We, as a broker receive the PIS bank balance from the bank and the same is uploaded in the trading terminal on a daily basis. This will allow the NRIs to buy shares up to the maximum value of funds available in their PIS bank account.
I. Activities carried out by the Broker:
1. The day end activities are performed and a contract note for the purchase trade is generated with the net purchase amount including all charges.
2. This is emailed to the respective bank on the same day evening.
3. The receipt entries are passed in the ledger on receiving funds from the bank on the next day towards the purchase obligation.
II. Activities carried out by the Bank:
1. Transactions executed in NRE accounts will be reported by the bank to RBI.
2. The bank will capture details from the contract note in their system to keep record of the date of purchase and rate of purchase which are essential to determine tax obligation when these shares are sold.
- The bank will subsequently transfer the exact amount of purchase to the paise from your PIS bank account to our bank account.
III. Activities carried out by the Broker:
1. NRIs are allowed to sell shares only if the same is available in the Depository account (Demat Account). The shares in the Depository account are automatically uploaded in the trading system.
2. At the end of the day, the contract note for the sale transaction is generated and emailed to the respective banks.
3. The shares are moved from the seller’s demat account to the pay in account to meet sale obligations.
IV. Activities carried out by the bank:
1. On receiving sale contract notes, the bank reports transactions executed in NRE mode to the RBI (Reserve Bank of India).
2. It also captures the details of sales such as rate of sale, date of sale etc., in their system.
3. It determines the nature of the transaction, either short term or long term, either capital gain or loss.
4. It deducts Tax at source on transactions executed with short term capital gain and remits them to the Government.
5. It then, remits the net sale obligation to the seller’s PIS bank account in case of secondary market sale or Savings bank account, in case of primary market sale.