How NRIs Buy Indian Stocks: PIS vs Non-PIS, the Repatriation Fork, and the June 2026 Rule Change

An NRI in London opens her laptop, logs into the discount broker she used before she emigrated, and tries to buy 200 shares of an Indian bank. The order bounces. Her resident account is dead, the broker wants her to re-open under the NRI category, and buried in the form is a question she did not expect: repatriable or non-repatriable. That single choice, made before she owns a single share, decides whether she can ever send the proceeds back to the UK, which bank account she needs, whether a designated bank has to track her trades for the RBI, and how much her broker charges per order.

That fork is the whole subject of this guide. And the timing matters, because on June 5, 2026 the RBI rewrote part of the framework underneath it, doubling the ownership ceilings and opening the route to all overseas individuals. Buying Indian shares as an NRI is not hard, but it runs on different rails from a resident account, and picking the wrong rail is expensive to undo.

The 30-second answer: NRIs buy listed Indian shares under the Portfolio Investment Scheme (PIS), governed by the RBI under FEMA. The choice that matters is repatriable versus not. The NRE-PIS route is repatriable: one designated bank tracks every trade against foreign-ownership caps, proceeds flow abroad freely, and brokers charge more for it. The NRO non-PIS route is non-repatriable and, since the RBI scrapped NRO (PIS) in 2018, needs no PIS permission, so it is cheaper and behaves like a resident account. Both are delivery-only: no intraday, no short selling. Gains run through Section 115AD: STCG 20%, LTCG 12.5% above Rs 1.25 lakh for transfers on or after July 23, 2024, with TDS cut at source by the bank (PIS) or broker (non-PIS). On June 5, 2026 the RBI raised the individual cap to 10% and the aggregate to 24%.

If part of your reason for buying Indian stocks is to manage your overall Indian tax position, read this alongside the NRI ITR filing guide for AY 2026-27, because the TDS your bank or broker cuts on every sale is only reconciled when you file.

The decision is repatriable or not, and almost nobody frames it that way

Skip past the acronyms. Before you compare brokers or worry about caps, you are really answering one question: do you want to be able to send this money back out of India later? Your answer picks the account, and the account picks everything else.

If the money came from abroad and you may want it back abroad, you want the repatriable route, which runs on an NRE account with PIS permission. You fund purchases from money you remitted in as foreign currency, and because it came in clean, the RBI lets it and its gains go back out freely, with no annual cap. The price of that freedom is that this is exactly the activity the RBI polices against foreign-ownership ceilings, so it must route through one designated bank branch that reports every buy and sell. That is what PIS is. Choose NRE-PIS if there is any real chance you will want the proceeds in your country of residence.

If the money is India-sourced, or you are content to keep it working in India, you want the non-repatriable route, which runs on a plain NRO account. The quiet but important fact most older guides bury: in 2018 the RBI abolished the separate "NRO (PIS)" account and let existing ones be redesignated as ordinary NRO accounts. So PIS permission is not required on NRO at all. You open an NRO savings account, link a demat and trading account, and buy delivery-based shares much like a resident, with no designated bank tracking you and no per-trade RBI reporting fee. Proceeds are not stuck in India forever; they fall under the general NRO repatriation limit of USD 1 million a financial year, which is plenty for most people.

In 2026 the practical default has shifted to NRO non-PIS, and the reason is cost, which I will put numbers on shortly. PIS is no longer the path of least resistance; it is the path you take deliberately when repatriability is worth paying for. You can run both, and many NRIs do: an NRE-PIS account for money brought from abroad that they want to keep portable, and an NRO account for rent, dividends and other India-sourced cash they are happy to leave invested.

Why the scheme exists, and why that explains the annoying parts

The Portfolio Investment Scheme, written PIS and historically called PINS by some banks, is the channel through which the RBI permits non-residents to buy and sell shares and convertible debentures of listed Indian companies on a recognised exchange. It sits inside the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 and applies to NRIs and OCIs, and as of June 2026, to all individual Persons Resident Outside India.

The reason it exists is ownership control. India caps how much of any single listed company non-residents can collectively own, and to enforce those caps in real time the RBI needs a live view of every repatriable secondary-market trade. So it requires those trades to route through a single designated bank that reports them. That one design choice explains the parts of the scheme that feel arbitrary: why you can use only one PIS bank, why trades must be delivery-based, why a buy order on an ordinary-looking company sometimes refuses to go through, and why the bank, not you, is the one watching the ceiling. Once you see PIS as a monitoring system rather than a brokerage feature, the rules stop feeling random.

The three accounts, and the broker numbers that decide PIS versus non-PIS

To buy a single share you need three linked pieces, which banks bundle and market as a "3-in-1" account when their broking arm provides all three.

The first is the bank account: NRE if you are going repatriable with PIS, NRO for the non-repatriable route. On the NRE-PIS route you take PIS permission from one designated branch, and that branch becomes the reporting node for all your repatriable equity. The second is the demat account, which holds shares in dematerialised form with a depository participant linked to NSDL or CDSL, tagged repatriable or non-repatriable to match the bank account funding it. Keep separate demat accounts for the two routes so each holding's repatriation status stays clean. The third is the trading account, opened with a SEBI-registered broker under the NRI category and linked to both the bank and demat so money, shares and orders move together.

Now the part that actually decides the route for most people, because it is rarely laid out in money. PIS is meaningfully more expensive than non-PIS, on two layers. First, the designated bank charges for PIS itself: a one-time setup fee of roughly Rs 1,000, an annual maintenance charge in the Rs 500 to Rs 1,000 range, and a per-transaction RBI reporting fee of about Rs 100 to Rs 200 on every buy and every sell, separate from brokerage. Second, brokers price PIS orders higher. At Zerodha, equity delivery on a non-PIS NRO account is 0.5% or Rs 50 per order, whichever is lower, while the same delivery trade on a PIS account is 0.5% or Rs 200 per order, whichever is lower, four times the floor, before the bank's reporting fee on top. The bank-led 3-in-1 providers are dearer again: ICICI Direct's NRI brokerage on a Rs 1 lakh delivery buy works out to about Rs 1,250, where Zerodha's PIS order on the same trade is Rs 200. Zerodha does not offer a true 3-in-1, so you pair its trading and demat with an NRE-PIS account at a partner bank such as ICICI, HDFC, Axis, Yes Bank, IDFC First or IndusInd.

The honest reading of those numbers: if you are an active-ish investor placing many orders, the per-trade PIS reporting fee and the higher brokerage compound into real money over a year, and they buy you nothing except repatriability. So pay for PIS when you genuinely need the proceeds to leave India. If the money is staying in India, NRO non-PIS at a discount broker is both simpler and several multiples cheaper per trade. Opening either is more document-heavy than a resident account, expect passport, visa or residence proof, overseas address proof, PAN, and on the PIS route the bank's PIS permission letter, though most banks now do it remotely with attestation. The open an NRE or NRO account from abroad and NRE, NRO and FCNR accounts compared guides cover the banking layer.

What you cannot do: delivery-only, and the lists that block a buy

This is where NRIs who traded actively before emigrating get caught. The framework is built for investment, not speculation, and the restrictions all fall out of that.

NRI equity is delivery-based only on both routes. Every buy must result in shares actually settling into your demat, which kills three things people assume they can do. You cannot do intraday, buying and selling the same scrip the same day, because the shares have to settle first. You cannot short sell, selling shares you do not own, because the scheme will not let you deliver what you do not hold. And BTST, buy today sell tomorrow, is generally blocked because the shares have not reached your demat when you try to sell. All three exist for the same reason: same-day and naked positions would make the RBI's ownership tracking meaningless. Derivatives, futures and options sit under a separate set of conditions and are not part of the equity route discussed here.

There is also a category of shares you simply cannot buy, and the block happens at order entry, which confuses first-time NRI investors. The RBI maintains a ban list of companies where non-resident holding has hit the ceiling, and a caution list for companies approaching it, both published by the exchanges and enforced by your designated bank. Separately, some sectors are off-limits to NRI portfolio investment entirely: chit funds, Nidhi companies, businesses in lottery, gambling or betting, and agricultural or plantation activity in certain forms. So when a buy order on an otherwise ordinary company refuses to go through, it is usually one of these lists doing its job, not a glitch.

The ownership caps, and what June 5, 2026 actually changed

The caps are the entire reason PIS exists, so they are worth getting exactly right, especially because they just moved.

For years the rule was that a single NRI or OCI could hold up to 5% of a listed company's paid-up capital on the PIS route, with all NRIs and OCIs together capped at 10%, raisable to 24% only if the company passed a special resolution. On June 5, 2026, in the monetary policy review, the RBI doubled the individual ceiling to 10% and raised the aggregate ceiling to 24%, with that higher aggregate effectively becoming the default rather than something a company had to vote for. In the same move the RBI extended the simplified PIS facility to all individual Persons Resident Outside India, not just NRIs and OCIs, and signalled a digital onboarding mechanism for PIS accounts and no separate SEBI registration for these positions. The changes run through amendments to the FEMA Non-Debt Instruments Rules.

What this means for you depends entirely on how much you are buying. For a retail NRI putting a few lakh into a large-cap, the company is nowhere near its non-resident ceiling and the higher caps change nothing about your day. Where they bite is on smaller companies that are popular with the diaspora and already crowded with foreign holding: the extra headroom means a scrip that would have hit the old 10% aggregate wall and landed on the ban list can now keep absorbing non-resident money up to 24%. So the change is real but narrow, useful precisely when you are buying near a ceiling and useless otherwise.

The monitoring still works the same way through the two lists. When non-resident holding nears the applicable ceiling, the company goes on the caution list and further purchases need clearance, broadly first-come first-served; when it hits the ceiling, the company moves to the ban list and no further non-resident buying is allowed until holdings fall back. The exchanges publish both, your designated bank enforces them, and a position you size off a stale headline can simply fail to execute. Confirm the live cap and caution-list status with your bank before buying near a ceiling. And note that sector-specific FDI-style limits still override the portfolio caps where they are tighter: banking is the textbook case, where non-resident holding is constrained well below what a 24% portfolio aggregate would suggest. The platform applies whichever limit is lower.

How the gains are taxed, and who cuts the TDS

The PIS framework is RBI and FEMA. The tax is separate, under the Income Tax Act, and for NRIs it runs through Section 115AD, the section governing how specified non-residents are taxed on securities. For transfers of listed equity (where Securities Transaction Tax has been paid) on or after July 23, 2024, short-term gains on shares held 12 months or less are taxed at 20%, and long-term gains on shares held more than 12 months at 12.5% on the amount above Rs 1.25 lakh in the financial year, plus 4% cess and, where your income crosses the thresholds, surcharge capped at 15% on these gains. That July 23, 2024 cut-off is why the date keeps appearing: it replaced the older Rs 1 lakh threshold and 10% rate, so a sale just before and just after it are taxed differently.

The feature that defines NRI equity taxation is that tax is withheld at source before the proceeds reach you, and exactly who withholds depends on your route. On the PIS route the designated bank computes the gain on each sale and deducts TDS before crediting the net to your NRE account. On the NRO non-PIS route the broker does it, computing and deducting before crediting your NRO account. Either way this is unlike a resident, who pays advance tax and self-assesses at filing. The withholding is on the gain rather than the sale value, which is correct in principle, but it routinely overshoots, because the system often does not give you the full Rs 1.25 lakh shield across the year, does not net off your capital losses, and ignores treaty relief. You recover the excess only by filing. For the full treatment of rates, the surcharge cap, the contested Rs 1.25 lakh point and treaty interaction, see the dedicated capital gains tax for NRIs on shares and mutual funds guide, and for getting overdeducted TDS back, TDS for NRIs and refunds.

Put real numbers on a repatriable sale. Priya, an NRI in Dubai, uses her NRE-PIS account. In May 2025 she buys 1,000 shares at Rs 800, a cost of Rs 8,00,000 debited from her NRE account through her designated bank. In February 2026, after about nine months, she sells all 1,000 at Rs 1,100, a sale value of Rs 11,00,000 and a gain of Rs 3,00,000. Because she held under 12 months, this is short-term, taxed at 20% under 115AD: base tax Rs 60,000, plus 4% cess of Rs 2,400, total Rs 62,400 (assume no surcharge). Her designated bank deducts that Rs 62,400 as TDS at the time of sale, so the net credited to her NRE account is Rs 10,37,600, and because this is the repatriable route, that Rs 10,37,600 can go to her UAE account freely, no annual cap, since the original Rs 8,00,000 came from abroad. Had she also booked a short-term loss on another scrip that year, the bank's TDS would still have ignored it and overdeducted; she claws that back by filing ITR-2.

Now change only the holding period and watch the tax collapse. Same 1,000 shares at Rs 800 (cost Rs 8,00,000), same sale at Rs 1,100 (value Rs 11,00,000), same Rs 3,00,000 gain, but she holds 14 months, so it is long-term. Long-term equity is taxed at 12.5% on the amount above Rs 1.25 lakh: taxable gain Rs 3,00,000 minus Rs 1,25,000 is Rs 1,75,000, base tax 12.5% of that is Rs 21,875, plus cess of Rs 875, total Rs 22,750. So the same Rs 3,00,000 profit costs Rs 62,400 if sold at nine months and Rs 22,750 if sold at fourteen, a saving of Rs 39,650, roughly 64%, for doing nothing but waiting five months past the 12-month line. For an NRI who cannot do intraday anyway and is holding stock by design, that line is worth respecting before you hit sell. (Whether the Rs 1.25 lakh shield reaches NRIs under 115AD as cleanly as it reaches residents under 112A has a contested minority view; the capital gains guide sets out the debate. The arithmetic here applies the threshold, which is how the ITR utility and most preparers treat it.)

The US and Canada friction nobody warns you about until you hit it

If you live in the US or Canada, the route map above still holds, but two things make your life harder, and they are worth knowing before you choose a broker.

The first is broker and AMC acceptance. To comply with FATCA and the Canadian reporting regime, several Indian platforms simply will not onboard US and Canada residents for the full product set. Zerodha, for instance, opens NRI trading and demat accounts for US and Canada NRIs but does not let them invest in mutual funds through its platform, and many fund houses either refuse US and Canada investors outright or accept them only with physical, offline paperwork and a non-electronic declaration. So your platform shortlist is shorter than a Gulf or UK NRI's, and you should confirm a broker takes your country before you start the document marathon. Direct stock buying on PIS or NRO is generally available; it is the mutual fund overlay and some platform features that get withheld.

The second is PFIC, and it only bites on funds, not on direct shares. For a US-taxable person, Indian mutual funds are Passive Foreign Investment Companies, which drag in punitive US tax treatment and Form 8621 reporting that can make the after-tax return worse than a comparable US fund. This is the strongest reason a US-based NRI often prefers buying direct Indian stocks over Indian mutual funds: individual listed shares are not PFICs, so you sidestep the worst of the regime while still getting Indian equity exposure. Canada does not have a PFIC rule as such, but it taxes worldwide income and its own offshore fund and foreign-property reporting rules apply, so the same instinct, prefer direct shares, hold for the long term, keep clean records, tends to hold. The fund-side detail and the PFIC overlay are in NRI mutual funds eligibility. The point for this guide: a US or Canada NRI who wants Indian equity should usually be looking at the stock routes here, not the fund route, and should pick a broker that will actually take them.

PIS versus non-PIS, side by side

The whole guide compresses to this table. Read down the column that matches your money.

What you are comparing	NRE-PIS (repatriable)	NRO non-PIS (non-repatriable)
Bank account	NRE, with PIS permission	NRO, no PIS needed since 2018
RBI tracking	One designated bank reports every trade	None; behaves like a resident account
Repatriation	Freely, net of tax, no annual cap	Within USD 1 million a financial year
Who deducts TDS	The designated bank, at sale	The broker, at sale
Per-trade cost	Higher brokerage plus Rs 100 to 200 bank reporting fee	Lower brokerage, no reporting fee
Setup	Heavier: PIS letter plus 3 accounts	Lighter: NRO plus demat plus trading
Best for	Money brought from abroad you may want back	India-sourced money staying invested in India

Both routes are delivery-only, both are taxed under Section 115AD, and both are subject to the per-company caps and the caution and ban lists. The table is only about the things that actually differ.

Getting the money out: repatriation of proceeds

How you repatriate follows entirely from which account the shares sat in, which is exactly why the route choice at the start matters so much.

NRE-PIS proceeds are freely repatriable. Because the shares were bought with money you remitted from abroad, the sale proceeds net of tax go out without an annual cap and without the 15CA and 15CB paperwork that NRO repatriation needs. This is the core advantage of the repatriable route and the reason to pay for it if you may want the money back.

NRO proceeds fall under the NRO repatriation limit. Shares held on the non-repatriable NRO route can be remitted abroad only within the general limit of USD 1 million per financial year (April to March), aggregated across all your NRO remittances rather than per transaction. For NRO repatriations above the prescribed threshold you file Form 15CA, a remitter declaration, and Form 15CB, a chartered accountant's certificate confirming taxes are paid. One forthcoming change to flag: from April 1, 2026, Forms 15CA and 15CB are being replaced by Forms 145 and 146, so confirm the current form on the e-filing portal before you remit. The full mechanics are in the NRO repatriation process and repatriating investment proceeds guides.

Edge cases that catch people

You bought shares as a resident, then became an NRI. Those shares can typically be held in a redesignated NRO demat on a non-repatriable basis. They do not become NRE-PIS-repatriable just because you moved abroad; the source of the original money governs repatriability, and you cannot retrofit it.

Shares received as gift or inheritance usually sit on the non-repatriable NRO side, with repatriation running through the USD 1 million NRO limit and the cost and holding period generally inherited from the previous owner for tax.

IPOs, rights and bonus shares run on different track. Primary-market subscriptions by NRIs sit under a separate schedule from secondary-market PIS buying and do not need PIS permission. Bonus and rights shares on existing PIS holdings generally carry the repatriability status of the underlying.

You become a resident again. When you return to India for good and your status flips back to resident, your NRI accounts must be redesignated and PIS tracking ceases to apply. Plan the conversion; do not keep trading on an NRI tag once you are resident.

DTAA relief on the gain. Several treaties, notably India-UAE, can reduce or eliminate Indian tax on certain capital gains. Where it applies, the bank's or broker's TDS will usually still deduct the full Indian rate, and you claim the treaty position at filing with a Tax Residency Certificate and Form 10F. See DTAA relief for NRIs.

The honest read

For an NRI buying Indian stocks, the single decision that matters is made before you buy: repatriable NRE-PIS or non-repatriable NRO. Here is the recommendation, not a menu. For most NRIs in 2026, start with NRO non-PIS. It needs no PIS permission, no designated bank tracking, and no Rs 100 to 200 reporting fee per trade, and at a discount broker the brokerage floor is a quarter of the PIS rate. It behaves like a resident account, it is taxed identically under Section 115AD, and the USD 1 million annual repatriation limit is far more than most retail investors will ever need to move. The simplicity and the cost saving win for the common case.

Open the NRE-PIS account when, and only when, repatriability is genuinely on the table: you are deploying money you brought from abroad and you can foresee wanting it back in your country of residence, perhaps because you may return there for good, or you are building a portfolio you think of as parked abroad rather than parked in India. Accept the heavier setup and the higher per-trade cost as the price of being able to take the money out freely later, because retrofitting repatriability after the fact is painful and often impossible. The June 5, 2026 liberalisation, the 10% individual and 24% aggregate caps, does not change this calculus for ordinary positions; it only matters if you are buying near a crowded scrip's ceiling.

Two disciplines apply on either route. Stop thinking like a trader: the route is delivery-only by design, no intraday, no short selling, which is not a cage to rattle but a nudge toward the only equity strategy that taxes well for you, holding past the 12-month line so the gain is taxed at 12.5% rather than 20%. As the second example showed, that one habit saved Rs 39,650 on a Rs 3,00,000 gain. And never treat the TDS your bank or broker cuts as a final settlement; it is a withholding, it usually overshoots, and the overpaid money only returns when you file. Treat the sale and the return as one transaction, not two. If you are a US or Canada NRI, add one more rule: prefer direct shares over Indian mutual funds to dodge PFIC, and confirm your broker takes your country before you begin.

Related guides

• NRI mutual funds eligibility
• NRI mutual fund KYC
• Repatriating investment proceeds
• Building an India corpus as an NRI
• Capital gains tax for NRIs on shares and mutual funds
• NRI ITR filing for AY 2026-27
• TDS for NRIs and refunds
• NRI residency and RNOR rules
• DTAA relief for NRIs
• NRE, NRO and FCNR accounts compared
• Open an NRE or NRO account from abroad
• The NRO repatriation process
• All taxation guides
• All investments guides

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This guide is general information for NRIs, not investment, tax, or legal advice. PIS rules, per-company ownership caps, caution and ban lists, broker charges, capital gains rates, TDS rates, and repatriation forms are set by the RBI, SEBI and the Income Tax Department and change. The RBI raised the individual ownership cap to 10% and the aggregate to 24% on June 5, 2026 through amendments to the FEMA Non-Debt Instruments Rules, broker charges vary by platform and date, and Forms 15CA and 15CB are being replaced by Forms 145 and 146 from April 1, 2026. Confirm the current rules with your designated bank, broker, and a qualified chartered accountant before transacting or repatriating, and verify the live caution and ban-list status of any scrip before buying near a ceiling.