NRI Trading in India

Posted on 15th Sep 2016
by TopShareBrokers Team


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Are you a NRI and want to play in Indian Stock Market but don't know how. Don't worry because here in this article you will get all the information to begin your journey as NRI Trader. To know about NRI Trading in detail, let's go step by step and learn who is NRI, what is NRI trading, types of Accounts NRI can open, Brokers that offer NRI Trading services in India and what all goes in to NRI Trading.

Latest Update for NRI Trading in India

With the recent amendment in FEMA regulation, NRIs can now invest in Equity Market like resident individuals. Earlier NRIs were allowed to invest in Equity market through a PIS account only. Now PIS account is required only if you have NRE Account by which you can repatriate (take out the funds out of the country) the sale proceeds.

NRI with NRO Account can trade in Equity Delivery as normal resident Indian.You just need to open a normal trading and demat account and link it with your NRO Saving Account.

NRI is no longer required to open PIS Bank Account for investment in Indian stock market without repatriation benefits.

NRIs allow to trade in Currency Derivatives

Yes, With RBI Circular on 2nd Feb 2017, NRIs access to the exchange traded currency derivatives(ETCD) market to hedge currency risk arising out of their investments in India. With this change NRIs may take positions in the currency futures/exchange traded options market.

For More detail please contact your broker.

RBI Notification

Who is NRI?

NRI or Non Resident Indian is a person residing outside India who is an Indian citizen and holding Indian passport. The purpose of staying outside India for an uncertain time period can be employment, business, education, training etc.

Who is Person of Indian Origin PIO?

Person of Indian Origin (PIO) means a citizen of any country other than Bangladesh or Pakistan, if he at any time held Indian passport; or he or either of his parents or any of his grandparents was a citizen of India; or the person is a spouse of an Indian citizen. Investment by PIO in Indian Securities is treated the same as the investment by non-resident Indians NRIs and requires same approvals and enjoys the same exemptions.

What are the steps NRI has to take for equity trading in India?

  • Open a NRE or NRO Account with designated Bank in India.
  • Take PIS (Portfolio Investment Scheme) approval letter from RBI (only for NRE Account).
  • Open Trading and Demat account with registered Broker.

What are the regulations for NRI Trading/Investment in shares?

  • Intraday trade is not allowed to NRIs.
  • All contract notes of buy and sell transaction has to be reported to PIS banker by your Broker.
  • Every sell transactions will be credited to client's bank account net of Tax. Hence for every sell transaction capital gains will be calculated by CA.
  • Tax on long term capital (more than a year) gains is Nil. Tax on short term capital gain (less than one year) is 15.45%.

What is NRE Account

NRE Bank Account is Non Resident External Account. Since it is an external account, any money lying in NRE account can be remitted outside the country which means the money is fully repatriable. Also money can be freely transferred from NRE to NRO Account. It can be a saving or current account. With this account, NRI has to go through PIS route to trade in Indian Stock Market.

What is NRO Account?

NRO Bank Account is Non Resident ordinary Account. With NRO Account you have restricted repatriation of 1 million USD per annum. Also money cannot be transferred from NRO Account to NRE Account. NRI with NRO saving account is no longer required to open PIS Bank Account for investment in Indian stock market.

Similarities and Differences between NRE and NRO Account:
NRE Saving Account NRO Saving Account
Account Type NRE account can be a Saving Account or Current Account NRO Account can be a Saving or Current Account
Average Monthly Balance in Account Rs 10,000 Rs 10,000
Repatriation Principal and Interest earn is fully repatriable Restricted or partially repatriable (upto $ 1 million in a financial year)
Taxation NRE Account is tax free Interest earn and credit balance has tax liability
Earnings in India Any type of earning in India cannot be deposited in NRE Account Earnings in India can be deposited in NRO Account
Joint Account NRE Account can only be jointly open with NRE only Can be open jointly with NRI or close relative in India

What is Portfolio Investment Scheme (PIS)?

Portfolio Investment Scheme PIS is the scheme of RBI through which NRIs and PIOs can purchase and sell shares and convertible debentures of Indian companies on a recognized stock exchange in India by routing all their transactions through a designated bank branch on repatriation benefit basis.

There are few branches of some Banks that are designated by RBI that a NRI can have account with in order to invest in Indian Share Market.

What is PIS Bank Account?

Non Resident Portfolio Investment Scheme Account is called NRI PIS Bank Account. Any NRI or PIO holder wishing to invest in Indian Share Market on repatriation benefit basis must have PIS Account with one designated Bank in India. It is meant for investing in Indian Share Market delivery based buy and sell transaction. Now with the new RBI circular, you only need PIS letter if you want to map NRE account with trading account. That would be called NRE PIS Account. However, for NRO account you are not required to get PIS letter and you can map your NRO Account to Trading account with any Broker as normal.

There are Financial Institutions in India who provide Bank, Trading and demat Account for NRIs all under one roof. They are called 3- in- 1 NRI service providers. They serve as Ban, Broker and DP all in one.

3-in-1 NRI Service Providers in India

The Broker who provides Saving Bank Account, Trading Account and Demat Account all in one for seamless transactions.

  1. Kotak Securities NRI Account >>More

    Kotak securities offer all three accounts for NRIs i.e. Saving bank Account, Demat Account and Trading Account named as Trinity Account. Kotak Mahindra bank is a designated bank for issuing PIS.

    Kotak Securities NRI Brokerage and other charges:

    • Account Opening Charges : Rs 3750
    • Brokerage : 1% per volume or 10 paisa per share whichever is higher
    • Average Quarterly Balance in saving account : Rs 10,000
    • Security Transaction Cost( STT) : .1%
    • Account Maintenance Fee ( AMC) for PIS account : Rs 1000 per year
    • AMC for Demat account : Rs 75 per month.

  2. ICICI NRI Trading Services >>More

    ICICI's 3-in-1 integrated account enables you to tie in your savings bank, demat and brokerage accounts electronically and seamlessly. You can invest in equities, derivatives (F&O), mutual funds, IPOs, ETFs through your ICICI NRI account.

    ICICI NRI Charges:

    • Account Opening charges : Rs 4000
    • Demat Account AMC for NRIs: Rs 1200 (for foreign address) or Rs 500 (for Indian address)
    ICICI NRI Equity Delivery Brokerage
    ICICI Total Turnover (per month) ICICI NRI Brokerage
    Above Rs 50 lakhs 0.50%
    Rs 25 lakhs to Rs 50 lakhs 0.75%
    Rs 10 lakhs to Rs 25 lakhs 0.90%
    Rs 5 lakhs to Rs 10 lakhs 1.00%
    Up to Rs 5 lakhs 1.25%
    ICICI NRI Equity Future Brokerage
    Total Turnover (per month) ICICI NRI Brokerage
    Above Rs 20 Crores 0.03%
    Rs 10 Crores to Rs 20 Crores 0.035%
    Rs 5 Crores to Rs 10 Crores 0.04%
    Up to Rs 5 Crores 0.05%
    ICICI NRI Equity Options Brokerage
    Total Turnover (per month) Per Lot Brokerage
    Above Rs 20 Lakhs Rs 70
    Rs 10 Lakhs to Rs 20 Lakhs Rs 75
    Rs 5 Lakhs to Rs 10 Lakhs Rs 85
    Less than 5 lakhs Rs 95

  3. HDFC NRI Trading Services >>More

    HDFC offers 3-in-1 account for NRIs to invest in India. This account combines banking, broking and demat account which makes your equity trading seamless and hassle-free.

    HDFC Securities NRI Brokerage Charges

    • Equity Delivery: 0.75% or min Rs 25 or ceiling of 2.5% on transaction value (Both Buy & Sell)
    • Equity Future (carry forward trade) : 0.05% or min Rs.25/- or ceiling of 2.5% of transaction value (Both Buy & Sell)
    • Equity Future (square off trade) : 0.025% or min Rs.25/- or ceiling of 2.5% of transaction value (Both Buy & Sell)
    • Equity Options : Higher of 1% of the premium amount or Rs 100 per lot (Both Buy & Sell)

  4. AXISDirect NRI Trading Services >>More

    AxisDirect, the online trading portal of Axis Securities Limited, a 100% subsidiary of Axis Bank offers3-in-1 account integrating bank, demat and trading account seamlessly enabling hassle free transactions.

    Invest in Equities, Initial Public Offerings, ETFs, Mutual Funds and Futures & Options with AxisDirect NRI trading account.

    AxisDirect NRI Brokerage Charges

    • Equity Delivery : .75%
    • Equity Future ( Buy and sell ) : .05%
    • Equity Future Intraday on each leg : .05%
    • Equity Options : Rs 100 per lot ( both buy and sell)
    • 2-in-1 NRI Service Providers in India

      This means the Broker offers Trading and Demat Account and you have to link the NRE or NRO Account open externally through Bank to your trading Account.


  5. ShareKhan NRI Trading Services >>More

    Sharekhan provides NRI Investment Services having tie up with HDFC Bank for RBI approved NRE or NRO Bank Account.

    How to open NRI Account with Sharekhan:

    1. Fill Contact Sharekhan form and Sharekhan executive will contact you.
    2. Fill the HDFC bank account forms and ekyc to Sharekhan. Sharekhan will send documents to Bank for account opening.
    3. Bank gives a/c numbers to Sharekhan. They will then process Demat and Trading Account.

Discount Broker's NRI Trading Services in India

The Broker who provides Trading Account and Demat Account with discount/Flat fee brokerage for NRI's.

  1. ProStocks NRI Account >>More
    • Trading and Demat Account Opening charges: Free
    • AMC for Trading Account : Nil (Zero)
    • Demat account AMC : Free with Rs 1000 refundable one time deposit.
    • Custody account ( for F&O trading) opening charges: Free but franking charges of Rs 1200.
    • Custody Account (for F&O Trading) with IL&FS : No AMC
    • Brokerage Charges :Rs 100 per trade (all segments).
    • Online EKYC, fill your form online

    How to open NRI Account with ProStocks:

    Simply leave your contact information with us and ProStocks representatives will call you.


  2. Zerodha NRI Account >>More
    • Zerodha, a leading Indian Discount Broker provided NRI trading services for trading in Equity and Equity Derivative segment.
    • Zerodha NRI Brokerage: Rs 200 per executed order for both Equity and F&O.

    How to open NRI Account with Zerodha:

    Simply leave your contact information with us and Zerodha representatives will call you.


  3. TradePlusOnline NRI Account >>More

    TradePlus NRI Account enables you to invest and Trade in Equities and Derivatives listed on NSE and BSE. You can also invest online in Mutual Funds and IPOs using this Account. They have tied up with HDFC Bank, Axis Bank and Yes Bank.

    TradePlus Online NRI Brokerage:

    • Equity Delivery : .30%
    • Equity Future and Options : .03%

  4. Upstox NRI Account >>More

    Upstox, the 2nd largest discount broker by number of clients started offering NRI Trading and Demat account services since Jan 2016.

    Upstox NRI Trading Account charges

    • Trading Account Opening Charges: Rs 250
    • Demat Account Annual Maintenance Charges AMC: Rs 300
    • Upstox NRI Brokerage: Flat Brokerage of Rs 200 per order traded plus applicable taxes as per actual irrespective of the value of the order.

What are the segments a NRE Trading Account holder can trade in?

NRI can do delivery based buy and sell transaction with NRI-NRE trading account linked with your NRI PIS Bank Account. Please note that NRIs are not allowed to do non delivery trades in cash segment (equity segment). Trading in equity derivatives and currency derivative is also not allowed through NRI- NRE Trading account.

Limit for purchase of shares by NRIs under NRE Account

Stock holding of an NRI can't exceed 10% in any Indian listed company subject to overall limit for listed equity shares of each company on repatriation benefit basis. Here is the list and limit on stock holding by NRI.

Documents required to open a NRE Trading Account:

This the list of general documents required by any broker. The list may vary depending upon your broker.

  • Self-certified copy of PIS permission letter issued by the Banker.
  • FATCA Annexure duly filled and signed.
  • Attested copy of PAN card.
  • Attested copy of Overseas address proof – Copy of Driving License/Foreign Passport/Utility Bills/Bank Statement (not more than 2 months)/Notarized copy of rent agreement/Leave & License agreement/ Sale Deed.
  • Self-certified copy of Indian address proof, if any.
  • Passport size photograph.
  • In case of an Indian Passport: Attested copy of valid passport with copy of Valid Visa
  • In case of Foreign Passport: Attested copy of valid passport, Copy of PIO/OCI card.
  • Proof of Bank account (a cancelled cheque leaf of your NRE savings bank account)
  • Note: Copy of PAN card, Passport, Power of Attorney and Foreign address proof to be notarized by Indian Embassy or any other competent authority like Consulate General / Notary Public / Any Court / Magistrate / Judge / Local Banker in the country where the NRI resides. The attesting authority should affix a “verified with original” stamp, name, designation, signature and date on the said documents
  • Declaration of P.O. Box in your residing country.

Trading in Indian Stock Market with NRO Account:

What does the new RBI Amended FEMA regulation says?

NRI is no longer required to open PIS Bank Account for investment in Indian stock market without repatriation benefits. NRI are on par with resident Indian for all investment in listed equity shares on Indian stocks exchanges without repatriation benefits which means NRI investing through NRO Account are not required PIS Account. Any existing NRO PIS Account will be converted to NRO Saving Bank Account post amendment in FEMA in Feb 2016.

Limit for purchase of shares by NRIs under NRO Account

NRI investment in equity shares of listed company without repatriation benefit is treated at par with resident Indian and there is no upper limit. Please refer the recent amendment in FEMA on RBI website at following link1 and link2

Segments allowed to trade in by NRI with NRO Account:

  • Equity Segment: Delivery based trade only
  • Equity Derivative Segment : Futures and Options trade for intra-day square off and carry forward both.
  • Currency Derivative Segment : Currency Futures trade for intra-day square off and carry forward both.
  • Note: Intraday Trading is not allowed to NRIs.

What are the documents required to open an NRI Non Repatriation Benefit (NRO) account?

  • Self-certified copy of NRO Saving Bank Statement
  • Declaration from Bank that they will deduct TDS / withholding tax as may be applicable. PIS account is no more applicable for NRO Trading Account .
  • FATCA Annexure duly filled and signed
  • Attested copy of PAN card
  • Attested copy of Overseas address proof – Copy of Driving License/Foreign Passport/Utility Bills/Bank Statement (not more than 2 months)/Notarized copy of rent agreement/Leave & License agreement/ Sale Deed
  • Self-certified copy of Indian address proof. Indian address proof is mandatory for NRO Account. Your Indian Address on NRO Bank Statement ( if existing ) is accepted as Indian address proof.
  • Passport size photograph
  • In case of an Indian Passport: Attested copy of valid passport with copy of Valid Visa
  • In case of Foreign Passport: Attested copy of valid passport, Copy of PIO/OCI card.
  • Proof of Bank account (a cancelled cheque leaf of your NRO savings bank account)
  • Note: Copy of PAN card, Passport, Power of Attorney and Foreign address proof to be notarized by Indian Embassy or any other competent authority like Consulate General / Notary Public / Any Court / Magistrate / Judge / Local Banker in the country where the NRI resides. The attesting authority should affix a “verified with original” stamp, name, designation, signature and date on the said documents
  • Declaration of P.O. Box in your residing country

How NRI can trade in Equity Futures and Options (equity derivative Segment) in India?

If you intent to trade in Equity Derivatives Segment, you have to come through the custodial route. You will need to open NRO Custody Account. Brokers like Zerodha and ProStocks offer NRO Custody account from ISSL, which is IL&FS Group Company. Your settlement obligation for trades in Equity Derivatives Segment will be done by ISSL from your custody account. ISSL charges custody account management charges and you need to do KYC with ISSL also. Your Broker will assist you in opening your custody account with ISSL. ISSL will permit custody account with assets not less than USD 5000.

How to get CP (custodial Participant ) code?

  • Contact a Clearing Member (CM) like IL&FS and submit the application for custodial participant (CP) code.
  • The Clearing Member request the National Securities Clearing Corporation Ltd. (NSCCL) to allot a CP code in respect of client for which the member would be carrying out clearing and settlement.
  • Clearing Member share the custodial participant (CP) code with you.
  • Open the NRI trading account with your choice of broker and provide them the CP code.
  • The broker will use the CP code for all your trade settlements.

What all documents are required for Custody Account with IL&FS?

To open a Custody Account you need to complete certain documents:

  • A Custody Account Opening Form including net-worth certificate, application for applying CP code etc.
  • A Custody Agreement.
  • A Power of Attorney granted in favor of ISSL.
  • All other standard documents related to Proof of Address, Identity etc.
  • If the documents are executed outside India then the consularisation / notorisation is required on all the documents.

I have NRO Account and PIS through Axis Bank, how to close my PIS Account ?

You can request your Bank to close your PIS Account and move to non-PIS way. In such case you need to contact your bank and send broker a revocation letter and closure of PIS acknowledgement copy.

How is tax calculated on NRO Account based Trading?

NRO Trading Account is subject to applicable withholding tax. This withholding tax is known as Tax Deducted at Source. Your broker need to deduct withholding tax and deposit to Tax Department, for that brokers need to take external service of Chartered Accountant.

What is the status of NRO/NRE accounts on the return of the account holder to India?

Banks have authority to redesignate such accounts as resident accounts on return of the account holder to India. When you convert your account in resident account, you will get interest till last date.

I am currently in Saudi Arabia , how can I open NRI trading A/C in India?

As per the latest RBI circular, if you have a NRO (non-repatriable) bank account, you can map that to the trading account and it will be like a normal resident account.

Who will compute and apply TDS for short term capital gain (profits) in case of a NRI trading ?

Your Broker will calculate the tax with the help of a CA and deduction will be done by the Bank where you are holding the NRI Account.

Which Banks in India provide PIS account?

Axis Bank, HDFC Bank, Yes bank, SBI Bank, ICICI Bank, Indusind Bank.

Why is the Brokerage charges high for NRIs with Discount Brokers?

Unlike resident accounts, there is a huge manual process supporting NRI clients. There is incremental efforts involved in all NRI trades including updating balances, reporting contract notes, reconciling receipt/transfer of funds etc and hence the higher charge.

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User Comments

avatar
1. Ashok  Jun 21, 2017 5:39:56 PM IST Reply
Dear Sir,

I am an Non Residence Indian and I am using NRO SB account for share investment ( Equity Delivery basis) but DP and trading account is not NRI Category and I have given normal Residence PAN CARD only.

But I just came to know that For NRI Separate Pan Card to be applied.

Kindly advice me.

Regards
Ashok



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