NISA in Japan: The Tax-Free Investing Guide for Indians
Here's a number that should bother every Indian working in Japan: roughly 20% (20.315%, to be exact). That's the tax Japan normally takes from your investment gains and dividends. Now here's the part almost no newcomer is told — Japan will let you invest up to ¥18 million and pay zero tax on all of it, for life, through an account called NISA. It's free to open, it takes an afternoon, and most foreigners don't get around to it for years — quietly handing the tax office money they never needed to pay.
This is the guide to fixing that: what NISA is, why the 2024 "New NISA" is a genuinely great deal, how to open one on an Indian passport and work visa, what people actually put in it — and the two cross-border traps (leaving Japan, and moving back to India) that generic NISA guides never mention.
Key takeaway: NISA (Nippon Individual Savings Account) is a tax-free investment wrapper. Normally Japan taxes investment gains and dividends at 20.315%; inside NISA that becomes 0%. The New NISA (from Jan 2024) lets you invest up to ¥3.6M/year — split into a ¥1.2M "Tsumitate" (fund-only) quota and a ¥2.4M "Growth" quota — up to a ¥18M lifetime cap, tax-free with no time limit, and the lifetime room even refreshes when you sell. Foreigners qualify as long as you're a Japanese tax resident (residence-card address + My Number + age 18+, any visa). Two things to plan for: your tax-free status is tied to living in Japan, and India taxes your worldwide income once you become a resident again — so talk to a cross-border tax professional before you move back. This is general information, not personalized financial advice.
What NISA actually is (and why 20% matters)
Open a normal brokerage account in Japan (a "特定口座", tokutei kōza) and every yen of profit you make — capital gains when you sell, plus dividends — is taxed at 20.315%. Make ¥1,000,000 of gains, hand ¥203,150 to the government.
NISA is the same investing, with that tax switched off. It's not a product you buy; it's a wrapper you hold funds and stocks inside. Anything that grows in there — and any dividends it pays — is completely tax-free. Over a working life in Japan, on a serious portfolio, that difference is measured in millions of yen. That's the whole pitch, and it's why NISA is the single most valuable "free" thing most foreign residents overlook.
The New NISA (2024) — why it's worth caring about now
NISA existed before, but it was fiddly and time-limited. The New NISA that started on 1 January 2024 overhauled it into something genuinely generous. The numbers you need:
- ¥3.6 million per year total, made of two quotas you can use at the same time:
- Tsumitate quota — ¥1.2M/year: for regular, automated monthly investing into a government-screened list of low-cost index funds. This is the "set it and forget it" bucket.
- Growth quota — ¥2.4M/year: for a wider range — individual stocks, ETFs, more funds. More flexible.
- ¥18 million lifetime cap (of which the Growth quota can be at most ¥12M; the rest is Tsumitate).
- Tax-free with no expiry. The old NISA made you tax-free for only 5 or 20 years; the new one has no time limit — hold for decades, still 0% tax.
- The room refreshes. If you sell something, the lifetime allowance it used up (at your purchase price) frees back up the following year for you to reinvest. The old NISA didn't let you do this.
For a normal salaried Indian in Japan, ¥3.6M/year of tax-free room is far more than you're likely to fill — which means, practically, you can put essentially all your long-term investing inside NISA and pay no Japanese tax on it.
Can you open one on an Indian passport? Yes — here's the test
NISA is not limited to Japanese citizens. The rule is about tax residency, not nationality. You qualify if you are a Japanese tax resident — broadly, you live in Japan and it's your base (the 183-days-a-year rule of thumb) — and you meet three simple requirements:
- A Japanese address — the one printed on your residence card (在留カード).
- A My Number (マイナンバー) — the tax ID everyone in Japan has.
- Age 18 or over.
You'll also need a Japanese bank account in your name to fund it. Your visa type doesn't matter — Engineer/Specialist in Humanities, SSW, HSP, student with income, spouse visa: if you're a tax resident, you're in. What doesn't qualify: tourists, and people who don't actually live in Japan.
How to open one (the practical bit)
Two brokers dominate among foreigners because they're online-only, cheap, and workable without fluent Japanese:
- SBI Securities — the most popular overall: the widest product range, the lowest fees, and steadily improving English support.
- Rakuten Securities — best if you're already in the Rakuten ecosystem (Rakuten Bank/points); the account linking is seamless.
Neither has a fully native-English interface, but expats run them daily with browser translation. The flow is: open a brokerage account → apply for the NISA account inside it (the broker files with the tax office; only one NISA is allowed per person across all of Japan, so you can't double up) → link your bank → start. Expect a week or two for the NISA approval.
What people actually hold in it
(Examples, not recommendations — see the disclaimer.) The overwhelmingly common approach among foreign residents is low-cost, globally-diversified index funds in the Tsumitate quota, bought automatically every month. The names you'll see repeatedly are the eMAXIS Slim series — "All Country" (global) and "S&P 500" (US) — because their fees are tiny. Some people use the Growth quota for individual stocks or ETFs; many just use both quotas for the same index funds to invest more per year.
The mechanics that make it work: automate a monthly amount, keep fees low, and leave it alone. NISA rewards long holding — that's where the tax-free compounding does its work.
The two cross-border traps generic guides skip
This is where being Indian (and mobile) changes the math. Two things you must plan around:
1. Your tax-free status is tied to living in Japan
NISA is a benefit for Japanese tax residents. When you leave Japan permanently — file your moving-out notice, cancel your residence — you generally can no longer keep investing in the NISA, and your existing holdings typically lose their tax-free protection going forward: depending on your broker you'll have to sell or move them to a taxable account. Rules and grace periods vary by broker, so if a move abroad is on the horizon, ask your broker exactly what happens to your NISA before you go, and factor it into when you sell.
2. Moving back to India can undo the "tax-free"
NISA is a Japanese tax concept. India does not recognise it. While you're a Non-Resident Indian (NRI), India doesn't tax your Japan income — fine. But once you return and become an Indian tax resident (ordinarily resident) again, India taxes your worldwide income. Gains you realise after you've become an Indian resident can be taxable in India, even though Japan called them tax-free. The India–Japan tax treaty (DTAA) governs which country taxes what and prevents double taxation, but it does not magically make NISA tax-free in India. The timing of when you sell — before vs after you become an Indian resident again — can materially change your tax bill. This is exactly the kind of decision to run past a cross-border tax professional, not a blog.
One more subtlety: NISA switches off Japanese tax, but it can't refund foreign tax withheld at source. US-listed holdings, for example, have US dividend withholding taken before the money reaches you; inside a NISA there's no Japanese tax to credit it against, so that foreign slice isn't recoverable. It's minor for most index-fund investors, but worth knowing.
NISA vs iDeCo — a quick note
You'll hear NISA mentioned alongside iDeCo (Japan's private pension). Short version: iDeCo's contributions are deducted from your taxable income (a bigger upfront tax break than NISA), but your money is locked until age 60 — awkward if you might leave Japan. NISA is fully flexible — withdraw anytime. Many residents use both; for a mobile foreigner who may not retire in Japan, NISA's flexibility usually makes it the first move. (We'll cover iDeCo and the full menu in the tax-savings guide.)
Common mistakes foreigners make
- Waiting. The biggest one. Every year without NISA is a year of gains taxed at 20% for no reason. The room doesn't fully carry over — use it.
- Leaving cash in the bank instead. Japanese savings interest is ~nothing; inflation quietly erodes idle yen. NISA is the standard fix.
- Opening a taxable account by default and only discovering NISA later — then paying tax you could have avoided.
- Chasing hot stocks in the Growth quota instead of boring low-fee index funds. NISA's edge is tax-free compounding over time, not trading.
- Forgetting the exit. Not planning what happens to the NISA when you leave Japan or move back to India — and getting a tax surprise.
Your next step
If you're a tax resident in Japan and you don't have a NISA yet, opening one is close to a no-brainer: it's free, and it turns a ~20% tax into 0% on your long-term investing. Start the broker application this month, automate a monthly amount you won't miss, and leave it to compound. Then make sure the rest of your money is working too — the complete guide to tax savings in Japan covers deductions, the pension refund you can claim when you leave, and more. Check your take-home first with the salary and tax calculators.
This article is general educational information, not personalized financial, investment, or tax advice, and Komichi is not a licensed financial advisor. Investing carries risk, including loss of capital. NISA rules, tax rates, broker terms, and India–Japan cross-border tax treatment change and depend on your personal circumstances — confirm current details with your broker and the official NISA/FSA and tax-authority pages, and consult a qualified cross-border tax professional before making decisions, especially around leaving Japan or returning to India.