What an NRI need to invest in Indian Stock market
First step is to obtain a PAN or a Permanent Account Number. This 10-digit number essential for all investments whether an NRI pays income tax or not.
Anyone who wants to invest in Indian stock markets, invest in India or get into any financial transaction in India needs a PAN - permanent account number. A PAN card is needed for any investor in India, whether he is a resident Indian living in India or a person of India origin (PIO), Non resident Indian (NRI) or an OCI - overseas citizen of India living abroad.
Permanent account number is a 10 digit alpha-numeric code number coming in form a standardized card shape which is issued by the IT department of India in all major cities, besides this NRIs can also apply for a Indian pan card online by going to the government website. Generally it takes 20-30 days for an NRI to get his pan card in any foreign location, and he can apply for his PAN number online these days without any major hassles where he/she can pay online to the Income tax department and apply for his unique pan number. The card is issued by the income tax department(www.incometaxindia.gov.in) and UTI or UTIISL(www.utiisl.co.in) or NSDL (tin.nsdl.com) which are authorised to process these applications. You can download the application form at these sites.
The simple form asks for your full name, residential and business address, age, nationality and the name and address of your representative in India. The proof of your name and address must be attested by the Indian mission in your country of residence.
Normally it is issued within a month and sent abroad to your address. If an application for PAN is submitted through internet and payment made through a credit card, the PAN number is allotted on priority and communicated to you through email.
To invest in share market, you need to obtain prior permission from the Reserve Bank of India. Your broker will assist you in obtaining that.
Then you need to open a Demat or ‘dematerialised’ account for holding and trading shares in the stock market. This account enables you to buy, sell and transact shares without the endless paperwork and delays. And thus makes it possible to even trade on the internet. It is also safe, secure and convenient.
Difference between your normal bank account a Demat account is that while the bank account deals in money, demat account deals with shares. While your bank account allows you to transfer funds between accounts without handling cash, a Demat account allows you to transfer shares between accounts without handling physical share certificates.
For investors, a Demat account has many benefits like- immediate transfer of shares
- no stamp duty on such transfers
- no worry about loss, theft
- and no worries aboout mutilation due to careless handling or forgery
- reduced transaction cost
- No worries about bad deliveries of shares due to signature mismatch
- Or delays due to postal delays.
If you already have a bank account in India, your bank will easily open your Demat account and you have the advantage of transferring your funds from your bank to your Demat account electronically. With your PAN Card, your RBI approval and your Demat account, you can invest in Indian stocks.
