When Non-Resident Indians (NRIs) invest in the Indian stock market, they must operate through regulated channels to ensure compliance with the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) guidelines. Traditionally, this was done through a Portfolio Investment Scheme (PIS) account. However, with evolving regulations and the simplification of investment processes, Non-PIS accounts have emerged as a popular alternative.
In this blog, we’ll explain the differences between pis vs non pis account, helping you choose the right one for your investment needs.
What is a PIS Account?
PIS (Portfolio Investment Scheme) was introduced by the RBI to allow NRIs to buy and sell shares and convertible debentures on Indian stock exchanges through a registered bank.
Key features of a PIS account:
It is linked to an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account.
Every transaction (buying/selling) is reported to the RBI.
Separate PIS accounts are needed for NRE and NRO investments.
Only one PIS account can be opened for each type (NRE/NRO) with a designated bank.
Banks deduct TDS (Tax Deducted at Source) on capital gains and remit it to the tax department.
Thus, a PIS account provided a controlled channel to monitor and regulate the flow of investments from NRIs.
What is a Non-PIS Account?
In 2020, SEBI and RBI relaxed norms for NRIs by allowing them to invest through a simpler mechanism — without the need for a PIS account. This investment route is called the Non-PIS route.
Key features of a Non-PIS account:
NRIs can invest using a normal NRO account linked to their Demat and Trading account.
Reporting to RBI is not required for every transaction.
No separate permission is needed from the designated bank.
TDS is still applicable on capital gains, but easier to manage.
Suitable for investments like IPOs (Initial Public Offerings), mutual funds, and secondary market transactions.
Thus, Non-PIS accounts offer NRIs a more flexible and less regulated way to invest in Indian securities.
PIS vs Non-PIS Account: Key Differences
| Feature | PIS Account | Non-PIS Account |
|---|---|---|
| Regulatory Oversight | Transactions reported to RBI | No reporting to RBI |
| Account Type | Linked to NRE/NRO accounts under PIS permission | Linked to NRO account (normal savings) |
| Investment Instruments | Stocks, convertible debentures | Stocks, IPOs, mutual funds |
| Transaction Compliance | High | Simplified |
| TDS Deduction | Bank deducts and files TDS | Broker deducts TDS or NRI files returns |
| Ease of Use | More documentation and monitoring | More convenient and faster |
| Permission Requirement | Mandatory PIS permission letter from bank | No PIS permission needed |
Which One Should You Choose?
Choosing between a PIS and a Non-PIS account depends on your investment goals:
If you want to invest from your NRE account and wish for repatriable investments (i.e., transferring funds abroad easily) — a PIS-linked NRE account is needed.
If you are fine with using an NRO account (where funds are non-repatriable beyond a limit) and want easier, less regulated transactions, then a Non-PIS route is ideal.
If you are investing primarily in mutual funds, IPOs, and secondary market shares without planning frequent fund repatriation, the Non-PIS route is simpler and more cost-effective.
If tax compliance is a major concern, both accounts require TDS, but Non-PIS offers a smoother path without the need for constant RBI reporting.
Recent Trends
Over the last few years, the industry trend shows that many NRIs are moving towards Non-PIS structures because:
It reduces administrative burden.
Brokerage firms offer integrated Non-PIS Demat and Trading accounts.
IPO participation is easier through Non-PIS.
Banks too have streamlined services to support NRI investments under both models based on the investor’s preference.
Conclusion
Understanding the difference between PIS and Non-PIS accounts is crucial for NRIs looking to invest in India. If you prefer tight regulatory oversight and seamless repatriation of funds, a PIS account may suit you. However, if you want flexibility, ease of operation, and lesser paperwork, a Non-PIS account is a modern, efficient alternative.
As regulations continue to evolve, NRIs now have greater freedom in choosing how they participate in India's vibrant capital markets.
Always consult with a professional NRI investment advisor or your bank before deciding, to ensure your investments are aligned with your financial goals and compliance requirements.
