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| The following investment avenues are available for
the Non-Resident Indians in India: |
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Government securities
or units of Unit Trust of India |
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National Savings
Certificates issued by post offices in India |
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Non-convertible
debentures of Indian companies |
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Bank Accounts in India
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Investment in
securities or shares and deposits of Indian firms or
companies |
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Investment in immovable
property in India |
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Investment in Mutual
Funds in India |
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Company deposits |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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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. |
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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. |
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| 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: |
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| Nature
of Charges |
Rate
as % of Charges |
Collected
by whom |
| Stamp Duty |
0.01% |
State Government |
| Transaction Charges |
0.00416%
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Stock Exchange |
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STT-Security Transaction Tax
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0.125% |
Central Government |
| Service Tax on Brokerage |
12.36% |
Central Government |
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| 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. |
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| NRIs can invest in Derivatives through NON PIS
account. |
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| 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. |
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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 |
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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 |
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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 |
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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 |
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| NRI can invest in Mutual Funds through NON PIS
account. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
