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The following investment avenues are available for the Non-Resident Indians in India:
- Government securities or units of Unit Trust of India
- National Savings Certificates issued by post offices in India
- Non-convertible debentures of Indian companies
- Bank Accounts in India
- Investment in securities or shares and deposits of Indian firms or companies
- Investment in immovable property in India
- Investment in Mutual Funds in India
- Company deposits
NRI are permitted to make direct investments in shares/debentures of Indian companies/units of mutual funds. They are also permitted to make portfolio investments i.e. purchase of share/debentures of Indian Companies through recognized stock exchange. These facilities are granted both on repatriation and non-repatriation basis.
Yes, the issuing company is required to issue shares to NRI on the basis of specific or general permission from GOI/RBI. Therefore, individual NRI need not obtain any permission.
No, NRIs do not require any permission to invest though Initial Public Offerings (IPO’s) or Private placements. IN such cases, the Issuing Company should comply with all necessary regulations for issuing securities to a person residing outside India.
No, NRIs can sale such shares/debentures on the Exchange without any approval. However, while seeking the credit of sale proceeds to NRE/NRO account, the bank should be provided with the details regarding date of allotment and cost of acquisition to calculate taxes, if any.
Yes, Investment can be made on repatriation as well as non-repatriation basis. However, an NRI will have to open NRE account as well as NRO account with designated bank branch as the sale proceeds of non-repatriation investment can only be credited to NRO account
The repatriation of the sale proceeds, net of taxes, are allowed if the original purchase was made on repatriation basis and such investments were made out of funds from NRE / FCNR account or by means of remittance from abroad.
Corporate benefits may be in the form of dividend, interest, rights, bonus, etc. Any corporate benefit resulting out of investment in securities on non-repatriation basis will not carry the right of repatriation. Similarly any corporate benefit resulting out of investment in securities on repatriation basis will carry the right of repatriation. This is subject to change depending on prevailing RBI regulations.
No, Securities received against investments under ‘Foreign Direct Investment scheme (FDI)’, ‘Portfolio investment scheme (PIS)’ and ‘Scheme for Investment’ on non-repatriation basis have to be credited into separate demat account. Investment under PIS could be on repatriation or non-repatriation basis. Investment under (FDI) scheme is on repatriation.
As per regulatory guidelines, Tax (if applicable) has to be deducted at source for all the profits earned in the equity market transactions. Before crediting sales proceeds it is the responsibility of the broker and the PIS cell to determine the appropriate Tax and deduct it at source.
TDS is computed on the profit amount or the gain as per the applicable rate. i.e. short term or long term on a First-In, First-Out (FIFO) basis.
The Investment in equity shares is considered capital assets and income there from is computed as
“Income from Capital Gain” for Indian taxation purpose.
If shares are held for less then 12 months. The gain arising on sale is considered as short term capital gain “Applicable rate of tax is 15.45%”
If the shares are held for more than 12 months, the gain arising on sale is considered as long term capital gain. There is no tax payable in case of long term capital gain if shares are sold on recognized stock exchange.
For any TDS to be deducted and money to be remitted to bank account, there are three things which have to be verified.
1. Amount of gain = Selling price – Purchase price
2. Duration of holding i.e. long term or short term = Selling date – Purchase date
3. Source of fund for purchase i.e. NRE or NRO. Important: TDS is deducted only at the time of crediting sales proceeds.
Apart from brokerage payable to the broker for obtaining his services and per transaction charges for delivery instruction ship charges by Demat, the charges and cost relating to transaction on shares executed on stock exchange are as under:
| Nature of Charges |
Rate as % of Charges |
Collected by whom |
| Stamp Duty |
0.01% |
State Government |
| Transaction Charges |
0.00416% |
Stock Exchange |
STT-Security Transaction Tax |
0.125% |
Central Government |
| Service Tax on Brokerage |
12.36% |
Central Government |
NRIs can also trade in futures and options by utilizing the funds of NRO non PIS account (Normal NRO Savings account.) NRI needs to take a Unique Client code (UCC) from the NSE through a clearing member. Kunvarji, being a clearing member will get the code from NSE and enable you to trade in derivatives. Trading in derivatives will help you to hedge your equity holdings.
NRIs can invest in Derivatives through NON PIS account.
NRIs can invest in exchange traded Derivative Contracts approved by SEBI from time to time out of INR funds held in India on non-repatriable basis (NRO) subject to the limits prescribed by SEBI.
- A mutual fund is nothing more than a collection of stocks and/or bonds. You can make money from a mutual fund in three ways:
- Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all income it receives over the year to fund owners in the form of a distribution.
- If the funds sale securities that have increased in price, the fund has a capital Gain. Most funds also pass on these gains to investors.
- If fund holdings increase in price but are not sold by the fund manager, the fund’s shares increase in price. You can then sale your mutual fund shares for a profit.
NRI can invest in Mutual Funds through NON PIS account.
NRIs can buy and sale shares seamlessly through Kunvarji Finstock Pvt Ltd. You can invest from your NRE as well as your NRO funds. For NRI, it is mandatory to open a Portfolio Investment Scheme (PIS) account through a RBI accepted designated Bank. Our preferred designated banker is Axis Bank. However, you can open with any bank for the PIS services. In case, you have already PIS account. You have to provide all the documents to your broker. Your trades are reported to the respective designated bank, which is turn would report the same to RBI.
The purchase of Equity shares/convertible debentures in each company with repatriation and non repatriation benefits shall not exceed 5% (or as prescribed by reserve Bank of India from time to time) or the paid up capital of the company, subject to an overall ceiling of 10% (or as prescribed by Reserve Bank of India from time to time.) All consequences of failure in such compliance, including any losses arising out of reversal of transactions shall be to the customer’s account.
Equity investments are subject to market risks and there is no assurance or guarantee that the objective of the portfolio management service will be achieved. As with any investment in securities, the net asset value of the managed portfolios can go up or down depending on the factors and forces affecting capital markets. Past performance of the portfolios does not indicate the future performance.
Yes, As far as the instructions are concerned, he can designate his relative who will issue buy or sale orders. We are providing mail, phone and chat facility also for easy trade. However, the payment mechanism of PIS account will have to be followed.
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