NRI Demat Account Online Procedures & Charges
If you are an NRI and are considering to invest in Indian Capital Markets, it is essential to open a Demat account. But first, let's try to understand the term "NRI," i.e. a Non-Resident Indian. According to the Income Tax Act, "NRI is an individual who is a citizen of India or a person of Indian origin and who is not a resident of India". You will be considered an Indian citizen or a person of Indian origin if you satisfy the following conditions:
1) Your stay in India is for more than 182 days in the relevant Financial year or
2) You have resided in India for more than 365 days during the last four financial years and more than 60 days during the last financial year.
3) But an NRI enjoys some privileges if they satisfy the following cases:
i. While being a citizen of India, if you leave India in any previous year as a crew member of an Indian ship or for employment outside India. (Say Case 1)
ii. Being a citizen of India or a person of Indian origin, you visit India in any previous financial year.
For example, you are an IT Professional, staying in Canada for the past four years. You come to visit your hometown at Pune in India for 25 days. Therefore, you become a Non-Resident Indian (NRI), under the above definition.
Now, you want to invest a certain amount of your savings in Indian Companies through the stock market. In this case, let's understand what procedures you need to follow before you can start investing:
- As a Non-Resident Indian (NRI), you can open a Demat account with any of the brokers registered as Depository Participant with Central Depositories Services Ltd. (CDSL) or National Securities Depositories Ltd (NSDL).
To open a Demat account, you are required to submit the following documents with Depository Participants:
o Copy of Portfolio Investment Scheme (PIS) permission letter from Reserve Bank of India
o Copy of FEMA Declaration
o Copy of PAN Card
o Overseas address proof: copy of driving license/foreign passport/utility bills/bank statement (which should not be older than two months)/notarized copy of rent agreement/leave and license agreement/sale deed
o Indian address proof, if any;
o Passport size photograph;
o Proof of Bank account (A cancelled cheque leaf of your bank account)
o In case of Indian passport, copy of valid passport with the place of birth as India and Copy of valid visa
o In case of Foreign Passport: Copy of valid passport, Copy of PIO/OCI card
· Being a Non-Resident Indian, you can open a Demat account by linking your Non-Resident Ordinary (NRO) /Non-Resident External (NRE) Bank Account.
· You have to keep in mind that you can only use the Demat account for NRI linked with NRE bank account for trading or investment in Equity only, and you are not allowed to invest in the derivative segment of the Indian stock market. On the other hand, you can utilize the Demat account linked with NRO Account for trading or investment in Equity and trading in the derivatives segment.
· Further, you must remember that NRIs are not allowed to trade currency or commodity markets in India.
Charges for Demat Account for an NRI-
· Following are different types of Demat account charges to be paid by you as an NRI:
o Account opening charges (AOC)
o Annual maintenance charges (AMC)
o Good and Service Tax (GST)
· Account opening charges differ from broker to broker. The charges can range from INR 300 to INR 4000.
· Similarly, Annual Maintenance Charges (AMC) also differ from broker to broker. The broad range of charges can be anywhere between INR 75 to INR 500.
· Lastly, please remember that the component of GST is levied at 18% over and above the AOC and AMC.
ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470.The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product.