Can an NRI invest in ETFs in India? Yes. NRIs and OCIs can buy and sell Indian ETFs on NSE and BSE with no limit on the amount. That includes equity ETFs such as Nifty 50 ETFs, and gold and silver ETFs. You need an NRI trading and demat account linked to an NRE account (repatriable) or an NRO account (non-repatriable). Gains are taxed in India and tax is deducted at source when you sell. US residents can also invest under Indian law, but Indian ETFs are generally treated as PFICs in the US, which makes them costly to hold.
This guide explains the rules as of September 2026, including the FEMA changes RBI made in June 2026. It is general information, not tax or investment advice.
Quick Answers
- Can NRIs buy equity ETFs? Yes, on a repatriable or non-repatriable basis, with no amount limit.
- Can NRIs buy gold ETFs? Yes. Gold and silver ETFs fall under a different FEMA rulebook from equity ETFs, but both allow NRIs to invest without limit.
- Can OCIs invest? Yes, on the same terms as NRIs.
- Can US and Canada residents invest? Indian law allows it. Some brokers restrict them, and US residents face PFIC reporting and tax.
- Is tax deducted? Yes. For tax year 2026-27, TDS is 20% on short-term equity gains, 12.5% on long-term gains and 30% on short-term gains from non-equity ETFs, plus cess and any surcharge.
Which FEMA Rule Covers Which ETF
An ETF is a mutual fund scheme whose units trade on the exchange. Under FEMA, which rule applies depends on how much of the fund is in equity.
| ETF type | FEMA rulebook | NRI/OCI permission |
|---|---|---|
| Equity ETFs (more than 50% in equity), e.g. Nifty 50, Sensex, Nifty Smallcap 250 | FEM (Non-Debt Instruments) Rules, 2019: Schedule III (repatriable) and Schedule IV (non-repatriable) | May buy or sell units without limit |
| Gold, silver, debt and liquid ETFs (50% or less in equity) | FEM (Debt Instruments) Regulations, 2019: Schedule 1, Part B (repatriable) and Part C (non-repatriable) | May buy units without limit |
RBI's Master Direction on foreign investment (updated to 15 June 2026) lists "units of mutual funds or Exchange-Traded Fund (ETFs) which invest more than fifty per cent in equity" as non-debt instruments.
NRE vs NRO: Repatriable and Non-Repatriable Routes
The account you invest from decides whether you can take the money out of India freely.
| Point | Repatriable (NRE side) | Non-repatriable (NRO side) |
|---|---|---|
| FEMA schedule | Schedule III (equity ETFs) / Debt Schedule 1 Part B | Schedule IV (equity ETFs) / Debt Schedule 1 Part C |
| Funded from | Inward remittance from abroad, or any repatriable account (NRE, FCNR(B)) | NRO, NRE or FCNR(B) account, or inward remittance |
| Sale proceeds of ETF units go to | Abroad, or any FEMA-compliant account in India, at your choice | Your NRO account only |
| Taking money abroad | Freely, after tax | Through the NRO remittance facility, up to US$1 million per financial year |
| Usual broker term | "PIS" route | "Non-PIS" route |
Sources: RBI FEMA notification 395(4)/2026-RB (13 June 2026); RBI Master Direction on foreign investment, Annex 4 (updated to 15 June 2026); RBI FAQ on remittance of assets.
On the NRO route, RBI says proceeds "should be credited only to the NRO account", whatever account you paid from. No PIS permission is needed for NRO investing: the Master Direction re-designates old "NRO (PIS)" accounts as plain NRO accounts. For the difference between the two accounts, see NRE vs NRO account.
Brokers often tie extra limits to the route. Zerodha's support pages, for example, allow intraday and F&O trading only on the NRO non-PIS route; the PIS route is delivery-only. For buying and holding ETFs, both routes work.
What Changed in June 2026
RBI rewrote the payment rules for NRI stock-exchange investment in June 2026. The Non-Debt Instruments (Third Amendment) Rules were notified on 12 June 2026, and RBI's FEMA notification 395(4)/2026-RB followed on 13 June 2026. The main changes:
- The "NRE (PIS)" account is replaced. Schedule III investments are now paid by inward remittance or "out of funds held in any repatriable deposit account". You designate one repatriable rupee account to be used only for these investments.
- Schedule III now covers any individual living outside India, "including" NRIs and OCIs. Mutual fund and ETF units are still described as an NRI/OCI investment.
- More choice for ETF sale proceeds. Net proceeds from mutual fund units "may be remitted outside India" or credited to any FEMA-compliant account in India, "at the option of the NRI/OCI investor".
- New reporting form. Banks now report these trades to RBI in Form LEC (IFI), replacing Form LEC (NRI).
The higher per-company limits for direct share purchases (under 10% per investor, 24% in total) affect shares, not ETFs. Many broker and bank pages still use the older "NRE-PIS" wording, so ask your bank how it has put the new designated account in place.
Repatriating ETF Money
Proceeds from ETFs bought on the repatriable route can be sent abroad after tax. Money in your NRO account, including proceeds from NRO-route ETFs, can be sent abroad up to US$1 million per financial year; above that you need RBI approval.
When you remit taxable money, you file the remittance form your bank asks for (Form 15CA under the old Act; the forms were renumbered under the Income-tax Act, 2025). If the taxable amount is over ₹5 lakh in the year, you also need a chartered accountant's certificate (formerly Form 15CB). Our guide to repatriating money from India walks through the steps.
How NRIs Are Taxed on ETF Gains (Tax Year 2026-27)
From 1 April 2026, gains are taxed under the Income-tax Act, 2025. Listed ETF units, including gold, silver and international ETFs, become long-term after more than 12 months.
| ETF type | Short-term (12 months or less) | Long-term (more than 12 months) |
|---|---|---|
| Equity ETFs (at least 65% in Indian listed shares) | 20% (section 196, old 111A) | 12.5% on gains above ₹1.25 lakh a year (section 198, old 112A) |
| Gold, silver and international ETFs | Slab rates | 12.5%, with no ₹1.25 lakh exemption (section 197, old 112) |
| Debt ETFs (more than 65% in debt), units bought from 1 April 2023 | Slab rates | Slab rates, whatever the holding period |
Two NRI-specific points:
- The ₹1.25 lakh exemption applies to NRIs. It sits in the general rate clause, which covers any taxpayer.
- NRIs cannot use the basic exemption limit against these gains. That relief is only for residents.
TDS when you sell
Unlike residents, NRIs have tax deducted at source on capital gains. The Finance Act 2026 sets these rates for non-resident individuals:
| Gain | TDS rate |
|---|---|
| Short-term gain on equity ETFs (section 196) | 20% |
| Long-term gain on equity ETFs above ₹1.25 lakh (section 198) | 12.5% |
| Other long-term gains (e.g. gold ETFs) | 12.5% |
| Other short-term gains (e.g. gold ETFs held 12 months or less) | 30% |
Surcharge is nil when the income subject to deduction is ₹50 lakh or less, 10% above ₹50 lakh and 15% above ₹1 crore, and is capped at 15% on these gains. Health and education cess of 4% is added. On the repatriable route your bank usually deducts the TDS; on the NRO non-PIS route your broker does.
Illustrative example. You sell an equity ETF after eight months with a ₹1,00,000 gain. TDS is 20% (₹20,000) plus 4% cess (₹800), so ₹20,800. Some brokers deduct a flat 15% surcharge regardless of income: ₹20,000 × 1.15 × 1.04 = ₹23,920. The extra ₹3,120 comes back only if you file an Indian return.
Filing a return is also how you recover TDS on the ₹1.25 lakh exemption, losses set off against gains, or treaty relief. See NRI ITR filing for 2026.
Tax Treaties (DTAA): The Basics
India's tax treaties decide which country taxes the gain. Relief is claimed under section 159 of the Income-tax Act, 2025.
- US and UK: both treaties let each country tax capital gains under its own law. India taxes the gain, and you claim a foreign tax credit at home. See the US–India DTAA guide.
- Singapore: after the 2016 protocol, gains on Indian shares bought from 1 April 2017 may be taxed in India, while gains on other property are taxable only in Singapore. In March 2025 the Mumbai tax tribunal (Anushka Sanjay Shah) held that mutual fund units are not shares, so a Singapore resident's gains on them were not taxable in India.
- UAE: in 2019 the Cochin tax tribunal (K.E. Faizal) reached a similar view for a UAE resident's equity mutual fund gains.
These tribunal rulings are not settled law, and both were about mutual fund units, not exchange-traded ETF units. To claim any treaty relief you need a tax residency certificate (TRC) from your country of residence, the self-declaration form (Form 10F under the old Act), and disclosure in your Indian return. Since TDS is usually deducted anyway, relief normally arrives as a refund.
Gold and Silver ETFs for NRIs
Can an NRI invest in a gold ETF? Yes. Gold and silver ETFs invest 50% or less in equity, so they fall under the FEMA Debt Instruments regulations, which let NRIs and OCIs buy units without limit on either a repatriable or non-repatriable basis. You buy them on NSE or BSE like any ETF.
The tax is different from equity ETFs. Held more than 12 months, gains are taxed at 12.5% with no ₹1.25 lakh exemption. Held 12 months or less, they are taxed at slab rates, and TDS is 30% plus cess and any surcharge. For product comparisons, see best gold ETFs and best silver ETFs in India.
US Residents: The PFIC Problem
Indian law lets US-resident NRIs buy Indian ETFs. US tax law is the bigger hurdle. Indian ETFs, like Indian mutual funds, are generally treated by US tax practitioners as Passive Foreign Investment Companies (PFICs). The IRS has issued no India-specific guidance, but its PFIC tests (75% or more passive income, or at least 50% passive assets) fit a typical fund.
What PFIC status means:
- Default regime: a gain on sale is spread over your holding period. Earlier years' slices are taxed at the highest ordinary rate for each year, plus an interest charge.
- Mark-to-market election: may be available for regularly traded ETFs. Each year's rise in value is taxed as ordinary income, even if you do not sell.
- Form 8621: one per PFIC, each year. The main exception is default-regime holdings worth $25,000 or less in total ($50,000 joint) with no distribution or sale that year.
- Account reporting: FBAR if your foreign accounts together exceed $10,000 at any time in the year, and Form 8938 if you live in the US and your foreign assets exceed $50,000 at year-end or $75,000 at any time (single filers).
Our PFIC tax guide for Indian mutual funds explains the regimes in detail, and the PFIC tax calculator estimates what a sale could cost under each one. Indian tax and TDS still apply on top; the US foreign tax credit may offset part of it.
Because of this, many US residents who want India exposure use US-listed India ETFs instead, such as iShares MSCI India (INDA) or iShares MSCI India Small-Cap (SMIN). These are US funds, so the PFIC rules, which apply to foreign corporations, do not apply to them. They track different indices and have their own costs. We mention them as the alternative people commonly use, not as a recommendation.
Broker access. Some Indian brokers limit US and Canada residents. ICICI Direct says US and Canada NRIs can open a trading account and trade equity, but not mutual funds or IPOs. Zerodha says US and Canada NRIs cannot invest in mutual funds through it, and lists no bar on equity or ETF trades. Check with your broker before opening an account.
Canada. The same broker restrictions usually apply to Canada residents. We have not covered Canadian tax treatment of Indian ETFs here; check with a Canadian tax adviser.
Returning to India
If you move back, your residential status changes how your gains are taxed in India, and you may first be RNOR (resident but not ordinarily resident). Use the residential status calculator to check your status for the year, and read RNOR status and its tax benefits. US residents planning a move should also run the PFIC calculator before selling, since timing affects the US tax.
How to Start
- Open an NRE and/or NRO bank account, depending on whether you want repatriable or non-repatriable investing.
- Open an NRI trading and demat account with a broker. Expect a FATCA declaration with your foreign tax ID, PAN, passport, overseas address proof and bank proof.
- Fund it from your designated repatriable account (NRE side) or your NRO account.
- Buy ETF units on NSE or BSE like shares. Use limit orders and check the price against the ETF's indicative NAV.
- Keep records of TDS certificates and contract notes for your Indian and home-country returns.
ETFs also carry trading costs beyond the expense ratio: bid-ask spread, premium or discount to iNAV, brokerage and demat charges. See ETF vs mutual fund vs index fund for how these add up, and NRI mutual fund investment in India if you would rather use index funds. To pick an ETF, start with best ETFs in India 2026 or the full list of ETFs in India. More NRI guides are on our NRI hub.
This guide summarises Indian and US rules as of late September 2026. It is not tax, legal or investment advice. Rules and broker policies change; check the latest RBI notifications and your broker's terms, and consult a tax adviser in both countries.