Trading rules for Non resident of India (NRI)

BUZZ · #11 22nd August 2008, 06:54 AM

Hi Hari,
Thanks for the link.
Have you came accros such NRI case before? Please share with us.

i.e. NRI has invested using his normal trading account and Tax department found out the case and I am just wondering what were the consequences in such cases?

Please share specially for all our NRIs for their information.

Have a wonderful day ahead!

haribird · #12 22nd August 2008, 09:11 AM

Quote:

Originally Posted by BUZZ

Hi Hari,
Thanks for the link.
Have you came accros such NRI case before? Please share with us.

i.e. NRI has invested using his normal trading account and Tax department found out the case and I am just wondering what were the consequences in such cases?

Please share specially for all our NRIs for their information.

Have a wonderful day ahead!

Dear BUZZ,

Thank you for your message.
I know many of my friends and relatives hold such account. But I DONOT advise it.
You can simply take one NRI trading account lonked to NRO in your name itself with the PAN card already have.
For more details you may email to (Will sent the email in Private Message as its a leading broker firms support email address.) They are really fast in replying your questions(with in 24hours).
ICICI is charging Rs:4000 for the NRI trading account opening but other charges nothing. Also ICICI Charges higher brokerage than normal trading account for NRI other don't.
There is an annual maintenance charges for PINS/PIS account for in banks its around Rs:1000 per year.

Regards,
Hari

BUZZ · #13 22nd August 2008, 09:45 AM

HI Hari,
Thanks for prompt reply, Well, I checked with some brokers and the annual maintenance fees and other charges are more than the normal account. I am not a expert player in equity market . So I may not use so much that's why looking for the cheaper option and low maintenance as if I don;t have time for trading then also should be fine.
I heard that reliance is such low charges still high for NRI?.. What you think about that but

I hope you understand!

haribird · #14 22nd August 2008, 10:50 AM

Quote:

Originally Posted by BUZZ

HI Hari,
Thanks for prompt reply, Well, I checked with some brokers and the annual maintenance fees and other charges are more than the normal account. I am not a expert player in equity market . So I may not use so much that's why looking for the cheaper option and low maintenance as if I don;t have time for trading then also should be fine.
I heard that reliance is such low charges still high for NRI?.. What you think about that but

I hope you understand!

Dear Buzz,

I don't know how reliable is reliance services. But I think they have the lowest brokerage rates. I have heard from some of my friends that its not so good. First you should relay on the service quality before day trading as if the system is faulty it will give you very bad results. I hardly have personal experience in Reliance. If you are a low volume trader then small brokerage charge differences will not affect you much.
Even if you are so particular in the annual maintenance charges and so, then take an account care of your parents or relative and trade in it.

Regards,
Hari

BUZZ · #15 22nd August 2008, 08:05 PM

Quote:

Originally Posted by haricnair

Dear Buzz,

I don't know how reliable is reliance services. But I think they have the lowest brokerage rates. I have heard from some of my friends that its not so good. First you should relay on the service quality before day trading as if the system is faulty it will give you very bad results. I hardly have personal experience in Reliance. If you are a low volume trader then small brokerage charge differences will not affect you much.
Even if you are so particular in the annual maintenance charges and so, then take an account care of your parents or relative and trade in it.

Regards,
Hari

Hi Hari,
I am not an intra day trading at all . I may use ccount only a few days in a months or so due to bust schedule... Thats why no point ending up with high charges.

Hope now u got my point!

So far no one has mentioned any Income Tax subsequences if an NRI holds normal account for trading.

Have u come acrossed any such cases? If so then what kind of action Tax dept takes against such cases...

I do have another option as u mentioned " use another close relative a/c" but still want some more clarification about NRI..

Have a wonderful time!!

haribird · #16 22nd August 2008, 10:13 PM

Quote:

Originally Posted by BUZZ

Hi Hari,
I am not an intra day trading at all . I may use ccount only a few days in a months or so due to bust schedule... Thats why no point ending up with high charges.

Hope now u got my point!

So far no one has mentioned any Income Tax subsequences if an NRI holds normal account for trading.

Have u come acrossed any such cases? If so then what kind of action Tax dept takes against such cases...

I do have another option as u mentioned " use another close relative a/c" but still want some more clarification about NRI..

Have a wonderful time!!

Dear Buzz,

Its illegal for an NRI to hold a non-NRI account. Normally there are rare chances of authorities finding it. But to be legal you should hold only NRI account and should convert your non-NRI account to NRI. Also its mandatory to report all your shareholding companies and so about your NRI status as per RBI.

I don't know any such cases occurred. A lawyer/Tax Practitioner can answer what will happen if the case is found.

As you said you are only trading very low. So the brokerage charges are not at all need to consider. The maximum total charges you need to pay in an NRI Trading/Demat account is less than 1500 per year. Even if in case of a non nri trading account the total annual charges is approximately 500. So I think 1000 more for an NRI Trading account per year is not so big. You can compensate in your gains.

The income(15% for short term gains, No tax if you hold for 1 year aleast) and other such taxes are same for NRI trading and Non-NRI Trading.

Regards,
Hari

BUZZ · #17 26th August 2008, 04:56 PM

Thanks buddy ,
If anyone comes across such cases and consequences then please post for our NRIs knowledge,

Cheers!

Buzz

sish7255 · #18 2nd September 2008, 09:03 PM

Dear Hari,

Thank you very much for this valuable information. I have a problem, hope you will post your reply. I’m NRI presently working in Trinidad & Tobago, West Indies for more than 2 years now. I contacted many brokers in India for NRI trading account, many of them did not reply and some of them said they are unable to extend NRI Online Trading Account for west Indies.

Hari, I have my NRE account( Joint with my wife who is NRI as well) with SBI but not yet internet banking enabled. Since my intention is to go back & settle in India when I finish my contract @ after 2-3 years. I don't want to repatriate any amount to abroad by using NRE repatriable account.

When I read your post, I have decided to go with NRO savings bank account with normal Demat & Trading account ( as what resident Indians do). Is it possible & legal this way? Then I don't need to have PINS account and PAN card on foreign address. I already have PAN card on Indian address.

If above option do not work, another option is to open savings bank account, Demat account and Trading account in my parents name in India and take POA in my name to operate it from overseas ( my parents are not literate enough).In this case I can transfer funds from my NRE a/c to my parents savings bank account to do trading.

For your knowledge, I'm planning to visit India by next month. awaiting for your valuable suggestions asap.

Kind Regards.

Sikandar

haribird · #19 5th September 2008, 06:01 PM

Quote:

Originally Posted by sish7255

Dear Hari,

Thank you very much for this valuable information. I have a problem, hope you will post your reply. I’m NRI presently working in Trinidad & Tobago, West Indies for more than 2 years now. I contacted many brokers in India for NRI trading account, many of them did not reply and some of them said they are unable to extend NRI Online Trading Account for west Indies.

Hari, I have my NRE account( Joint with my wife who is NRI as well) with SBI but not yet internet banking enabled. Since my intention is to go back & settle in India when I finish my contract @ after 2-3 years. I don't want to repatriate any amount to abroad by using NRE repatriable account.

When I read your post, I have decided to go with NRO savings bank account with normal Demat & Trading account ( as what resident Indians do). Is it possible & legal this way? Then I don't need to have PINS account and PAN card on foreign address. I already have PAN card on Indian address.

If above option do not work, another option is to open savings bank account, Demat account and Trading account in my parents name in India and take POA in my name to operate it from overseas ( my parents are not literate enough).In this case I can transfer funds from my NRE a/c to my parents savings bank account to do trading.

For your knowledge, I'm planning to visit India by next month. awaiting for your valuable suggestions asap.

Kind Regards.

Sikandar

Dear Sikandar,

Thank you for your appreciation.
I think the better option is the below if you have no issues taking account in your parents name.

[q]If above option do not work, another option is to open savings bank account, Demat account and Trading account in my parents name in India and take POA in my name to operate it from overseas ( my parents are not literate enough).In this case I can transfer funds from my NRE a/c to my parents savings bank account to do trading. [/q]

Or the other options is to contact a broker firm and they will facilitate it. I will give contact details of some brokers in Private Message.

And the about other option of take a Normal NON NRI Trading Account, I will ask my friend, a bank manager about the legality of it and will post the possibilities here in 2 days.

Regards,
Hari.

haribird · #20 6th September 2008, 02:50 PM

Quote:

Originally Posted by haricnair

Dear Sikandar,

Thank you for your appreciation.
I think the better option is the below if you have no issues taking account in your parents name.

[q]If above option do not work, another option is to open savings bank account, Demat account and Trading account in my parents name in India and take POA in my name to operate it from overseas ( my parents are not literate enough).In this case I can transfer funds from my NRE a/c to my parents savings bank account to do trading. [/q]

Or the other options is to contact a broker firm and they will facilitate it. I will give contact details of some brokers in Private Message.

And the about other option of take a Normal NON NRI Trading Account, I will ask my friend, a bank manager about the legality of it and will post the possibilities here in 2 days.

Regards,
Hari.

This is an information provided by a leading bank's manager when I have asked him.

A person living out of India for 182 days or more ( in a year) is considered as an NRI.
As per NSDL an NRI cannot hold an RI ( Resident Indian ) account.
Incase, your status has changed to NRI, it would be possible but at the same time it would be illegal to hold an RI account.

Hope this will clarify.
Regards,
Hari.

The Following User Says Thank You to haribird For This Useful Post:
sish7255 (7th September 2008)