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

The process is almost similar to that for resident Indians.

Check out the requirements for NRI account at HDFC Securities:

http://www.hdfcsec.com/Common/NRICustomerAccount.aspx

I think most other brokerages have similar requirements.

If NRI's want to invest in Indian stock markets, they need to have a bank account in India.

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Thanks!

My question is if an NRI hides his identity as NRI and gets trading account as like Resident of Indians . in that case can you elaborate more please.

Assume, and I understand that NRI is citizen of India and have not given up his citizenship. Any time he can move back to India for good..

Of course NRI already has saving account in Indian banks before becoming an NRI

In this situation what are your views and how legal or illegal it is to get same trading account as like Resident?

Not sure about the legal implications.

If an NRI opens an account as a resident, he will have to give an Indian address as his current address.

This would obviously be false information as his current residence will be outside India.

He will also need to submit his PAN details.

Now, this NRI won't been showing any income to the Indian Income Tax Department as his income will be arising abroad.

If the IT department finds a particular PAN holder has a high turnover in stocks and still isn't declaring any income, they may scrutinize the matter in detail.

If they find that an NRI has a trading account as an Indian resident, they may create problems.

If you are an NRI, I strongly suggest you open an account as an NRI.

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ICICI bank has a lot of information on NRI-related matters.

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Great Alchemist

Thanks for prompt reply!

But an NRI has to pay more for trading a/c as I read somewhere.

I am getting information before go ahead for any account.

Another thing is, I am not sure whether stay long overseas.. Sooner or later I come back india. So you think in that case I should go for NRI a/c and end up by paying high?

As you mentioned huge turnover.. So what is the minimum turnover that can be invested which would not let the tax dept to raise question?

Thanks?

I don't think there is much difference in charges for NRI accounts.

(I actually have no first hand experience with NRI accounts and so may be wrong).

It is better you contact a brokerage house and clarify with them.

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Nothing like a minimum turnover, but usually the tax department is interested in big fish.

If you buying shares of more than Rs 5 lac in a short period, then I think you become big fish... (This is just my personal opinion).

This doesn't mean IT department ignores smaller transactions.

IT department also scrutinizes smaller accounts on random basis.

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