PIS Account Requirement Update: Simplified Process for NRO Transactions

The Reserve Bank of India (RBI) has recently abolished the requirement for Portfolio Investment Scheme (PIS) bank accounts for NRO transactions. Previously, both NRE and NRO accounts required PIS accounts to trade in the Indian stock market. Here's an overview of the changes and how they impact NRO transactions:

Old Process for NRI Trades

• Transaction Reporting: All NRI trades, whether through NRE or NRO accounts, were reported to the RBI.
• Tax Scrutiny: The RBI assessed tax obligations for sale transactions, ensuring that taxes were paid before crediting the net proceeds.
• Settlement: All transactions were settled through the PIS account. For example, buying 100 shares of a company at ₹850 each would result in ₹85,000 (plus charges) being debited from the PIS account. Upon selling these shares at ₹950 each, tax on the ₹10,000 profit would be deducted before the net proceeds were credited back to the PIS account.

New Process for NRO Transactions

• No RBI Reporting: NRO transactions no longer need to be reported to the RBI.

• No PIS Account Required: Trades in Non-Repatriable mode (NRO) do not require a PIS account.
• Tax Scrutiny: Transactions are still subject to tax obligations, but taxes are deducted before the sale proceeds are credited to the account.
• Cost-Free Management: Navia handles the tax obligations for NRO transactions at no additional cost, reducing overall transaction expenses.

Benefits

The removal of the PIS account requirement for NRO transactions significantly simplifies the trading process and reduces costs. NRO account holders now benefit from:

• Lower Transaction Costs: Without the need for a PIS account, transaction fees are reduced, resulting in savings for NRO account holders.
• Simplified Trading Process: The trading process for NRO accounts is now more straightforward, with fewer administrative requirements.
• Efficient Tax Management: Navia handles tax obligations on behalf of NRO account holders, ensuring compliance without additional costs.