Fixed deposits (FDs) are amongst the most popular investment choices for NRIs.
Fixed deposits for NRIs can be NRE, NRO or FCNR.

• Interest earned on NRE FD is tax free while interest on an NRO FD account is taxable.
• Interest earnings in an NRO account are subject to tax deducted at source (TDS)and balance is credited only after deducting all taxes.
• Deposits in an NRE account can be repatriated without any limit, whereas those from an NRO account are restricted to a ceiling of 1 million USD per annum by RBI.
• FCNR accounts are maintained in foreign currency and the interest rate for these accounts depends upon the currency. FCNR deposits are fully repatriable and completely tax free.

The tax liability for NRIs on mutual funds is exactly same as that of a Resident. The only difference is that TDS will be deducted for all investments that are done by NRI accounts

NRIs are eligible to invest directly in Indian equities under the ​Portfolio Investment Scheme (PIS) of RBI.Only one PIS account is allowed per individual and each transaction done through these accounts will be reported to RBI.

Three type of accounts are required to make direct equity investments in India

1. A separate NRE/NRO savings account linked to PIS
2. A demat (dematerialized) account to hold your shares in and
3. A trading account with a registered broker with SEBI

IPOs are not covered under PIS but NRIs can easily apply for them through their trading accounts or 3-in-1 accounts.

NRIs can purchase both residential and commercial properties. However, one cannot buy agricultural lands, farm houses or plantations. However, this rule doesn’t apply if you get ownership of agricultural land through inheritance or as a gift.

A government security is a tradable instrument issued by the Government of India to raise funds for development or for special projects.

The interest earned from these instruments is taxable if it’s credited to NRO account and tax-free if the account used is NRE.However, if the bond has been marked as tax-free during the issue, the interest becomes tax-free in India regardless of the account.

These securities are tradable on money market and hence are highly liquid.

Both public and private companies also raise capital similar to government issuing securities to raise money. The type of bonds could be Public Sector Unit (PSU) bonds, Non-convertible debentures and perpetual bonds.

Certificates of deposits (CDs) are non-negotiable money market instruments issued in demat form or as promissory notes.

They are like fixed deposits, but have a higher liquidity as they can be freely transferred from one person to another.

NPS is a voluntary defined contribution pension system in India. It is cost-effective and government backed voluntary defined contribution retirement savings scheme.

Any NRI who is still an Indian Citizen and is aged between the age of 18 to 60 years can avail of this scheme by opening an NPS account. Contributions to NPS receive tax exemptions under Section 80C, 80CCC and Section 80CCD (1) of Income Tax Act.