PIS vs Non-PIS Demat Account for NRIs (2026): RBI FEMA Rules, Trading Limits & Best Brokers

How NRIs invest in Indian shares

NRIs can buy and sell shares listed on NSE and BSE, but not through an ordinary resident demat account. FEMA requires an NRI-designated trading account, an NRI demat account and a linked NRE or NRO bank account. Repatriable equity investments made with NRE money continue to require an NRE Portfolio Investment Scheme (NRE-PIS) account routed through a designated Authorised Dealer Category-I (AD Category-I) bank. Non-repatriable investments made through an NRO Non-PIS account do not require PIS permission.

RBI's June 2026 amendments to the FEMA (Mode of Payment and Reporting of Non-Debt Instruments) Regulations simplified payment and reporting channels; they did not remove the NRE-PIS requirement for repatriable stock-exchange investments.

PIS vs Non-PIS compared

Each NRI can usually route PIS investments through only one designated bank at a time. You can hold both a PIS and a Non-PIS account at once, often with the same broker.

Digital KYC and VIPV from abroad from 3 December 2026

SEBI's circular dated 4 November 2026, Review of Know Your Client process for individual Person Resident Outside India clients, takes effect on 3 December 2026. It allows eligible individual NRIs, OCI cardholders and foreign nationals located in FATF-compliant countries to submit KYC information and supporting documents digitally from abroad, removing the earlier requirement to be physically located in India during digital onboarding.

• Intermediaries can complete Video In-Person Verification (VIPV) abroad with live GPS coordinates, date and time stamps, face-liveness checks and protection against spoofed IP addresses, VPNs and proxies.
• An authorised official of the intermediary must attend the VIPV, and the process is subject to concurrent audit.
• Clients in FATF non-compliant countries remain under the previous KYC process, and separate Foreign Portfolio Investor rules continue to apply where relevant.

Trading restrictions every NRI must know

• No intraday trading in the equity cash segment: every buy must be delivered and every sale must be of shares already in your demat account.
• No short selling in the cash segment.
• Individual NRI holding in a company is capped at 5% of paid-up capital, and aggregate NRI holding at 10% unless the company raises it to 24% by resolution.
• Shares bought through PIS must be sold through PIS; you cannot move them to Non-PIS without bank and regulatory steps.
• Some sectors with foreign investment caps may temporarily block NRI purchases when limits are reached.

F&O trading with NRO funds

NRIs can trade equity futures and options on NSE using non-repatriable funds. The broker must arrange a Custodial Participant (CP) code through a clearing member, and margins must come from your NRO account or be supported by shares held under Non-PIS. Currency derivatives are restricted to hedging a genuine exposure.

1. Open a Non-PIS trading and demat account and NRO bank account.
2. Apply for a CP code through your broker's clearing member; it takes 1–2 weeks.
3. Transfer margin from the NRO account.
4. Profits are credited to NRO and can be repatriated within the USD 1 million limit after tax.

Taxes on NRI share trading

Brokers deduct TDS on capital gains at each sale because the buyer of your shares is anonymous. File ITR-2 (or ITR-3 for F&O) to adjust and claim refunds.

Choosing a broker

Look at the total cost: account opening fees, annual demat charges, PIS bank fees, brokerage and depository charges per sale. For long-term investors the annual fixed costs often matter more than per-trade brokerage.

Opening checklist

1. NRE and/or NRO bank account with a bank that offers PIS.
2. PAN with non-resident status.
3. Passport, visa or OCI card and overseas address proof.
4. PIS permission (bank-issued) for repatriable investments.
5. FATCA declaration; US/Canada residents may face extra checks.
6. Signed account opening forms, often digitally with video KYC.