Zerodha NRI account (PIS)

Zerodha NRI account (PIS) is a trading and demat account offered by Zerodha to non-resident Indians (NRIs) and Overseas Citizens of India (OCI) cardholders who wish to invest in Indian equity markets through the Portfolio Investment Scheme (PIS). The PIS is a channel authorised by the Reserve Bank of India under the Foreign Exchange Management Act, 1999 (FEMA), specifically under the FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 (as notified through various RBI master directions). Investments made through the PIS route from a Non-Resident External (NRE) bank account are fully repatriable, while those from a Non-Resident Ordinary (NRO) account are repatriable within RBI-prescribed limits.

The PIS route is the primary mechanism for NRIs who wish to trade equity on a delivery basis on Indian stock exchanges. It differs from the non-PIS account in that PIS is mandatory for trading in listed equity shares and is subject to aggregate NRI ownership limits monitored by the RBI and custodians.

Eligibility

The following persons are eligible to open a Zerodha NRI PIS account:

• Non-Resident Indians (NRIs), Indian citizens residing outside India as defined under section 2(w) of FEMA, 1999 and section 115C(e) of the Income Tax Act, 1961.
• Overseas Citizens of India (OCI) cardholders, Foreign nationals holding OCI cards under the Citizenship Act, 1955, who are treated on par with NRIs for investment purposes under FEMA.
• Persons of Indian Origin (PIOs), Effectively merged into the OCI category post-2015; treated as NRIs for investment purposes.

The following are not eligible for the NRI PIS route:

• Individuals who have returned to India and resumed resident status (they must convert to a resident individual account).
• Citizens of Pakistan and Bangladesh (subject to additional RBI approval requirements even for NRI status).
• Foreign nationals who are not OCI or PIO holders.

PIS overview and regulatory wrapper

Portfolio Investment Scheme

The Portfolio Investment Scheme was introduced by the Reserve Bank of India to provide a structured and monitored channel for NRI equity investment. Under PIS:

• All purchases and sales of listed equity shares must be routed through a designated PIS bank account (either NRE or NRO savings account) at an Authorised Dealer (AD) category-I bank.
• The PIS bank is responsible for reporting each transaction to the RBI (through the Reserve Bank Integrated Ombudsman Scheme reporting infrastructure) to ensure aggregate NRI holding in any Indian company does not breach the sectoral cap (typically 10 per cent of paid-up equity for NRIs collectively, with the company’s board having the ability to raise this up to the applicable FDI sectoral limit).
• NRIs may hold PIS investments through both an NRE account (for repatriable investments) and an NRO account (for non-repatriable investments), but must maintain separate PIS designations for each.

Applicable regulations

PIS bank and account structure

Designated PIS bank

To open a Zerodha NRI PIS account, the NRI must first obtain a PIS permission letter from an Authorised Dealer (AD) category-I bank. The designated PIS banks that Zerodha works with include HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, and others. The NRI must:

1. Open an NRE or NRO savings account at the designated PIS bank.
2. Apply for PIS permission (a one-time registration) at the bank.
3. Receive the PIS permission letter, which contains a unique reference number.
4. Submit this letter to Zerodha during account opening.

An NRI may hold only one PIS account linked to NRE and one linked to NRO simultaneously across all brokers; the PIS designation is broker-agnostic and monitored by the PIS bank.

NRE vs NRO investments

Documentation required

Segments available

The NRI PIS account at Zerodha is subject to significant segment restrictions compared to a resident individual account:

The prohibition on intraday trading is a fundamental FEMA restriction, not merely a Zerodha operational limitation. NRIs may not buy and sell the same security on the same day under the PIS framework; purchases must result in delivery to the demat account, and sales must come from the demat account (no short selling).

KYC process

Zerodha does not offer a fully online eKYC process for NRI accounts due to the complexity of overseas address verification and PIS documentation. The NRI account opening process follows a physical or partially-physical KYC workflow:

1. Application pack download, The applicant downloads the NRI account-opening kit from Zerodha’s NRI portal.
2. Form completion, The account-opening form, including KYC details and segment selection, is completed.
3. Document compilation, Passport copies, PAN, PIS letter, overseas address proof, and other documents are compiled. All documents must be either notarised in the country of residence, attested by the Indian Embassy or High Commission, or attested by a banker in the country of residence.
4. Submission, The completed pack is couriered to Zerodha’s registered office in Bengaluru.
5. Verification, Zerodha’s NRI team verifies documents and communicates with the designated PIS bank.
6. Account activation, Upon successful verification, the trading and demat account credentials are sent to the client.

Video-based KYC (V-CIP) is available as an alternative to notarisation for some NRI applicants, where the SEBI-prescribed video interaction is conducted with a Zerodha representative.

Account opening fees and charges

Note: Zerodha’s standard flat-fee zero brokerage on equity delivery does not apply to NRI PIS accounts. The higher brokerage reflects the cost of FEMA reporting and PIS compliance.

Tax treatment

NRIs are taxed on Indian-sourced income under Chapter XII-A of the Income Tax Act, 1961, which provides concessional rates:

Capital gains

TDS on capital gains, The buyer or the clearing corporation is required to deduct TDS on capital gains arising to NRIs at the applicable rate under section 195 of the Income Tax Act, 1961. In practice, TDS is managed by the PIS bank and the depository for transactions through the PIS account. The NRI may file a return to claim a refund if the TDS deducted exceeds the actual tax liability.

Double Taxation Avoidance Agreements (DTAA)

India has concluded DTAAs with over 90 countries. An NRI may claim benefit under the applicable DTAA to reduce withholding tax on dividends and capital gains. To avail DTAA benefits, the NRI must submit a Tax Residency Certificate (TRC) from the country of residence and Form 10F under the Income Tax Act.

Wealth tax

Wealth tax was abolished in India from assessment year 2016-17. NRIs are not subject to wealth tax on Indian investments.

Repatriation of funds

Repatriation of sale proceeds from NRE PIS investments is unrestricted. For NRO PIS investments, repatriation up to USD 1 million per financial year is permitted after payment of applicable taxes, subject to certification by a Chartered Accountant in Form 15CA/15CB.

The PIS bank manages the repatriation routing and is responsible for ensuring that funds moving out of the NRO account comply with the RBI’s reporting requirements.

Platform access and operational workflow

NRI PIS account holders access Zerodha’s trading platforms with some differences compared to resident individual accounts:

Trading platform

Kite is available to NRI PIS account holders for placing equity delivery orders. However, because intraday trading is prohibited for NRIs under FEMA, Zerodha’s RMS (risk management system) blocks intraday product types (MIS, Margin Intraday Square-off) for NRI PIS accounts. Only the CNC (Cash and Carry) product type is available for equity orders.

Fund routing workflow

Every equity purchase and sale must be routed through the PIS bank account. The workflow is:

1. Client places a buy order for equity on Kite.
2. Trade executes on the exchange.
3. On T+1 settlement, the exchange’s clearing corporation debits the client’s funds account at Zerodha.
4. Zerodha settles with the exchange and simultaneously informs the PIS bank of the transaction.
5. The PIS bank debits the NRI’s NRE or NRO savings account for the trade value.
6. On sell orders, the reverse process applies: sale proceeds are credited to the PIS bank account after settlement.

This additional routing step, involving the PIS bank, means that NRI PIS transactions have a slightly longer fund-settlement timeline compared to resident accounts.

Transaction reporting to RBI

The PIS bank reports each NRI buy and sell transaction to the Reserve Bank of India as required under FEMA and the PIS framework. The report includes the NRI’s PAN, the security traded, the value, and the NRI’s PIS account details. These reports enable RBI to monitor aggregate NRI holdings in each listed company against the applicable sectoral ceiling.

Portfolio Investment Scheme aggregate limits

SEBI and RBI jointly monitor aggregate NRI and FPI holdings in listed companies. The PIS framework includes the following limits:

If the aggregate NRI holding in a company approaches the ceiling, the company’s registrar (through the depository) issues a caution (yellow flag) at 3 per cent below the ceiling. At the ceiling, further NRI purchases are blocked. Individual NRIs may not hold more than 5 per cent of paid-up equity in any single listed company on the PIS route (10 per cent with board approval).

Mutual fund investments for NRI PIS account holders

NRI PIS account holders at Zerodha may also invest in direct mutual fund plans through Zerodha Coin. Mutual fund investments are separate from the PIS mechanism and do not require PIS routing:

• Investments in mutual funds are governed by FEMA Regulations, Schedule 5.
• Redemption proceeds are credited to the linked NRE or NRO bank account (not the PIS account, as PIS applies only to listed equities).
• Certain mutual funds do not accept investments from NRIs based in the United States or Canada due to FATCA/CRS reporting obligations; the applicable AMC prospectus should be consulted.

Regulatory reporting obligations of NRI account holders

NRI investors holding Indian securities through the PIS route have certain reporting obligations under FEMA and the Income Tax Act:

• Schedule FA (Foreign Assets) reporting, NRIs who are tax residents of India for a particular year must disclose their foreign assets and income in Schedule FA of the income tax return.
• FATCA/CRS self-certification, All financial institutions (including brokers and mutual funds) are required to obtain a FATCA/CRS self-certification from NRI clients to identify their tax residency and comply with Common Reporting Standard requirements for automatic exchange of financial information.
• Form 15CA/15CB, Required for repatriation of funds from NRO accounts.
• Indian income tax return, If Indian-sourced income exceeds the basic exemption limit, the NRI must file an Indian income tax return under section 139 of the Income Tax Act.

Comparison with NRI non-PIS account

References

1. Foreign Exchange Management Act, 1999.
2. FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017, as amended.
3. RBI Master Direction on Non-Resident Indians (NRI) Investments in India (periodically updated).
4. Income Tax Act, 1961, Chapter XII-A (sections 115C to 115I).
5. Income Tax Act, 1961, section 195 (TDS for non-residents).
6. SEBI (Stock Brokers and Sub-brokers) Regulations, 1992.
7. SEBI Master Circular on KYC, SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/37, dated 8 March 2023.
8. RBI circular on Portfolio Investment Scheme for NRIs (AP (DIR Series) circulars, various).