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 the 'Non
Resident Indians (NRIs)' and 'Person 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 purchase/sale transactions through their account held
with a Designated Bank Branch. Any NRI or a PIO wanting to trade/make fresh investments
in the Indian Equity Secondary Market needs and must have one PIS account with only
one designated bank in India.
NRE PIS account
NRO PIS account
For all the Indian companies or companies listed on Indian stock exchanges, there
are certain limits which have to be monitored under FEMA regulations. For any company
the foreign investment into that company cannot cross that limit. This limit is
different from company to company and sector to sector. Also individually any NRI
or a PIO cannot invest more than 5% in any Indian company.
NRI/PIO can open only one PIS account with any designated banks (Preferred bank
– Axis Bank) in a prescribed format for PIS account, 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
>PIS account is applicable only for NRIs and not for resident
>It is only for trading in Indian markets and not any other
>It is applicable only for equity trades and not Mutual
When investor brings the money to India and does not want to take it back to the
home country, he can make the investments using NRO account. Such investments are
said to be done on non-repatriable basis. In case, he decides to take the principal
plus the profits back to the home country, then he would essentially need an NRE
account. In NRE accounts, he would be allowed to take out the principal and the
profits, after paying necessary taxes. This is called repatriable investment.
>Dividend is totally tax free in the hands of investors.
> Units or securities held for more than 12 months qualify
for long term.
>No set-off is available against losses while deducting
TDS on short term capital gains.
>TDS will be deducted by banker or Mutual funds and can
be claimed by investor while filing Income Tax returns, if total tax liability is
> TDS certificate will be issued which can be used to claim
You will have to ask your bank for Portfolio Investment Scheme (PIS) approval. The
bank may charge you a nominal fee of around Rs 1000 to Rs 2000 and you would be
allowed to invest in the markets. Another important guideline is that NRIs cannot
undertake speculative trades in cash segment. For instance, if they buy shares on
Monday they will have to wait until Wednesday to sell it. However, they would be
allowed to trade in the futures segment of the market. These are the general guidelines
prescribed by RBI for NRI investing. RBI has relaxed its rules and it is upto your
bank to verify your documents and the contract notes. Banks would definitely charge
you a fee for these services and hence shop around and look for the bank where you
can get the best deal.
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 (The visa could be either in the passport or
> Cheque leaves and Bank Statement compulsory/Banker’s
>PAN card (Mandatory).
> Proof of local and foreign address.
>Passport copy for proof of address.
>Visa Copy (In case the place of issue of passport is India).
>PIS Permission /RBI Approval.
> Demat Proof.
>Stamp Paper to be signed by the client.
>Photograph signed across
>POA (Power of attorney) – if required by the client &
notarized from abroad.
>Authority Letter – (If authority given by the client).
>Photo of person authorized.
> Letter signed by authorized person.
>PAN card. (Mandatory).
>Details of NRE / NRO account opened with banks and Banker
>Purchase Details of Stock Holding, if any.
> Letter from current employer (if applicable).
>Open a NRE/NRO Bank Account with designated bank.
> Apply for PIS Approval.
>Open Demat Account.
>Open 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 i.e.
short term or long term on a First-In, First-Out (FIFO) basis.
For any TDS to be deducted and money to be remitted to bank account, there are three
things which have to be verified
>Amount of gain = Selling price – Purchase price .
>Duration of holding i.e. long term or short term = Selling
date – Purchase date
>Source of fund for purchase i.e. NRE or NRO .
Important: 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 result
through structured and disciplined approach. Further, investor gets access to their
portfolio on web and can track their asset allocation. They can also get complete
details of stocks, sectors and funds. At the end of each year, they get audited
report that includes holding with valuation, realized and accrued profit and losses,
listing of dividend received during the year and transaction statement. NRIs can
avail this service. Using PMS, it becomes easier for NRIs to manage the records
and filling of income tax returns.
Except for tax exemption on interest on fixed deposits in NRE Accounts, NRE and
NRO have same tax slabs.
>Basic tax exemption of Rs 100,000 for investment in PPF,
Insurance Premium, Mutual Fund ELSS, etc. us 80C .
>Additional tax exemption of Rs. 20,000 on investment in
tax saving Infrastructure bonds.
>Senior citizen age reduced from 64 years to 60 years .
> People above 80 years of age to be included in the newly
introduced 'Very Senior citizen'category and their basic exemption limit increased
to Rs 500,000.
>Surcharge is not applicable, education cess of 3% on income-tax
is levied .
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