Hello Sreekanth Good Day..
I am putting forward my question which is there in my mind for year without proper clarification. I am happy that I have found finally a right person to clarify my query.
I am NRI residing in Dubai and my wife is also NRI with dependent visa. I am having a doubt regarding trading using Indian Demat account though I am an NRI. I used to trade in capital markets when I was in India using my wife's Demat account and I am continuing trading using the same demat account online, using the same account by transferring money to my wife's SB account linked to that Demat account. (Neither NRE nor NRO account).
In MF , purely investments only and no plan to sell any of my MF.(long term corpus building is my only aim as no other commitments or liabilities). By trading in shares I have made 75,000 profit last year and paid/paying taxes as applicable (@15% even for 1 rs profit). My monthly investment in MF is around 15000 and in share trading on an average 2 lakhs for an year. My doubt is that, since I am paying my taxes and submitting returns as NRI (for me and my wife), is it ok to continue in this mode how I am doing or is it mandate to open a PIS account and to do such activities (shares+MF) only through PIS account.
Will it be an offense as per FEMA regulations, to do trading in Share market by an NRI through without PIS account even though I am submitting my returns properly and paying taxes as per IT rules? I never do day trade or intra day trade and why I am using my wife's account is purely astrological as I found my wife is more lucky than me. I am waiting eagerly for your reply based on which I have to decide opening a new PIS account or not, during my next trip to India.
2 Answers
Hi,
1 - As both of your are NRIs, you need to convert the existing SB normal accounts to NRO/NRE accounts.
2 - If you are transferring the amount from your account to your spouse's account, these amounts can be treated as Gifts. Any income / gains earned on these amounts if invested, are clubbed to your income and taxable (if any) accordingly.
Kindly read:
https://www.relakhs.com/gift-income-tax-rules-detailed-guide/
3 - For mutual funds, NRIs can invest directly and don’t need to go through PIS (Portfolio Investment Scheme).
4 - For direct Equities (shares), as an NRI, you have to go through PIS. Under PIS, as an NRI, you have to open a non-resident external or a non-resident ordinary account either on repatriable or non-repatriable basis.
Hi,
1 - Making a Gift deed is not mandatory, especially if the transfers are through banking system (cheque/online transfers but not in Cash). Yes, do make a note of such transactions in future...
2 - If the investments are done with gift amount, then clubbing of income provisions do apply and you need to club such profit/gains to your income. Going forward, you may keep this in mind and suggest you to take help of a CA and file your tax eturns.
3 - Yes, going forward, you may make investments in Shares through PIS account.
You are welcome :) Cheers!
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