I am an NRI, while applying for creating my DMAT account online for Share market trading I gave my NRO account for buying and selling shares and Mutual fund. Since I applied for the DMAT account online I inadvertently did not mention my status as NRI and gave my INDIAN address as permanent and contact address. The DAMT account has been created (ZERODHA and SBI securities) and linked to my NRO account for payment. And I have bought a few shares. Is opening a DMAT account USING NRO account a violation of FEMA regulations? Kindly advise, Anil Kumar P Kuwait
Hello sir,
No there is no violation in opening a trading account with zerodha using your NRO account there is no violation. However, it is advisable to check and update your residential status for proper deduction of TDS and later file return to claim such TDS.
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To ensure compliance and optimize tax handling for your trading activities in India as an NRI:
For detailed, personalized advice, consider a phone consultancy.
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Shubham Goyal
- Ideally you should use NRE A/c for investment, current income, maturity proceeds and repatriation of funds
- Update NRI status in DEMAT A/c for the purpose of proper TDS deduction
- File ITR timely
For detailed discussion you may opt for phone consultation
Hello,
Using your NRO (Non-Resident Ordinary) account to open a DMAT (Dematerialized) account for share market trading is not inherently a violation of FEMA (Foreign Exchange Management Act) regulations. However, there are certain regulations and guidelines that you need to be aware of and comply with as an NRI trading in the Indian stock market:
Residential Status Declaration: As an NRI, it's important to correctly declare your residential status while opening financial accounts, including DMAT accounts. Since you inadvertently provided your Indian address as permanent and contact address, it's advisable to update your information to reflect your NRI status.
NRO Account Usage: Using your NRO account for share market trading is generally allowed, as NRIs can invest in Indian securities through their NRO accounts.
Tax Implications: Be aware of the tax implications of your investments and trading activities in India. Income generated from investments in Indian securities, including capital gains, may be subject to taxation in India. Consult with a tax advisor to understand your tax obligations and ensure compliance with Indian tax laws.
Update Account Information: It's essential to update your account information, including your residential status and contact details, to accurately reflect your NRI status. This helps ensure compliance with regulatory requirements and facilitates smooth communication and transactions with your financial institution.
Overall, while using your NRO account to open a DMAT account for share market trading is permissible, it's crucial to ensure compliance with all relevant regulations and guidelines to avoid any potential violations or legal issues.
For further discussion you can opt for phone consultation.
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Thank you
CA Vaibhav Garg
INVESTMENTS(RS) APPROXIMATE INCOME PER YEAR 1 FIXED DEPOSIT (NRI) @7% PER ANNUM 200,00,000 IRS 14,00,000 2 FIXED DEPOSIT (NR0) @8% PER ANNUM 50,00,000 IRS 4,00,000 3 MUTUAL FUND BSE (EQUITY) @12% 100,00,000 IRS 12,00,000 4 MUTUAL FUND BSE(DEBT)@8% 50,00,000 IRS 4,00,000 5 PRIVATE SECTOR BONDS @7% 50,00,000 IRS 3,50,000 6 SOVERIGIN GOLD BOND@2.5% 25,00,000 IRS 62,500 7 HOUSE RENTAL INCOME (INDIA) IRS 1,80,000 8 AGRICULTURE INCOME IRS 1,00,000 9 CAPITAL APPRECIATION (LAND SALE) IRS 10,00,000 I am an NRI and my projected incomes from different investments in INDIA are as above. Please inform me what would be the income tax applicable for the current financial year as per new tax regime. Please tabulate the tax each item and total as per various tax slabs. This information is not for filing income tax returns, but for my investment strategy. Kindly revert. ANIL KUMAR
Mutual Funds (Equity and Debt): For equity mutual funds, if held for more than a year, long-term capital gains exceeding ₹1 lakh are taxed at 10% without indexation. Short-term capital gains are taxed at 15%. For debt mutual funds, long-term capital gains (if held for more than three years) are taxed at 20% with indexation, and short-term gains are taxed as per your income tax slab.
Sovereign Gold Bonds: The interest from these bonds is taxable as income, but the capital gains at the maturity of the bond are tax-exempt if held until maturity.
Private Sector Bonds: Interest from these bonds is taxable under 'Income from Other Sources'. The tax rate depends on your income slab.
Capital Appreciation from Land Sale: This is taxed as capital gains. If the property was held for more than two years, it's considered long-term and taxed at 20% with indexation benefits. Short-term gains are taxed according to your income tax slab.
House Rental Income: Taxable under 'Income from House Property'. You can deduct property taxes and claim a standard deduction of 30% of the net rent to reduce taxable income.
Agriculture Income: Exempt from income tax under Section 10(1) of the Income Tax Act, provided it meets certain conditions related to agricultural operations.
For detailed, personalized advice, consider a phone consultancy.
Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.
Thank you.
Shubham Goyal