PIS Essentials for NRIs: Trading Access, Limits & Taxation Explained

For Non-Resident Indians (NRIs), investing in the Indian stock market can be one of the smartest ways to stay connected to India’s economic growth. But before you begin buying or selling shares, there’s one crucial piece of the puzzle you must understand — the Portfolio Investment Scheme (PIS).

While the term may sound technical, it’s actually a simple framework designed to help NRIs invest in Indian equities in a regulated and compliant way. In this blog, let’s break down the essentials — trading rules, purchase limits, tax impact, and how you can start your investing journey hassle-free.

What Is PIS and Why Do NRIs Need It?

The Portfolio Investment Scheme (PIS) is a system introduced by the Reserve Bank of India (RBI) that allows NRIs and OCIs to invest in Indian stocks on a repatriation or non-repatriation basis through the stock exchange.

Under PIS, all buy/sell transactions are reported to the RBI to maintain transparency and ensure foreign investments are monitored properly.

In simple terms, PIS acts as a bridge between your NRE/NRO bank account, your trading account, and the Indian stock market.

How NRIs Get Trading Access Through PIS

Here’s how an NRI gains access to trade in Indian equities:

1. Open NRE/NRO Bank Account

You need at least one of these:

• NRE Account – For investing with full repatriation of funds
• NRO Account – For investing with non-repatriable funds

2. Apply for a PIS Permission Letter

Your bank applies to RBI on your behalf and issues a PIS letter. This is mandatory for equity trading in the secondary market.

3. Open a Demat & Trading Account with an Indian Stockbroker

Choose a SEBI-registered broker such as JM Financial Services, known for its strong NRI desk, assisted onboarding, and robust compliance support.

4. Start Investing

Your buy/sell trades will automatically be reported to RBI by your bank through the PIS system.

Investment Limits for NRIs Under PIS

NRIs can invest in most listed Indian companies, but there are a few restrictions:

1. Individual NRI Investment Limit

• A single NRI can invest up to 5% of the paid-up capital of any listed Indian company.

2. Total NRI Investment Limit

• Combined NRI investment (including OCIs) is capped at 10% of the company’s paid-up capital.
• This limit may be increased to 24% if the company passes a board resolution.

3. No Intraday or Short Selling

Under PIS, NRIs cannot:

• Do intraday trading
• Engage in short selling
• Trade in currency derivatives

4. Allowed Instruments

NRIs can invest in:

• Equity shares
• IPOs
• Mutual funds
• ETFs
• Bonds
• NCDs

They cannot invest in:

• Agricultural or plantation companies
• Certain restricted sectors

Tax Implications for NRIs Under PIS

Taxes apply differently depending on whether you invest through the NRE (repatriable) or NRO (non-repatriable) route.

1. Capital Gains Tax

• Short-Term Capital Gains (STCG @ 15%)
  If you sell shares within 12 months.
• Long-Term Capital Gains (LTCG @ 10%)
  Applicable if gains exceed ₹1 lakh in a financial year.

2. Tax Deduction at Source (TDS)

Unlike resident investors, NRIs face mandatory TDS, regardless of gain amount:

• STCG – 15% TDS
• LTCG – 10% TDS

Your broker or PIS bank deducts this automatically.

3. Dividend Tax

Dividend income is taxable at the applicable slab rate for NRIs. TDS of 20% is deducted on dividends.

4. Repatriation Rules

• Investments via NRE PIS are fully repatriable
• Investments via NRO PIS can be repatriated within set RBI limits

Why NRIs Prefer JM Financial Services for PIS Investing?

JM Financial Services supports NRIs with:

• Simplified digital onboarding
• Assistance with PIS documentation
• Dedicated NRI support desk
• Research-backed insights
• Strong risk and compliance framework

For NRIs looking to build or grow their India-focused portfolio, JM Financial provides a trusted and efficient investing experience.

FAQs

1. What is PIS for NRI investors?

PIS (Portfolio Investment Scheme) allows NRIs to invest in Indian listed companies while ensuring RBI-monitored compliance.

2. Is PIS mandatory for NRIs?

Yes, NRIs need a PIS permission letter to buy or sell shares on the secondary market.

3. Can NRIs do intraday trading?

No, intraday trading and short selling are not permitted under PIS.

4. How is tax calculated for NRIs trading through PIS?

STCG is taxed at 15%, LTCG at 10%, and TDS is deducted on all gains.

5. Can NRIs invest without PIS?

For equities—no. But for mutual funds, NCDs, bonds, and ETFs—yes, PIS is not required.

6. Which is better — NRE PIS or NRO PIS?

Use NRE PIS for full repatriability and NRO PIS for income earned in India.