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Non PINS Demat Account query for Non US based NRI

NRI investment related query -

Following information is available on Internet -

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.

May I please request experts to help to identify which brokers are providing this kind of demat account service for NRIs without PINS.

Already connected with ICICI direct - they suggesting only way is PINS account.

Please suggest if there is any other alternate way (legal) to invest in equity without PINS account.

Thanks in advance.

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I was curious about it as well as I pay loads of amount for PIS transactions. I found the following. Quoting from RBI article. the link for which is attached.
Important points are highlighted in Bold. So, you could just purchase shares from NRO account from now on if I understand this article correctly.

“Schedule-4
[See Regulation 5(3) (ii)]
Acquisition of Securities or units by
a Non-Resident Indian (NRI), on Non-Repatriation basis

Permission to purchase

  1. A Non-resident Indian (NRI), including a company, a trust and a partnership firm incorporated outside India and owned and controlled by non-resident Indians, may acquire and hold, on non-repatriation basis, equity shares, convertible preference shares, convertible debenture, warrants or units, which will be deemed to be domestic investment at par with the investment made by residents. Without loss of generality, it is stated that

An NRI may acquire, on non-repatriation basis, any security issued by a company without any limit either on the stock exchange or outside it.

An NRI may invest, on non-repartition basis, in units issued by an investment vehicle without any limit, either on the stock exchange or outside it.

An NRI may contribute, on non-repatriation basis, to the capital of a partnership firm, a proprietary firm or a Limited Liability Partnership without any limit.

Explanation: ‘Investment Vehicles’ and ‘Units’ and ‘shall have the same meaning as defined in sub-regulation (ii g) and (xi A) of Regulation 2 of these Regulations.

Prohibition on purchase

  1. Notwithstanding what has been stated in paragraph 1, an NRI shall not make any investment, under this Schedule, in equity shares, convertible preference shares, convertible debenture, warrants or units of a Nidhi company or a company engaged in agricultural/plantation activities or real estate business or construction of farm houses or dealing in Transfer of Development Rights.

Explanation: For the purpose of this paragraph, “Real estate business” means dealing in land and immovable property with a view to earning profit therefrom and does not include development of townships, construction of residential commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships. Further, earning of rent income on lease of the property, not amounting to transfer, will not amount to “real estate business”. Investment in units of Real Estate Investment Trusts (REITs) registered and regulated under the SEBI (REITs) regulations 2014 shall also be excluded from the definition of “real estate business”.

Method of payment for purchase

  1. The consideration for investment under this Schedule shall be paid by way of inward remittance through normal banking channel from abroad or out of funds held in NRE/FCNR/NRO account maintained with a bank in India:

Sale/Maturity proceeds

  1. The sale/maturity proceeds (net of applicable taxes) of the securities or units acquired under this Schedule shall be credited only to NRO account irrespective of the type of account from which the considerations for acquisition were paid.

  2. The amount invested under this Scheme and the capital appreciation thereon shall not be allowed to be repatriated abroad. ”

https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10288&Mode=0#S4

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I have been investing in stocks with Prabhudas Lilladher through my NRO account. The amount earned is non-repatriable. PIS permission is required but the bank mentions in the PIS permission that this is only linked through NRO account and non-repatriable.

By the way, I have separate broker for repatriable PIS account linked with my NRE account.
Its 100% legal to have two separate accounts from NRIs as I am having. You can not have two PIS accounts with repatriable benefit.

I connected with RKSV (Upstorx) and they replied back with following sentence -

Newly amended law for NON-PIS NRO account is also available with ,in which you need to open NRO special account with HDFC and YES bank.

But when I tried to connect with them over call , center center person was not aware about this.
Now I am waiting for their further clarification.

Is the TDS applicable for short term CG and if so , how is it given effect?

i had same issue with Yes bank… their PM have no knowledge on NRI banking service but they call themselves Yes bank’s Non.Resident customer’s PM. I opened NRO invest account and linked it to my trading account in Zerodha… you just need to open an NRO-Invest account at Yesbank… take a printout of the account statement of NRO-Invest online and provide it to the broker…

My PM was soo bad that to open the NRO-Invest, it took me 2 months and escalating the issue to their HQ… after escalating, the branch manager called me to apologise and promised he will resolve it in 2 week… and he did it in 10 days…

TDS is applicable for short term capital gain and the bank deducts the TDS while crediting the sell proceeds.

How NRO invest account is different than NRO account? .or can i use NRO account?
Thanks

Hello @malthankar -

I tried reaching HDFC bank , Kotak Mahindra , ICICI bank branches in my city Jaipur but none of them able to support me in this regards.
In fact there were clueless about this feature. Since this kind of accounts are bit rare from them.
Also they tried to contact - NRI experts in there respective banks - But no success.

Only Yes bank is open to do so - They connected to me from inputs from Zerodha.

Kind Regards,
Vineet

One more Query - NRI Related Query -

Hello Experts ,
In case - NR Indian (son) transfer some funds to his resident Mother’s saving account.
And then this money is invested direct equity & MF thru mother’s Demant / AMC account.
After FY - Short term gains taxes are planned to be paid during Income tax filling from Mother PAN.
Kindly validate if there is anything illegal in above scenario.
Do here - Son & Mother need to maintain record for gift deeds ?
Thanks in advance.

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I asked Kotak Mahindra bank to open a demat account and associate it with my existing NRO accounts. They said it is perfectly possible and local transaction charges will apply. I am in the process of opening a demat account now (to be linked to my NRO account).

Is this demat account having resident or non resident status?

You may have NRI status as it is linked with NRO, you can not bring back that money to USA (any other country). I had a chat with AnandRathi and they will also do the same. I feel “tradeplusonline.com” will also do if you are not in India currently and want to open from outside country.

If PIS accounts are done away, then it makes things a lot easier and smoother for NRIs. Money can be transferred from NRO abroad or to NRE account upto 1 million USD per year easily using Liberalised remittance for NRIs.
Can the current resident demat account be converted to non resident one without having to open another and transferring holdings into the new one?

Non resident since they asked for both the overseas and local address

Just change your saving account to NRO account and you are set…your existing demat will work as it is

hi Milind,

Have you done this before? Were you able to simply change your savings account to NRO and keep investing through demat account. For example, ICICI requires us to break the link between the demat account and the savings account before changing status of the savings account to NRO.

Regards

Hi,

i have gone through same thing but when i called to ICICI customer care, they said to convert to NRO , you do not need to close existing demat account.
please check as PINS is not required for NRO account. Even in my case they closed and opened it which was not required at all.
Regards

A final update on this. Though the law seems to me to be clear that NRIs do not need PINS for investment through NRO account, no brokerage seems to have this knowledge and insist on a PINS account. After a lot of struggle with ICICI, I finally settled with HDFC securities for its relatively lower brokerage charges. And though I had a nre and nro Account with them they created 2 new accounts and linked it with my securities account. Last count, Now I have 2 NRE accounts, 2 NRO accounts, a pins NRO, a pins nre, a non-pins nre and a non-pins nre. And I am unable to invest in certain companies like ujjivan though ujjivan has said there is no restriction on NRIs investing in them. Quite a few inconveniences when I try to consolidate my assets, but atleast I am now able to invest seamlessly.

Hi @malthankar, I’m holding resident demat and trading account with Zerodha and the linked bank account is a resident savings account with HDFC. Going by above statement, is it just enough if I convert my existing resident savings account with HDFC to NRO account and no need to convert my resident demat and trading account with Zerodha to NRO? Can I continue to buy share as normally.

I recently got NRI status technically(crossed 182 days outside India). When I go through online articles, it’s quite complicated to understand what I should be doing now with my bank and demat accounts. I buy shares regularly and want to invest on a non-repatriable basis as I don’t have any plans to settle abroad. Please let me know if my above understanding holds good or appreciate if you can guide me on the way forward with least possible complications.