Trading rules for Non resident of India (NRI)

[BUZZ]

Hi Guys,
Can anyone explain the rules and regulations for NRI for online trading in Indian equity market.

1) If NRI gets an online trading account to trade Indian stock market by simply producing his PAN number and proof of residence and other relevant documents regardless showing any identity of any proof of foreign living status?

Please explain rules and regulations in this regard.


Cheers!
Buzz

 

[TFL]

Hi Guys,
Can anyone explain the rules and regulations for NRI for online trading in Indian equity market.

1) If NRI gets an online trading account to trade Indian stock market by simply producing his PAN number and proof of residence and other relevant documents regardless showing any identity of any proof of foreign living status?

Please explain rules and regulations in this regard.


Cheers!
Buzz

Dear BUZZ,

NRI Trading account is not available to foreign residents including Non-Resident Indians (NRIs) in United States.
NRI would not be allowed to day trade. Indian non-resident investors are not allowed to speculate on a day-to-day basis in the markets. For instance if they buy shares on Monday they would have to wait till Wednesday to sell it. However, they would be allowed to trade in the futures segment of the market.

If you want to trade with NRE account and the profit to your NRE account rather than NRO account then only you need to follow the below procedures. Else you can open a trading account like normal(PIS is needed but PAN is not needed in foreign address), no difference.

As most people and broker firms agents will say its complicated to take one and will confuse you. One of my relative have NRI Trading account and I have did everything for him. When I have contacted ICICIDirect, Sharekhan and Geojit Agents and even calls them directly they told me its a very complicated thing and forced me to take a normal trading account. Even ICICIDirect officer told me the same. But it is not that much complex in reality. I will explain the procedure below.

Donot go for ICICIDirect for trading, They are the very worst service in India. Also their brokerage is very high (If you ask them they will explain its the lowest by saying so many fake excuses, don't believe). But their ICICI Banking services are just good not best.

STEPS:
1. Take a PAN CARD(Photo and Passport copy for Foreign address proof) with your foreign address. You can apply for this in the normal form itself, put address with your overseas address and put your communication address with Indian address. If you have already taken a PAN Card with local address, then cancel the card and take a new one with foreign address.(Holding two PAN Cards are illegal.)

2. Take an NRE account with any banks like HDFC, ICICI, SBI, AXIS, etc. I recommend HDFC Bank. They provide standard quality services.

3. Take a PIS or PINS account linked to the NRE account from the same bank. You need PAN Card for this. This PINS is also known as RBI premission for NRI online trading.

3. Go to a trading firm, Sharekhan(go for Trade Tiger account not classic or fast trade), Religare, or Geojit and fill the form from there itself and submit the necessary documents.
Primary Documents Needed: Photo, Passport Copy, Local Address proof (Telephone/Bill/Ration Card/etc.), PAN CARD Copy, NRE bank statement, PIS Bank statement.

Your account will get activated in 3 or 4 days. Then you can trade with status of NRE. If I had missed anything readers please report.

Happy Trading.
Hari.

Please feedback.

 

[learn2trade08]

It tooka while for me to decide whether nre/nro/nri(even today i dont understand the difference between them),meanwhile i got my citizenship.....So thought of cutting short the entire thing and opened couple of trading accounts in my parents name.
all the best!

Dear BUZZ,

If you want to trade with NRE account and the profit to your NRE account rather than NRO account then only you need to follow the below procedures. Else you can open a trading account like normal, no difference.

As most people and broker firms agents will say its complicated to take one and will confuse you. One of my relative have NRI Trading account and I have did everything for him. When I have contacted ICICIDirect, Sharekhan and Geojit Agents and even calls them directly they told me its a very complicated thing and forced me to take a normal trading account. Even ICICIDirect officer told me the same. But it is not that much complex in reality. I will explain the procedure below.

Donot go for ICICIDirect for trading, They are the very worst service in India. In trader community there is a saying, "People who trades in ICICIDirect are fools." Its true that you will loose your money just because of their bad service. Also their brokerage is very high (If you ask them they will explain its the lowest by saying so many fake excuses, don't believe). But their ICICI Banking services are just good not best.

STEPS:
1. Take a PAN CARD(Photo and Passport copy for Foreign address proof) with your foreign address. You can apply for this in the normal form itself, put address with your overseas address and put your communication address with Indian address. If you have already taken a PAN Card with local address, then cancel the card and take a new one with foreign address.(Holding two PAN Cards are illegal.)

2. Take an NRE account with any banks like HDFC, ICICI, SBI, AXIS, etc. I recommend HDFC Bank. They provide standard quality services.

3. Take a PIS or PINS account linked to the NRE account from the same bank. You need PAN Card for this. This PINS is also known as RBI premission for NRI online trading.

3. Go to a trading firm, Sharekhan(go for Trade Tiger account not classic or fast trade), Religare, or Geojit and fill the form from there itself and submit the necessary documents.
Primary Documents Needed: Photo, Passport Copy, Local Address proof (Telephone/Bill/Ration Card/etc.), PAN CARD Copy, NRE bank statement, PIS Bank statement.

Your account will get activated in 3 or 4 days. Then you can trade with status of NRE. If I had missed anything readers please report.

Happy Trading.
Hari.

Please feedback.

 

[TFL]

It tooka while for me to decide whether nre/nro/nri(even today i dont understand the difference between them),meanwhile i got my citizenship.....So thought of cutting short the entire thing and opened couple of trading accounts in my parents name.
all the best!

Dear learn2trade08,

The differences are,

There are normally 3 kind of accounts: NRE, NRO, and FCNR
NRE: From this account you can transfer your funds easily to outside India. Also cannot transfer funds to this account from any non NRE/FCNR account. Mean you cannot fund the NRE account with local cash or from NRO account.

NRO: The above limitations are no applicable for this. Act as normal account.

FCNR: Same as NRE, but can hold money in foreign currency like Dollar, pound, etc.

1. If you link and NRE account and take PIS you can trade adn get your profits out of india. Other wise if you donot want such facility just take normal NRO/SB account + Trading account. TDS will be deducted directly from the account after trades.

Note: You can take the normal account linked to your NRO/SB account rather than taking it in your parents. As both act like same. If you need any personal advice PM me. I think I can direct.

 

[BUZZ]

Dear BUZZ,

If you want to trade with NRE account and the profit to your NRE account rather than NRO account then only you need to follow the below procedures. Else you can open a trading account like normal, no difference.

As most people and broker firms agents will say its complicated to take one and will confuse you. One of my relative have NRI Trading account and I have did everything for him. When I have contacted ICICIDirect, Sharekhan and Geojit Agents and even calls them directly they told me its a very complicated thing and forced me to take a normal trading account. Even ICICIDirect officer told me the same. But it is not that much complex in reality. I will explain the procedure below.

Donot go for ICICIDirect for trading, They are the very worst service in India. In trader community there is a saying, "People who trades in ICICIDirect are fools." Its true that you will loose your money just because of their bad service. Also their brokerage is very high (If you ask them they will explain its the lowest by saying so many fake excuses, don't believe). But their ICICI Banking services are just good not best.

STEPS:
1. Take a PAN CARD(Photo and Passport copy for Foreign address proof) with your foreign address. You can apply for this in the normal form itself, put address with your overseas address and put your communication address with Indian address. If you have already taken a PAN Card with local address, then cancel the card and take a new one with foreign address.(Holding two PAN Cards are illegal.)

2. Take an NRE account with any banks like HDFC, ICICI, SBI, AXIS, etc. I recommend HDFC Bank. They provide standard quality services.

3. Take a PIS or PINS account linked to the NRE account from the same bank. You need PAN Card for this. This PINS is also known as RBI premission for NRI online trading.

3. Go to a trading firm, Sharekhan(go for Trade Tiger account not classic or fast trade), Religare, or Geojit and fill the form from there itself and submit the necessary documents.
Primary Documents Needed: Photo, Passport Copy, Local Address proof (Telephone/Bill/Ration Card/etc.), PAN CARD Copy, NRE bank statement, PIS Bank statement.

Your account will get activated in 3 or 4 days. Then you can trade with status of NRE. If I had missed anything readers please report.

Happy Trading.
Hari.

Please feedback.

Hi Hari,
Sorry for the late reply as was bit busy. Well, I am really thankful to you for the information. Well first, I understand NRE and NRO accounts properly. Therefore, there is no doubt about it.

Trading related:
Now I am in the situation that I am sooner or later shift back to India may be years or so). So I am not sure where its wise thing to open NRI trading account and end up paying extra unnecessary as I would not gonna to use as much.
So what you think should I go ahead to open trading account as being an NRI or Just go ahead for normal account.
For example: If I go for the normal trading account as I do have PAN ( Indian address). So its easy for me to go for normal trading account.
So what are the consequences, if I get a normal treading account at present situation?
Of course I am still Indian citizen.

And How tax dept deals with such cases?

Your suggestions will be highly appreciated
Buzz
Edit/Delete Message

 

[ash.paul]

Hi Buzz,
Just to let you know if you are not an indian resident ie not in India for more than 180 days in 1 financial year, then it would be illegal to open an account stating that you are indian resident, by law you can only open any bank accounts in india with a NRI status..
You can open accounts in your family or any reliable persons name or NRE/NRO a/c as normal.
Did you searched any of your local brokers in the country of residence who provides the facility to trade in Indian markets.

 

[TFL]

Hi Hari,
Sorry for the late reply as was bit busy. Well, I am really thankful to you for the information. Well first, I understand NRE and NRO accounts properly. Therefore, there is no doubt about it.

Trading related:
Now I am in the situation that I am sooner or later shift back to India may be years or so). So I am not sure where its wise thing to open NRI trading account and end up paying extra unnecessary as I would not gonna to use as much.
So what you think should I go ahead to open trading account as being an NRI or Just go ahead for normal account.
For example: If I go for the normal trading account as I do have PAN ( Indian address). So its easy for me to go for normal trading account.
So what are the consequences, if I get a normal treading account at present situation?
Of course I am still Indian citizen.

And How tax dept deals with such cases?

Your suggestions will be highly appreciated
Buzz
Edit/Delete Message

Dear BUZZ,

As an NRI you need PIS for trading in secondary market. Not needed if you only want from IPOs. Also you don't need PAN with foreign address if you only want to link your Trading & Demat account to NRO.

In your case, Go to your bank take a PIS Account (PINS) and take a statement of this PIS account and the NRO account, Submit them with PAN (local address) copy and photo. There will be no consequences for having a PIS account.

Note: Legally you cannot link to normal SB account, but most brokers will allow this silently.

Happy Trading.
Hari.

Please feedback.

 

[TFL]

Hi Buzz,
Just to let you know if you are not an indian resident ie not in India for more than 180 days in 1 financial year, then it would be illegal to open an account stating that you are indian resident, by law you can only open any bank accounts in india with a NRI status..
You can open accounts in your family or any reliable persons name or NRE/NRO a/c as normal.
Did you searched any of your local brokers in the country of residence who provides the facility to trade in Indian markets.

Dear ash.paul,

You are true. Thank you for the clarification. I like to add the below too.

Who can be called a non-resident under the Income Tax Act?
A person is said to be a non-resident for a particular year under the Income Tax Act when he satisfied both the following conditions:
1) He is in India for less than 182 days in that particular year, AND
2) If he was in India for more than 365 days or more in the four years preceding that year, then he is India for less than 60 days in that year.
(Courtesy: MoneyControl)

Thank you.

 

[BUZZ]

Hi Buzz,
Just to let you know if you are not an indian resident ie not in India for more than 180 days in 1 financial year, then it would be illegal to open an account stating that you are indian resident, by law you can only open any bank accounts in india with a NRI status..
You can open accounts in your family or any reliable persons name or NRE/NRO a/c as normal.
Did you searched any of your local brokers in the country of residence who provides the facility to trade in Indian markets.

hi Thanks,
What happens if an NRI has its normal bank accounts (saving) active continue after he becomes NRI?

Please highlight on this issue too!

 

[TFL]

hi Thanks,
What happens if an NRI has its normal bank accounts (saving) active continue after he becomes NRI?

Please highlight on this issue too!

Dear BUZZ,

By law you need to report the bank about your NRI status. Then the accounts will be converted to NRI. But most people still holds normal saving account in certain banks.

Hope you can find answers for most of your questions at the below CNBCT18 website.

MoneyControl.com/nri

Regards,
Hari