I have been a Non-Resident Indian (NRI) for many years and have been investing in Indian equities using income earned abroad deposited in my NRE account. In FY25, I sold some shares and booked capital gains, but my AD (authorized dealer) banker deducted TDS from profit. I thought income from NRE accounts was tax exempt, so why was TDS applied?
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Any payment made to NRI on account of taxable income earned by such a person is subject to TDS under section 195. While interest earned on NRE savings accounts (non-resident external) is tax-free, this exemption is applicable only on interest income , not on capital. profit from the sale of investments made using an NRE account.
Although the money used to purchase the shares comes from your NRE account, the capital gains from the sale of those shares are treated separately from the interest income exemption for NRE accounts. As a result, NRIs are liable for TDS on capital gains from their investments in India, and AD bankers must deduct appropriate tax when these investments are sold.
However, if too much TDS has been deducted, you can file an income tax return in India to get a refund.
I am an NRI. I want to invest in the Indian stock market with my foreign earnings. My banker advised me to open a non-PINS account linked to my NRO account. I want guidance with this.
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For NRIs interested in investing in the Indian stock market, there are two main investment accounts: PINS (Portfolio Investment Scheme) accounts linked to NRE accounts, and Non-PINS accounts linked to NRO (Non-Resident Ordinary) accounts.
PINS is designed to enable NRIs to invest in the Indian secondary stock market (buying and selling shares of listed companies) using funds from their foreign earnings through an NRE account. An NRI can maintain only one PINS account with an AD bank at any time. Because PINS is linked to an NRE account, both principal and earnings can be repatriated indefinitely and freely.
On the other hand, non-PINS accounts linked to NRO have no restrictions on the number an NRI can open, allowing more flexibility in making investments in India. However, principal and income are subject to a repatriation limit of $1 million per financial year.
Harshal Bhuta, Partner, PR Bhuta & Co. cas
