proceeds depend on their account balances and the source of investments.
Now that we have seen a few common myths, let us look at the RBI rules for NRI investment and why they exist.
What Are The RBI Rules For NRI Investments In the Indian Market
The entire investment framework for RBI serves two purposes: protecting the Indian economy while providing NRIs with genuine investment opportunities.
RBI-Approved Investment Categories NRIs Can Choose From
NRIs can choose from any of the following investment categories to invest in India without a second thought.
Equity Investment (Through PIS-enabled accounts)
- Company shares that are listed on Indian stock exchanges.
- Convertible debentures.
- 5% of any company's paid-up capital.
- The total NRI investment cannot exceed 10%. However, with the approval of the concerned company, the threshold can be raised to 24%.
Fixed Investment Options
- NRE and NRO fixed deposits.
- Treasury bills and government securities.
- PSUs and infrastructure bonds.
- NCDs and corporate bonds.
Mutual Fund Investments
- All the domestic mutual funds, whether repatriable or non-repatriable, on a basis.
- Investments made through NRE accounts for repatriable funds.
- No restrictions on the amount that's been invested.
Alternative Investments
- For the sake of taxation benefits, GIFT City Investments.
- National Pension System (NPS Tier 1 only).
- Infrastructure Debt Funds Bonds.
Savetaxs Tip: It is better to diversify across categories than to put all your money into a single investment type. Don't get infatuated by attractive returns; it's always better to diversify.
How Do RBI Rules For NRIs Work
This is how the RBI regulation framework for NRIs works:
Explaining PIS (Portfolio Investment Scheme)
PIS is precisely like a gateway to the Indian stock market. As an NRI, you cannot sell or buy stocks without a PIS-enabled account.
However, as per the recent 2025 RBI Rule change, NRIs no longer need a separate NRE and NRO PIS account. A single NRE PIS-enabled account handles both your non-repatriable and repatriable investments.
Please note that NRIs' investments in equity & mutual funds require a PIS-enabled account, but, as per recent changes, mutual fund investments can be made without a PIS.
The Investment Process:
- Open a PIS-enabled NRE account with the designated bank branch.
- Link your demat account to your PIS account.
- Place investment orders through a registered and reliable broker.
- All the transactions are routed only via the PIS account.
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RBI Made Repatriation Rules For NRI Investment Simple
The RBI regulates the repatriation rules for NRI investments; the rules are
- NRE Account investment proceeds can be repatriated without any limitation.
- NRO account investment proceeds can be repatriated up to $1 million per financial year.
- FCNR Account Deposits have an unlimited repatriation limit.
Property sale proceeds of up $2 million can be repatriated easily without any prior RBI approval.
In a nutshell, when it comes to repatriation of NRI investment proceeds, the key is the source of funds: money brought in from abroad gets full repatriation rights, whereas Indian income is subject to limits.
Savetaxs Tips: As an NRI, it is better to keep detailed records of your sources of funds. This documentation may be needed during the repatriation process.
The Updated RBI Guidelines For NRI Investment In India
As per the 2025 union budget, some rules have been changed for specific NRI investment categories, while others remain unchanged.
Hence, let us see how the new Union Budget for 2025 has impacted the different investment categories.
Stock Market Investment
For this investment category, the RBI's core regulation for NRIs remains unchanged; however, a few improvements have been made.
As per RBI Rules, This Is What NRIs Can Do:
- Delivery-based trading in the equity shares market.
- Invest in IPOs with your NRE/NRO accounts.
- F&O trading, but only for equity and index.
- Mutual funds and ETFs, but cannot engage in currency or commodity ETFs.
Prohibited Investments For NRIs
- Intraday trading in equity shares.
- NRI investor cannot invest in segments such as atomic energy, gambling, and railways.
RBI Rules Changes In Real Estate Investments
As per the 2025 RBI Rules Change, this is the investment segment for which the RBI has provided the greatest relief to NRIs.
- The long-term capital gains tax is reduced from 20% to 12.5%.
- Additionally, up to two properties can now be treated as self-occupied properties.
The rest of the rules remain the same.
NRI Fixed Deposits And Banking
The interest rates for NRI fixed deposits have changed significantly; however, a few improvements have been made.
RBI Rules On NRE Fixed Deposits
- The interest remains tax-free in India.
- The funds are easily and entirely repatriable.
- New small deposit withdrawal rules apply.
RBI Rules On NRO Fixed Deposits
- The TDS limit for money transfers from relatives has been increased. The new limit is now Rs 10 lakh annually; previously, it was Rs 7 lakh.
- For example, if your parents in India send you money up to Rs 10 Lakh per year, the amount is TDS-free.
Mutual Fund and Other Investment Schemes
The entire NRI mutual fund game remains the same with just one important exception.
NRI investors from Canada and the US still face restrictions with specific AMCs due to CRS and FATCA compliance requirements. But the exception is that with time, more compliant fund houses are expanding.
DTAA Benefits
DTAA is the best tool for NRIs to optimize their taxes. India had DTAA agreement with more than 90 countries, and the 2025 changes do not impact any of the DTAA benefits.
The Before Vs. After: The RBI Guidelines Change 2025
The following table shows how rules were for NRIs before the Union Budget 2025 implemented the new changes to NRI investment in India, and how they are now.
| Aspect |
Before 2025 |
After 2025 |
Impact for NRIs |
| Long-term capital Gain tax for NRI investor |
20% on property |
12.5% on proeprty |
37.5% tax savings on property sales. |
| Property sale proceeds repartition. |
Complex and needed RBI approval beyond a specific limit. |
Rs 2 million without any prior RBI approval. |
Way easier to repatriate a big chunk of money. |
| Self-occupied properties |
One Property. |
Two properties |
Tax savings on notional rent. |
| Education Loan TCS |
0.5% TCS applicable. |
Has been completely removed. |
No more TCS on education-related expenses. |
| PINS Account |
NRE+NRO PINS needed |
Only NRE PINS required. |
This change has made banking for NRIs a lot simpler. |
Benefits For NRIs Under The Current RBI Rule
By far, you must have understood that every RBI rule for NRI investments is in the best interest of NRIs. The tax efficiency opportunities, flexibility in investments, and new opportunities like GIFT City funds, everything is for a good NRI investment portfolio.
However, we have summarized all the benefits RBI has provided NRIs to avail of under the current set of rules.
Tax Efficiency Opportunities.
2025 updates that help NRIs:
- TCS threshold increased from Rs 7 lakh to Rs 10 lakh.
- No TCS has been imposed on education loan remittances.
- The limit of property repatriation has been doubled to Rs 2 million.
Investment Flexibility
- NRI investors are allowed to trade in futures and options only using an NRO account, on a non-repatriable basis.
- Rights and bonus shares without additional approvals.
- IPO investments with accurate documentation.
New Opportunities:
- GIFT city fund for tax-free USD deposits.
- Enhance mutual fun access.
- Simplified account management.
What Are The Documentation Requirements NRIs Must Do
These are the requirements that the NRIs must fulfill.
- Regular KYC updates
- Source of funds verification.
- Tax compliance certificates for large repatriations.
Non-compliance with any RBI rules and regulations may result in account freezing, RBI audits, and additional penalties.
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The Bottom Line
The RBI regulations are only making it easier for NRIs. Be it the easy PIS account management, the higher TCS threshold, or the increased repatriation limit, each and every rule is in favor of NRIs.
With proper guidance and an immediate action plan, you can invest in India stress-free. For further expert-backed guidance, connect with Savetaxs. Our experts bring in 30 years of combined experience in NRI investments. We will assess your account structure, recommend the right investment categories for your money based on your financial needs, plan your repatriation strategy, and restructure your investments as needed.
Additionally, our experts will assess your investments, restructure them if needed, and help you plan your 2026-27 investments in line with your financial goals and RBI rules.
Hence, connect with us today as we serve our clients 24/7 across all time zones.
Note: This guide is for informational purposes only. The views expressed in this guide are personal and do not constitute the views of Savetaxs. Savetaxs or the author will not be responsible for any direct or indirect loss incurred by the reader for taking any decision based on the information or the contents. It is advisable to consult either a CA, CS, CPA, or a professional tax expert from the Savetaxs team, as they are familiar with the current regulations and help you make accurate decisions and maintain accuracy throughout the whole process.
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