An NRI who opens an investment account through an Indian bank-linked broker is often given four demat accounts, each carrying its own annual charge. For many people living abroad, one of them does all the work. Closing the rest saves a few thousand rupees a year and simplifies tax returns in two countries.
Four accounts come from two separate rules
A demat account holds shares and fund units electronically, much as a bank account holds cash. For a non-resident, each demat account has to be labelled in two ways: by the source of the money and by the type of investment.
The source is either NRE or NRO. An NRE (Non-Resident External) account holds money earned abroad. It can be sent back out of India in full, and its interest is tax-free in India. An NRO (Non-Resident Ordinary) account holds income that arises in India, such as rent, dividends or the proceeds of a property sale. RBI rules allow up to US$1 million a financial year to be sent abroad from NRO accounts, after tax.
The investment type is either PIS or non-PIS. The Portfolio Investment Scheme (PIS) is the route for buying listed shares on the exchange, with a designated bank reporting each trade to the Reserve Bank of India. Non-PIS covers everything else: IPOs, mutual funds, derivatives, shares held from before you left India, and shares received as a gift or inheritance.
Two choices of two produce four combinations, and brokers commonly open all of them at the start.
| Account | Funded by | Used for | Money can leave India |
|---|
| NRE PIS | Earnings from abroad | Listed shares bought on the exchange | In full |
| NRE non-PIS | Earnings from abroad | IPOs, mutual funds, derivatives | In full |
| NRO PIS | Indian income | Listed shares, where the broker still requires PIS | Up to US$1m a year after tax |
| NRO non-PIS | Indian income, older holdings | Shares from resident days, inherited and gifted shares, IPOs, funds | Up to US$1m a year after tax |
PIS was built to police ownership limits
India caps how much of a listed company non-resident individuals may own. For years the limit was 5% of a company’s paid-up capital per NRI and 10% for all NRIs together. PIS gave the RBI a way to count purchases, which is why each investor is allowed only one designated bank for it.
Those limits were raised in June 2026. Amendment rules notified on 12 June set the ceiling at just under 10% per non-resident individual and 24% for all such investors combined. The RBI rewrote the reporting process three days later. Brokers still call the service PIS and still charge for it.
NRO money has not needed PIS since 2019
The Non-Debt Instruments Rules of 2019 treat investment made from NRO money on a non-repatriable basis as domestic investment. It does not count towards the NRI ownership limits, so there is nothing for PIS to track.
Brokers took time to act on this. Since late 2020 a growing number have allowed NRIs to buy and sell listed shares from an NRO non-PIS account, and some now permit intraday trading as well. Practice still varies between firms, so confirm your own broker’s position before closing an NRO PIS account.
The fees add up to about ₹6,000 a year
Broker tariffs checked in September 2026 put the annual maintenance charge on an NRI demat account at roughly ₹700–900, usually waived in the first year. Banks add around ₹1,000 a year for each PIS permission. GST at 18% applies to both.
Take a typical four-account setup with two PIS permissions. Four demat charges at ₹800 and two PIS fees at ₹1,000 come to ₹5,200. With GST, that is about ₹6,100 a year, or roughly US$65, much of it spent on accounts that hold nothing.
Closing an account brings some of that back. A 2010 SEBI circular requires depository participants to refund advance maintenance charges for the unused part of the year. The rule covers demat charges only, and at least one large bank describes its PIS fee as non-refundable.
Your country’s tax rules decide whether NRE investing pays
The NRE exemption applies only in India. Where you live, income from Indian investments may be taxed again, with credit for the Indian tax, and some countries add reporting rules of their own.
| Country of residence | Indian investment income taxed at home? | What else to know |
|---|
| UK | Yes, as it arises (since April 2025; four-year relief for new arrivals) | Individual Indian shares cannot be held in an ISA; India funds can |
| US | Yes, for citizens and green-card holders wherever they live | Indian mutual funds are usually PFICs; FBAR filing above US$10,000; FATCA limits which Indian firms accept you |
| Canada | Yes | Form T1135 if foreign property cost exceeds C$100,000; some fund houses restrict residents |
| Australia | Yes | Indian income declared, with credit for Indian tax |
| UAE and most Gulf states | No personal income tax | Currency and broker costs only |
| Singapore | Generally no, for foreign income received by individuals | Income through a Singapore partnership is taxed |
In the countries that tax this income, an NRE demat means Indian tax and home tax, a currency spread on the way in and again on the way out, and NRI brokerage rates that are higher than resident ones. Residents of the US and Canada should also check
which Indian fund houses still accept them
.
Funds at home often do the NRE job more cheaply
Money earned abroad does not have to travel to India to be invested in India. India funds and exchange-traded funds are sold in every major NRI destination, and many can be held in a local tax-free or tax-deferred account.
A UK resident can hold India funds in a Stocks and Shares ISA. In the US, India ETFs listed on American exchanges sit outside the PFIC rules that catch Indian mutual funds, and can be held in an IRA. Canadians can hold India ETFs, including US-listed ones, in a TFSA or RRSP. Residents of Australia, Singapore and the Gulf can buy India ETFs listed at home or in the US.
These routes avoid the bank’s currency spread on transfers to and from India, Indian tax returns and NRI paperwork. The trade-offs are fund charges and a narrower choice, since most funds track India’s larger companies. The investment is still exposed to the rupee.
When NRE accounts still earn their fee
An NRE demat is worth its fee in four situations. The first is buying individual Indian companies, particularly smaller ones that foreign funds rarely hold, which needs NRE PIS. The second is applying for Indian IPOs or buying Indian mutual funds with money from abroad while keeping the proceeds fully repatriable, which is the job of NRE non-PIS.
The third is a planned return to India. Holdings in Indian accounts are redesignated as resident when you move back, while funds held abroad come into Indian tax and foreign-asset reporting once you become ordinarily resident. The
RNOR tracker
shows how long the transition lasts.
The fourth is living where home does not tax the income, as in the Gulf. There the NRE exemption stays whole, and direct Indian holdings cost little more than a local India fund.
If none of these applies, neither NRE demat is needed. An NRE savings account is still useful for sending money to family or paying bills in India.
One NRO account usually does the rest
The NRO non-PIS demat is the account most NRIs end up using. It holds shares bought before emigrating, and inherited shares, which must be held on a non-repatriable basis. It can also put idle NRO balances, such as rental income, into IPOs and mutual funds.
Buying shares on the exchange with NRO money is where brokers differ. The regulation no longer requires PIS for these purchases, but some bank-linked brokers still route them through an NRO PIS account. If yours does, keep NRO PIS for exchange purchases and NRO non-PIS for everything else, or move to a broker that allows exchange trading from NRO non-PIS. The second option saves a PIS fee and a set of statements. The first avoids moving your holdings.
That leaves a lean setup for many NRIs: one NRO bank account and one NRO non-PIS demat, or a PIS and non-PIS pair where the broker insists, with NRE accounts only in the situations above. The
NRI banking guide
covers the bank accounts in more detail.
Before closing any account, answer five questions:
- Have you bought anything through it in the past two years?
- Does it still hold shares or fund units?
- Do you plan to send money from abroad specifically to buy Indian shares?
- Does your broker allow listed-share trading from NRO non-PIS?
- Is a dividend, bonus or buyback due on anything it holds?
If the answers to the first, third and fifth are no, the account is a candidate for closure.
Closing an account takes paperwork, not money
Start by downloading full transaction, holding and capital gains statements. Both the Indian tax return and the one where you live may need them, and they are harder to obtain once the account has gone.
Then sell the holdings or transfer them to the demat account you are keeping, and wait for any pending corporate action to settle. Release any cash earmarked for trading, and ask the bank to withdraw the PIS permission linked to the account.
The closure request comes last. Some brokers accept it online, while others still require a signed physical form handed in at a branch, which for someone abroad means a courier to India or a visit. Money later moved out of the NRO account falls under the
annual repatriation limit
.
Check the nominee on what you keep
SEBI’s revised nomination rules took effect on 1 September 2026. New single-holder demat accounts must now name a nominee unless the holder formally opts out, and existing accounts are worth checking at the same time.
A nominee receives the assets on death but does not necessarily own them. In Shakti Yezdani v Jayanand Jayant Salgaonkar (December 2023), the Supreme Court held that a nomination under company and depository law does not override a will or the law of succession. The will, or the legal heirs, decide ownership.
Wills for NRIs
covers that side.
This article is general information, not financial or tax advice. Fees and rules change; confirm the position with your broker and a tax adviser in India and in your country of residence before closing accounts or moving investments.
