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Introduction
In this article, we’ll explore the Portfolio Investment Scheme (PIS), a favored investment avenue among Non-Resident Indians (NRIs) seeking to tap into India’s thriving financial markets. Many NRIs often ponder how to enter the Indian investment landscape, and the PIS scheme offers an elegant solution.
You can also watch our video where I discuss this topic, in case you are not a fan of Reading.
What is the Portfolio Investment Scheme (PIS)?
The PIS scheme, or Portfolio Investment Scheme, is a straightforward financial instrument that enables NRIs, Persons of Indian Origin (PIO) cardholders, and Overseas Citizen of India (OCI) cardholders to invest in India’s stock market and securities. Whether you’re looking to bring funds from abroad or utilize money already in India, the PIS scheme offers a seamless pathway.
Getting Started with PIS
- Open a PIS Account: To begin, approach your bank and inquire about opening a PIS account. Most public and private sector banks offer this facility.
- Demat Account: Once your PIS account is active, the bank will set up a Demat account, intricately linking both accounts for seamless transactions. This is where your purchased stocks will be securely stored.
Consult CA Arun Tiwari for more information at 📞 8080088288 or cs@aktassociates.com
Simplicity and Documentation
One remarkable aspect of the PIS scheme is its simplicity. The bank handles all the necessary documentation, primarily requiring standard Know Your Customer (KYC) documents. However, it’s crucial to understand the taxation aspect of PIS.
Taxation with PIS
When selling stocks, a Tax Deducted at Source (TDS) will be deducted by the bank, serving as a prepayment of your income tax liability. The TDS rate depends on whether your capital gains are long-term or short-term:
- Long-term Capital Gains: For holdings exceeding 12 months, the TDS rate is 10%.
- Short-term Capital Gains on Securities: 15% TDS.
- Debt Securities: 20% TDS, plus applicable surcharge and education cess.
The remaining balance is credited to your bank account, and you can choose to repatriate it abroad or reinvest it in India.
Repatriation and Restrictions
It’s important to note that there are restrictions on transferring funds abroad for certain transactions. Investments in listed securities generally allow for repatriation, but options trading falls under a non-repatriable basis. If you’re investing from your Non-Resident Ordinary (NRO) account, the funds must remain in India, and you cannot repatriate them.
Annual Repatriation Limit and RBI Approval
NRIs can repatriate up to $250,000 annually without additional approvals by submitting Form 15CA/15CB. If you wish to repatriate beyond this limit, you must seek permission from the Reserve Bank of India (RBI).
Got More Questions?
If you have further queries or seek more information about PIS and its intricacies, please feel free to ask in the comment section. Dive into the Indian stock market and be a part of its growth story with PIS. Remember, your money should work for you, not lie idle.
In Conclusion
The Portfolio Investment Scheme (PIS) provides NRIs with a hassle-free gateway to invest in India’s dynamic stock market and securities. Compliance requirements are minimal, and the TDS serves as an advance tax payment that can be adjusted while filing your returns.
While this isn’t investment advice, it’s a simple mathematical fact: Investments often outperform bank FD interest rates over time. So, consider PIS as an attractive option to grow your wealth in India’s thriving financial markets.