PMS for NRIs: The Complete Guide to Investing in India from Abroad (2026)
NRIs earn abroad but India's equity market has delivered 12-13% CAGR over two decades. PMS is the cleanest vehicle — direct stock ownership avoids PFIC traps for US NRIs, professional management eliminates time-zone issues, and tax-loss harvesting saves real money.
Updated February 2026 | Covers FEMA, SEBI, RBI regulations as applicable. Not tax advice — consult your chartered accountant for jurisdiction-specific implications.
You've built a career abroad. You earn in dollars, dirhams, or pounds. And somewhere in the back of your mind, there's a persistent thought: India's growing at 6-7% GDP. Shouldn't my money be working harder there?
It should. But if you're an NRI looking at Portfolio Management Services in India, the path between "I want to invest" and "my money is actually deployed" is paved with regulatory acronyms, contradictory advice, and account-opening paperwork that would make a tax inspector weep.
This guide cuts through all of it. Not with generic bullet points, but with the specific, practical information you need to make a decision — and execute it.
Part 1: Why PMS for NRIs — The Case in Numbers
Let's start with why PMS is particularly suited to NRI investors, rather than the more commonly recommended mutual funds or direct equities.
| Investment Route | Minimum Investment Amount | NRI-Specific Advantage | NRI-Specific Challenge |
|---|---|---|---|
| Direct Equities | No minimum amount | Full control | Requires active monitoring across time zones; delivery-only (no intraday); PIS account mandatory for NRE route |
| Mutual Funds | ₹500 (SIP) | Easy, low maintenance | US/Canada NRIs face restrictions with many AMCs; limited customisation; no tax-loss harvesting |
| Portfolio Management Services | ₹50 lakhs | Professional management, no time-zone dependency, tax-loss harvesting, customisation | Higher regulatory paperwork |
| Alternative Investment Funds (AIFs) | ₹1 crore | Access to private markets, venture, credit | Illiquid (3-7 year lock-in); US NRIs face PFIC issues with pooled structures |
The structural advantage of PMS for NRIs is significant:
You own individual stocks in your demat account. Unlike mutual funds (where you own units of a pooled fund) or AIFs (pooled vehicles), PMS gives you direct ownership. For US-based NRIs, this is critical — individual stock ownership avoids the Passive Foreign Investment Company (PFIC) classification that makes AIFs a tax nightmare under US law.
While a PMS is structurally superior, you must be aware that Indian-listed ETFs are classified as PFICs.
Professional management eliminates the time-zone problem. If you're in New York, London, or Dubai, you're not waking up at 4 AM to monitor Indian markets. Your portfolio manager executes based on a pre-agreed mandate. Systematic PMS strategies — which run on rules-based signals — don't even need a human making timing decisions.
Tax-loss harvesting is possible. Since you own individual stocks, your PMS manager can sell losing positions to offset gains — something impossible in a mutual fund. For NRIs in the 30%+ effective tax bracket (India + home country), this can save ₹2-5 lakhs annually on a ₹1 crore+ portfolio.
Part 2: The Regulatory Framework — Simplified
This is where most NRIs give up. The regulatory maze involves three bodies — RBI, SEBI, and FEMA — and the rules interact in ways that even many wealth advisors get wrong.
Here's the simplified version:
Step 1: Confirm Your NRI Status
Under FEMA, you're an NRI if you've resided outside India for more than 182 days in a financial year for employment, business, or any purpose indicating an intent to stay abroad. Your investment rules flow from this classification.
Step 2: Choose Your Account Type
| Account Type | Funded By | Repatriation | Tax on Interest | Best For |
|---|---|---|---|---|
| NRE (Non-Resident External) | Foreign currency earnings | Fully repatriable (principal + gains) | Tax-free in India | NRIs who want to invest foreign earnings and eventually move money back |
| NRO (Non-Resident Ordinary) | Indian-origin income (rent, dividends, etc.) | Up to USD 1 million per FY (with CA certificate) | Taxable in India | NRIs managing Indian income sources |
Key insight: Most NRIs should use their NRE account for PMS investments. It keeps principal and gains fully repatriable without annual limits.
Step 3: The Banking Setup — PIS or Non-PIS?
The Portfolio Investment Scheme (PIS) is an RBI-regulated framework for NRIs buying and selling stocks in India. However, how you set this up depends entirely on whether you want your money to be repatriable or non-repatriable.
For PMS:
- You can invest via PIS (if using NRE route and want repatriation); OR
- If you are using funds already held in India (like rental income) you will open a Special NRO Securities Account (RBI permission not required), often called a Non-PIS NRO account.
Most PMS providers handle the account setup as part of onboarding. The portfolio manager gets Power of Attorney to trade on your behalf — you don't need to approve individual transactions (that's the whole point of discretionary PMS).
Part 3: The PMS Account Opening Process for NRIs
Here's the step-by-step, including realistic timelines:
Documents Required
| Document | Details |
|---|---|
| Passport copy | Pages with name, DOB, address, photo, signature, issue/expiry date |
| Proof of NRI status | Valid Employment Visa / Work Permit and Residence permit, required for Indian Passport holders |
| OCI/PIO Card | Required for NRIs with a Foreign Passport to identify if the Applicant/Holder is of Indian origin |
| PAN Card | Indian Permanent Account Number (mandatory) |
| Overseas address proof | Utility bill (electricity/gas, not older than 3 months) or foreign bank statement |
| Indian address proof | If applicable — Aadhaar / Passport / Driving License / Voter ID |
| NRE/NRO bank account details | Bank statement (last 6 months) / cancelled cheque |
| Demat account | Can be opened as part of PMS onboarding |
| FATCA/CRS self-certification | Tax residency declaration (mandatory for all NRIs) |
| Photographs | Recent passport-size photos |
| Source of funds proof | Bank statements showing foreign income / cancelled cheque |
Note: Once the documents are signed by the Applicant, the KYC documents must be authenticated by one of the following recognized authorities to confirm they are "Originally Seen and Verified": Overseas Branches of Indian Banks / Indian Embassy or Consulate General / Notary Public / Authorized officials of overseas branches of Scheduled Commercial Banks registered in India /Judges or Court Magistrates / Multinational Banks that have a relationship with the Indian intermediary
Typical Timeline
| Step | Duration |
|---|---|
| Form and Declaration preparation by PMS | 2 business days |
| PMS agreement signing and delivery to India | 5-7 business days |
| Bank and Demat account opening | 7-10 business days (can be done remotely) |
| Fund transfer (NRE/NRO to PMS) | 1-3 business days |
| Portfolio deployment begins | Within 1-2 weeks of funding |
| Total: Account open to first trade | ~2-4 weeks |
Part 4: Taxation — The Part That Keeps NRIs Up at Night
This is the single most complicated aspect. Your tax liability depends on two things: Indian tax law AND the tax law of your country of residence. Here's the Indian side:
Capital Gains Tax on PMS for NRIs (India, FY 2025-26)
| Type | Holding Period | Tax Rate | Notes |
|---|---|---|---|
| Equity STCG | < 12 months | 20% | Post-July 2024 Budget |
| Equity LTCG | > 12 months | 12.5% | Above ₹1.25 lakh exemption per FY |
| Gold ETF STCG | < 12 months | As per income tax slab | For listed gold ETFs/funds |
| Gold ETF LTCG | > 12 months | 12.5% | With indexation benefit removed post-July 2024 |
| Debt | Any period | As per income tax slab | No LTCG benefit for debt instruments |
Source: Income Tax Act provisions post-Union Budget 2024. Verify with your CA for the latest applicable rates.
TDS — The NRI Tax Trap
Unlike resident investors, NRIs face mandatory TDS (Tax Deducted at Source) on all capital gains. Your broker or PMS provider deducts tax before paying you the proceeds. This means:
On LTCG, TDS is deducted at 12.5% (plus surcharge and cess). On STCG, TDS is deducted at 20%. You cannot avoid TDS by filing a nil return — the deduction happens at source.
If your actual tax liability is lower (due to DTAA benefits or other deductions), you can claim a refund by filing an Indian income tax return.
DTAA — Avoiding Double Taxation
India has Double Taxation Avoidance Agreements with 90+ countries. The key ones for NRI PMS investors:
| Country of Residence | DTAA Treatment | Key Consideration |
|---|---|---|
| USA | Tax credit in US for Indian taxes paid | Avoid pooled funds (PFIC rules); PMS with individual stock ownership is structurally better |
| UK | Tax credit; Non-dom rules may apply | Gains kept unremitted may be tax-deferred under remittance basis (changing 2025-26) |
| UAE/Singapore | No capital gains tax in country of residence | Most tax-efficient; only Indian tax applies |
| Canada | Tax credit; CRA treats gains as foreign income | Some AMCs restrict Canadian NRIs from mutual funds; PMS is often easier |
| Australia | Foreign income tax offset available | CGT applies in Australia; DTAA prevents double taxation |
Critical advice: NRIs in UAE and Singapore have the cleanest tax structure for Indian PMS — zero capital gains tax at home, and only Indian LTCG/STCG applies. If you're in the Gulf or Southeast Asia and not investing in Indian markets, you're leaving money on the table.
Part 5: Country-Specific Considerations
US-Based NRIs
The US is the most complex jurisdiction for NRI investing. Key issues:
PFIC (Passive Foreign Investment Company): Investing in Indian mutual funds or AIFs can trigger PFIC classification, leading to punitive tax rates and Form 8621 reporting. A PMS typically avoids this because you own individual stocks directly in your own Demat account. This alone makes PMS the structurally superior vehicle for US NRIs.
FATCA compliance: Your PMS provider will collect FATCA self-certification. Your Indian financial accounts get reported to the IRS automatically under the India-US Intergovernmental Agreement.
FBAR reporting: If your aggregate Indian financial accounts exceed USD 10,000 at any point during the year, you must file FinCEN Form 114 (FBAR). Your PMS demat account counts.
UAE-Based NRIs
The simplest structure. No capital gains tax in the UAE means you pay only Indian tax on PMS gains. With ~3.5 million Indians in the UAE, this is arguably the largest addressable segment for Indian PMS providers.
Use your NRE account for full repatriation flexibility. Your PMS gains in India are taxed at Indian rates (12.5% LTCG, 20% STCG), and you take the net proceeds home tax-free.
UK-Based NRIs
The UK's non-dom rules have been changing. From April 2025, the remittance basis is being reformed. Gains from Indian PMS will likely be subject to UK CGT if you're a UK tax resident. However, DTAA relief means you get credit for Indian taxes paid. Consult a cross-border tax specialist — this area is in flux.
Part 6: How to Choose a PMS as an NRI
Everything in our "Best PMS in India 2026" evaluation framework applies. But NRIs should add three additional filters:
1. NRI Onboarding Experience
Does the PMS provider have a dedicated NRI onboarding process? Can you complete documentation remotely (e-sign, video KYC)? Or do they require you to visit India? In 2026, any provider requiring physical presence for onboarding is behind the curve.
2. Reporting and Communication
You're in a different time zone. You need:
Monthly portfolio statements in a format your overseas CA can understand. Realised/unrealised gain reports for tax filing in both jurisdictions. A dedicated relationship manager accessible during your working hours. Digital access to your portfolio (most PMS providers offer this via apps or portals).
3. Systematic vs. Discretionary
For NRIs specifically, systematic (quant-based) PMS strategies have a structural advantage: they don't depend on the fund manager being available for ad-hoc decisions. The model runs, signals are generated, trades are executed. Whether you're in Mumbai or Manhattan, the process is identical.
Discretionary PMS — where a human fund manager makes stock-picking decisions — works fine too, but ensure the communication channel is robust. You don't want to learn about a major portfolio change via a monthly statement that arrives three weeks late.
Part 7: The GIFT City Option
GIFT City (Gujarat International Finance Tec-City) is India's first International Financial Services Centre, and it's changing the game for NRI investors.
| Feature | Domestic PMS | GIFT City PMS |
|---|---|---|
| Investment currency | INR only | USD/other foreign currencies |
| Currency risk | Full INR exposure | Can be denominated in USD |
| FEMA restrictions | Apply | Relaxed — treated as "foreign territory" |
| Repatriation | Via NRE/NRO route | Fully repatriable without RBI approvals |
| Tax on capital gains | Indian STCG/LTCG rates | Zero capital gains tax on certain instruments (IFSCA rules) |
| Regulatory oversight | SEBI | IFSCA (International Financial Services Centres Authority) |
GIFT City is particularly attractive for NRIs who want to avoid the rupee depreciation drag. An NRI who invested USD 100,000 in Indian equities in 2011 saw the Sensex triple — but the rupee fell from ₹45 to ₹85 per dollar, significantly diluting USD-denominated returns. GIFT City structures can mitigate this.
However, GIFT City PMS is still early-stage. Fewer managers are operational there, minimum investments tend to be higher, and the product ecosystem is less mature. For most NRIs, domestic PMS via NRE accounts remains the most practical option in 2026.
Part 8: Common NRI PMS Mistakes
Mistake #1: Using NRO when NRE is available. NRO has a USD 1 million annual repatriation cap and requires a CA certificate. NRE is fully repatriable, no cap. If you have foreign-origin funds, always use NRE.
Mistake #2: Not filing Indian tax returns. Even though TDS is deducted at source, you should file an Indian ITR to claim any excess TDS refunds and to build a clean compliance trail. This is especially important if you plan to return to India eventually.
Mistake #3: Ignoring DTAA benefits. Many NRIs pay tax twice — once in India (via TDS) and again in their home country — because they don't claim the foreign tax credit. Get a Tax Residency Certificate (TRC) from your country of residence. It's the key document for DTAA benefits.
Mistake #4: Choosing a PMS with no NRI track record. Onboarding an NRI client is operationally different from onboarding a resident. The PMS provider needs to handle PIS coordination, FEMA compliance, TDS calculations, and cross-border reporting. Ask how many NRI clients they currently manage.
Mistake #5: Investing in mutual funds from US/Canada without checking restrictions. Several Indian AMCs refuse investments from US and Canadian NRIs due to SEC/CRA reporting requirements. PMS has no such restriction — SEBI rules are universal regardless of country of residence.
Where Grey Sky Capital Fits for NRIs
Grey Sky Capital's Smart Core Portfolio was designed with several features that are particularly relevant for NRI investors:
Systematic execution. Our rules-based, quantitative approach means your portfolio is managed by the same process regardless of time zones. No "I tried calling the fund manager but he was in a meeting" situations. Signals generate, trades execute, allocation adjusts — all systematically.
Multi-asset structure. For NRIs exposed to currency risk, having dynamic allocation between equity, gold (a natural USD hedge), and debt provides structural diversification. In CY 2025, multi-asset PMS strategies averaged +9.62% while equity-only PMS averaged just +0.25%.
Individual stock ownership. No PFIC issues for US NRIs (Direct equities). You own the stocks in your demat account. Clean, simple, tax-efficient across jurisdictions.
NRI onboarding process. We specialize in navigating the complexities of NRI investments. We provide a hands-on document management service where we prepare all necessary paperwork and coordinate the pickup and return to India. Our team works with partners experienced in PIS coordination, setting up your bank accounts and ensuring all regulatory requirements are met.
SEBI-registered. Grey Sky Capital Private Limited is a SEBI-registered Portfolio Management Service (INP000009694). Full regulatory compliance, mandatory disclosures, and APMI-reported performance data.
The Bottom Line
NRI investment in India is no longer optional for wealth optimisation — it's a missed opportunity if you're not doing it. India's GDP is projected to reach USD 5 trillion by 2027. The Indian equity market has delivered ~12-13% CAGR over two decades. Gold — a natural hedge against rupee depreciation — has delivered 11%+ CAGR in INR terms over the past decade.
PMS is the cleanest vehicle for NRI participation: direct stock ownership (critical for US NRIs), professional management across time zones, tax-loss harvesting capability, and full customisation. The ₹50 lakh minimum is meaningful but, for NRIs with established careers abroad, typically within reach.
The regulatory paperwork is real but manageable. The tax implications require professional advice. And the choice of PMS strategy matters enormously — as our analysis of 1,257 PMS strategies shows, the difference between top quartile and bottom quartile outcomes on ₹1 crore over 10 years is ₹3+ crore.
Your wealth was built abroad. Let it compound at home — with the right structure, the right strategy, and the right partner.
This article is for informational purposes only and does not constitute tax, legal, or investment advice. NRI investors should consult qualified professionals for jurisdiction-specific guidance. Tax laws and FEMA regulations are subject to change. Investment in securities market is subject to market risks. Read all related documents carefully before investing. Past performance is not indicative of future returns.
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