It’s important for NRIs to understand the process and requirements involved in investing in Indian stocks. The information you’ve provided covers various aspects of opening and using these accounts, as well as the rules and regulations that NRIs need to adhere to:
Eligibility Criteria and Account Types: NRIs need to open demat and trading accounts to invest in Indian stocks. They can invest on a repatriable or non-repatriable basis. Repatriable investments allow the proceeds to be transferred outside India, requiring an NRE savings account. Non-repatriable investments have restrictions on transferring money outside India and necessitate an NRO savings account.
Portfolio Investment Scheme (PIS): NRIs can invest through the Portfolio Investment Scheme (PIS), which enables them to buy and sell shares of Indian companies on recognized stock exchanges using their NRE or NRO accounts. The PIS-enabled NRE account needs to be linked with the demat and trading accounts for stock trading.
Investment Options: NRIs can invest in stocks, bonds, IPOs, NCDs, and Esops through their NRE/NRO accounts. They can also invest in mutual funds using their NRE/NRO accounts after completing the KYC process.
Taxation: NRIs are subject to capital gains tax and dividend income tax, similar to resident investors. The tax rate for dividend income is 20%, subject to the Double Taxation Avoidance Agreement (DTAA), if applicable. After tax deductions, the funds are credited to the respective NRE/NRO accounts.
It’s important for NRIs to work with authorized dealers and banks that are approved by the Reserve Bank of India (RBI) to ensure compliance with all regulations.
Required Documents: NRIs need to provide various documents, including an account opening form, PAN card, passport, OCI/PIO status, foreign and Indian address proof, a canceled cheque of NRE/NRO account, and passport-size photos. These documents need to be self-attested and verified by appropriate authorities.
Charges and Fees: NRIs are charged various fees for trading accounts, including account opening fees, brokerage charges, platform access fees, call and trade fees, exchange transaction charges, stamp duty fees, GST, Sebi charges, and more.
Investment Limits: NRIs are limited to investing up to 10% of a company’s paid-up capital. Demat and trading accounts act as intermediaries between bank accounts and investment tools like equity shares and bonds.
Demat Accounts for Mutual Funds: Unlike other securities, mutual funds can be invested in without the need for a demat account.
It’s important for NRIs to work with authorized dealers and banks that are approved by the Reserve Bank of India (RBI) to ensure compliance with all regulations.
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