 Who qualifies
as a Non-Resident Indian (NRI)?
|
|
An Indian Citizen who has gone out of India or who stays outside India for any of
the following :
|
 Taking up employment
|
|
carrying on business
or vocation
|
or stays abroad
under circumstances indicating an intention for an uncertain duration of stay
abroad is a non-resident Indian.
|
|
Indian Citizens
working abroad on assignments with Foreign Government/ Govt. Agencies or international
/ regional agencies like the UNO, IMF, World Bank etc.
|
|
Officials of Central
and State governments and Public Sector Undertakings deputed abroad on temporary
assignments or posted to a Branch office (including diplomatic missions) abroad.
|
|
Indians settled
abroad permanently or gone abroad on immigration.
|
Crew members of Indian nationality or Indian origin employed by foreign airlines/shipping
companies, if they are based at foreign ports & reside abroad.
|
|
|
|
|
What is NRO account?
|
|
A NRE bank account is an external
A NRO bank account is an Ordinary Saving bank account opened for Non resident Indians.
This is why it is known as Non Resident Ordinary account. Since it is an Ordinary
account i.e. as good as normal saving bank account, funds lying in NRO account cannot
be taken outside the country or in other words, the funds lying in NRO account are
non repatriable.
|
|
|
|
Who is a person
of Indian Origin (PIO)?
|
|
Investor is deemed to be a person of Indian origin if Investor is a foreign citizen
(other than of Pakistan or Bangladesh), and if:
|
|
Investor have at
any time held an Indian Passport or
|
Investor or either
of Investor Parents or any of Investor grandparents were citizens of India by
virtue of the Constitution of India or the Citizenship Act,1955.
|
Investor is the
spouse of an Indian citizen or of a person of Indian origin (other than of
Pakistan or Bangladesh)
|
|
|
|
|
What is PIS? |
|
PIS means Portfolio Investment Scheme of Reserve Bank of
India defined in Schedule 3 of Foreign Exchange Management Act 2000. As per the
scheme, an NRI can purchase and sell, on delivery basis, shares and convertible
debentures of Indian companies through a registered stockbroker on a recognized
Stock Exchange by routing such transactions through their PIS account held with
a Designated Bank branch.
|
|
|
|
How many PIS account
can a NRI open?
|
|
NRI
/ PIO can open only one PIS account with any designated banks in a prescribed format
for PIS account, upon which the bank can issue a PIS approval letter to the Investor.
|
|
|
|
WHAT IS A NRE
ACCOUNT ? |
|
A NRE
bank account is an external bank account opened for Non Resident Indians. This is
why it is known as Non-Resident External account. Since it is an external account,
any funds lying in NRE account can be taken outside the country or in other words,
the funds lying in NRE account are fully repatriable. This fund can be converted
into any foreign currency at the behest of the account holder and can be remitted
outside the country.
|
|
|
|
How can NRI/PIO
Invest in Indian Secondary Markets? |
A Non-resident Indian
(NRI/PIO) may purchase/sell shares and/or convertible debentures of an
Indian company, through a registered broker of a recognised
stock exchange under Portfolio
Investment Scheme (PIS)
The NRI/PIO designates
a branch of an authorised dealer for routing his/its transactions relating to
purchase and sale of shares/convertible debentures under
this Scheme, and routes all such
transactions only through the branch so designated.
|
|
|
|
How can NRI/PIO
Invest in Indian Secondary Markets through PFSL ?
|
|
1
|
|
NRI First Needs to open two Accounts with the designated Bank in India
|
 Saving NRE Normal
Account
|
|
NRE PIS (Portfolio
Investment Scheme)
|
|
If NRI has Indian Wealth the same can be invested in Secondary Market through
|
|
Saving NRO Normal
Account
|
NRO PIS (Portfolio
Investment Scheme)
|
|
 |
|
2
|
|
After that Demat Account needs to be opened with the Depository Participant
|
|
The NRE / NRO
Demat can be opened with the same above bank or
|
|
The NRE / NRO
Demat account can be opened with Padmakshi by
|
providing the
convenience to trade with the same broker.
|
|
|
|
|
3
|
The Client needs to Sign the Client Service Agreement with Padmakshi to trade in
Secondary Market.
|
|
|
|
|
PURCHASE TRANSACTION |
|
1
|
PFSL Submits one Contract Note at the PIS designated branch on the day of transaction
(within 24 hrs) and keep one copy in the Clients file. Note : PFSL will also email
a copy to the NRI / PIO Investor.
|
|
|
|
2
|
POA /Authority holder / NRI / PIO Investor and Bank (PIS) Branch verify if all transactions
are in order
|
|
|
|
3
|
Debit PIS A/c. & Credit Broker A/c. after getting instructions from POA /Authority
holder / NRI / PIO Investor Instructions
|
|
|
|
4
|
PFSL credits the DP (PIS) a/c. of the NRI / PIO Investor after he receives Pay –
out from the Exchange
|
|
|
|
|
SALE TRANSACTION |
|
1
|
PFSL Submits one Contract Note at the PIS designated branch on the day of transaction
(within 24 hrs) and keep one copy in the Clients file. Note : PFSL will also email
a copy to the NRI / PIO Investor.
|
|
|
|
2
|
POA /Authority holder / NRI / PIO Investor and Bank (PIS) Branch verify if all transactions
are in order
|
|
|
|
3
|
POA /Authority holder / NRI / PIO Investor releases shares sold to PFSL Pool Account
and receives cheque from PFSL
|
|
|
|
4
|
PIS bank then credits NRI / PIO Investors account after Netting of Taxes*.
|
* Debit for Capital
gain Tax + Bank Charges + Service Tax
|
|
|
|
|
Taxation – Capital
Gain / Dividends |
|
Long Term Capital
Gain : NIL
|
|
(Securities Holding more than 12 months)
|
Short Term Capital
Gain : 16.995%
(Securities Holding less than 12 months)
|
Dividend : NIL
Note : Above is solely dependent on Finance Act-GOI
|
|
|
|
|
Illustration on
Taxation & Bank Charges
|
Consider a NRI Investor
starts an account with Rs. 25,00,000/- with PFSL and PIS Bank a/c
with PFSL designated bank.
|
|
Bank Charges = Rs.
100 + 10.30% (Service Tax) per scrip on Purchase & Sale.
|
|
Brokerage + other
levies (Service tax + Security Transaction Tax + Turnover Tax)
|
|
|
|
|
How would NRI /PIO
Investor operate the account ?
|
|
NRI / PIO can operate the account in following ways:
|
NRI / PIO Investor
will give POA/Letter of Authority to PFSL to operate his/her DP (Demat)
accounts and Bank Accounts and he/she will operate the trading
account via email, chat or
tele call.
|
NRI / PIO Investor
will give POA/Letter of Authority to PFSL to operate his/her DP (Demat)
accounts whereas he can operate his/her Bank Accounts and
trading account via email, chat or
tele call.
|
NRI / PIO Investor
will give POA/Letter of Authority to his resident relative / friend to operate
his/her Trading, DP, and Bank accounts.
|
|
|
|
|
How does NRI/PIO
Investor get Corporate benefits ?
|
Dividends : Dividends are given
on a repatriable or non – repatriable basis as the case may be.
Rights Issue : The issuer has to take RBI’s approval for repatriable basis. The
right thus acquired is on repatriable basis only if the original shares were on
the same basis.
Bonus : The issuer has to take RBI’s approval for repatriable basis. The Bonus thus
acquired is on repatriable basis only if the original shares were on the same basis
and the NRI/PIO Investor has funded these shares from repatriable account.
|
|
|
|
If NRI Investor
wants to trade only on Repatriable basis why should he needs NRO
account.
|
|
It serves two accounts :
|
Dividends cannot
be repatriated; therefore it will be directed to NRO Saving account; however
if the original shares were purchased on repatriable basis
the dividends will get directed to NRE
Savings A/c.
|
|
NRI Investors Indian
Wealth can be directed to secondary market through PIS-NRO A/C.
|
|
|
|
|
What is the status
of NRI/PIO Investors for Trading Derivatives Segment ?
|
NRI / PIO Investor is allowed to trade in Indian Derivatives Market only on non
repatriable basis.
NRI / PIO Investors for derivatives segment will have to appoint a Clearing Member
for clearing and settlement of trades done on futures and option segment and get
Custodian Participant Code from that clearing member
|
|
|
|
Requirement of
Documents for Bank Account
|
The following set of documents
are needed for each account to be opened :
Passport Copy
Valid Visa Copy
Indian Address Proof
(if any)
Correspondence Address
Proof (if diff from Passport)
One Photograph
PAN Card Copy
If original documents are not available, copies will be required to be certified
by a local notary of public or the Indian Embassy.
|
|
|
|
Client Padmakshi
account set up
|
The following set of documents
are needed for Trading cum Demat account to be opened with Padmakshi
Passport Copy
Valid Visa Copy
Indian Address Proof
(if any)
Correspondence Address
Proof (if diff from Passport)
One Photograph
PAN Card Copy
FEMA Declaration
If original documents are not available, copies will be required to be certified
by a local notary of public or the Indian Embassy.
|
|
|
|
Permanent Account
Number application
|
Permanent Account Number application
form, along with 2 passport style photographs of size 3 ½ X 2 ½ inches
PAN Application Procedure is attached herewith
|
|
|