Frequently Asked Questions

First, NRIs need to open a bank account and decide whether they need to invest on a repatriable or non-repatriable basis. NRIs already having bank accounts should check with their bankers to find out whether such accounts have mandate for stock trading as you can nominate only one bank account for your stock trading (PIS). Some of the leading private sector banks are competent in this regard and can help you open an online account.

Portfolio Investment Scheme (PIS) is a scheme of the Reserve Bank of India (RBI) defined in Schedule 3 of Foreign Exchange Management Act 2000 under which NRIs and Persons of Indian Origin (PIOs) can purchase and sell shares and convertible debentures of Indian Companies on a recognized stock exchange in India by routing all such transactions through their account held with a Designated Bank Branch. Any NRI or PIO wanting to trade in the Indian Equity Secondary Market needs a PIS account with only one designated bank in India.

There are two types: NRE PIS Account and NRO PIS Account.

For all Indian companies or companies listed on Indian stock exchanges, there are certain limits which have to be monitored under FEMA regulations. The foreign investment into any company cannot cross that limit. This limit differs from company to company and sector to sector. Individually, any NRI or PIO cannot invest more than 5% in any Indian company.

NRI/PIO can open only one PIS account with any designated bank in a prescribed format, upon which the bank will issue a PIS approval letter to the investor.

No, only investment done in secondary market should be routed through a PIS account. For other products the investment can be done through direct subscription route.

It is a normal savings bank account which can be opened with any bank in India. Non-PIS is an account for which the transactions are not reported to RBI. This account takes care of selling all those shares which are not allowed under PIS. Shares acquired under IPO or received as gift or bought as resident Indian can be sold under Non-PIS account.

When an investor brings money to India and does not want to take it back, they can make investments using an NRO account (non-repatriable basis). If they decide to take the principal plus profits back to the home country, they would need an NRE account where both principal and profits can be repatriated after paying necessary taxes.

You will need to ask your bank for Portfolio Investment Scheme (PIS) approval. The bank may charge a nominal fee. An important guideline is that NRIs cannot undertake speculative trades in the cash segment. If they buy shares on Monday, they will have to wait until Wednesday to sell. However, they can trade in the futures segment of the market.

Yes, NRIs can do so by giving Power of Attorney (POA). Currently, many NRIs are doing this as it is a lot easier and faster.

NRI customers are authorized only to take delivery of shares. They cannot do intraday trading owing to restrictions imposed by RBI/SEBI. In the case of Privileged NRI Account, you can trade in Derivatives, subject to approval from relevant authorities.

PIS account, Passport copy (photocopy), Visa copy, Cheque leaves and Bank Statement (compulsory) or Banker's verification, Signature Verification, PAN card (Mandatory), and Proof of local and foreign address.

Passport copy for proof of address, Visa copy, PIS Permission/RBI Approval, Demat Proof, Stamp Paper signed by client, Photograph signed across, POA (if required & notarized from abroad), Authority Letter (if applicable), Photo of authorized person, Letter signed by authorized person, PAN card (Mandatory), Details of NRE/NRO account with banks and Banker Verification, Purchase Details of Stock Holding (if any), and Letter from current employer (if applicable).

Open a NRE/NRO Bank Account with a designated bank, apply for PIS Approval, open a Demat Account, and open a Broking Account.

Yes, PAN card is mandatory for investments in equity shares and mutual funds.

TDS is computed on the profit amount or the gain as per the applicable rate (short term or long term) on a First-In, First-Out (FIFO) basis.

For TDS deduction and money remittance to bank account, three things are verified: Amount of gain (Selling price minus Purchase price), Duration of holding i.e. long term or short term, and Source of fund for purchase (NRE or NRO). TDS is deducted only at the time of crediting sales proceeds.

Portfolio Management Services (PMS) provides the benefits of diversification across assets, sectors, and funds. The experts in Portfolio Management achieve better results through a structured and disciplined approach. NRIs can avail this service. Using PMS, it becomes easier for NRIs to manage records and filing of income tax returns.

Short term capital gains on equity are taxed at 15%. Long term capital gains on equity are taxed at 10% above Rs 1 lakh. For debt funds, short term gains are taxed at the applicable slab rate and long term gains at 20% with indexation benefit. Dividend income is taxable as per the applicable slab rates. TDS on NRE account interest is nil; NRO account interest attracts 30% TDS.