Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
How an NRI invests
An NRI can buy Indian listed shares through a broking and demat account linked to an NRE (repatriable) or NRO (non-repatriable) bank account. Historically this needed a Portfolio Investment Scheme (PIS) account; the rules have eased, and a non-PIS route is now common. Intraday and derivative trading are restricted, so NRIs typically invest on a delivery basis.
How the gains are taxed
On listed equity, gains follow the same rates as for residents: short-term (held up to 12 months) at 20%, and long-term at 12.5% on the amount above ₹1.25 lakh a year. The crucial difference is that, for an NRI, TDS is deducted on these gains, which a resident does not face. Confirm current rates per the Finance Act.
A worked example
Example: you invest through an NRE account, sell shares after two years with a ₹2 lakh gain — long-term tax applies on ₹75,000 (after the ₹1.25 lakh shield) at 12.5%, with TDS withheld accordingly. Because you used NRE, both the capital and gains are freely repatriable. A treaty can reduce the TDS. Our NRI tax service can handle the filing.