What Is NRO?
NRO is otherwise called as Non Resident Ordinary.
Is PIS Required For NRO Account?
PIS is otherwise known as Portfolio Investment Scheme.
No, not now. Till recently, PIS was mandatory for NRE or NRO account it is not required any more as the Government scrapped this.
To understand better, lets first understand the process involved in settling a NRI trade. Whenever, a NRI client trades, the transaction will first be reported to RBI. It will next be scrutinized for tax obligations, in case of sale transaction and then be settled. For eg., if you buy 100 HCL tech at Rupees 850, the transaction will first be reported to RBI, your PIS bank account will then be debited for Rupees 85000 + charges. When sell these 100 shares at Rupees 950 each, the transaction will first be reported to RBI, then scrutinized for tax obligation and in this case it is a profit of 100 x 100 for which tax will be deducted and then the sale proceeds (after deducting the tax obligation) will be credited to the PIS account. Thus the purpose of this account is to route all purchase and sale obligations arising out of buying and selling shares in the secondary market and reporting them to RBI.
RBI has now relaxed these procedures for NRO mode of trade. Under the new process NRO transactions need not be reported to RBI and hence, the trades executed in Non Repatriable mode need not be routed through PIS account. The transaction will however continue to be under scrutiny for tax obligations and taxes if any are to be paid before the sale proceeds gets credited to the account. This can be done by the Bank only if you open a Special account with them. If not, each and every sale transaction of yours has to be supported by Auditors certificate to get the proceeds credited to your bank account.
Thus, if you prefer to take the services of the bank, you will then be required to open Trade, Demat, Special Bank and Savings bank account to trade in NRO mode.
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