NRI Brokerage Charges

In general, a broker is someone who buys and sells items on behalf of others— the middlemen between two parties. For the stock market, a broker facilitates stock market transactions of an investor for a fee. Brokerage fees are calculated as a percentage of the total amounts exchanged.

Non-Resident Indians (NRIs) can invest in equity, equity derivatives, IPOs, Mutual Funds, and bonds in India. They are not permitted to trade in commodities, or carry out intra-day trading, as per government regulation. There are various bank and trading accounts and charges involved in such trading and investment.

Charges Involved

1. NRI PIS Permission and associated charges

The Portfolio Investment Scheme (PIS) allows NRIs to invest in shares of Indian companies on any of the 23 recognized stock exchanges, under repatriation or non-repatriation basis, through a registered broker. PIS-enabled NRI accounts are used for trading and investment in India. To open trading accounts and demat accounts, the PIS and are linked with NRI Trading and Demat accounts. All transactions of PIS enabled accounts are reported to the RBI on a daily basis.

There are three charges under the NRI PIS.

  • a. PIS Issuance Charges
    This is paid just once, while applying for the PIS permission. It can fall anywhere between 0-500 INR.
  • b. PIS Account AMC (Annual Maintenance Contract)
    This is charged on a yearly basis by the bank for maintaining the PIS enabled account and are charged regardless of whether transactions are made using the account.
  • c. Other PIS Charges
    These are the charges levied for each transaction carried out through the PIS enabled accounts.

NRI Bank Account and associated charges

An NRI bank account has to be opened for an NRI to trade and invest in India. The fees include all fees associated with opening a bank account such as cheque book, transaction, and convenience fees.

These accounts can be of two types.

  • a. Non-Resident External (NRE) account
    This account enables the transfer of income earned abroad to India. The money held in the account can be transferred to India i.e., can be repatriated. They are rupee accounts and interest earned from this account is tax exempted. Funds for investments on repatriation basis are routed through PIS-enabled NRE accounts.
  • b. Non-resident Ordinary (NRO) account
    This account is to manage income earned in India. Income earned abroad can be deposited as well. Not all money in this account can be repatriated. RBI regulations allow repatriation up to $1 million in a financial year. Interest earned on the account is subject to tax.
    Funds for investments on non-repatriation basis are routed through PIS-enabled NRO or NRO accounts without PIS.

For PIS enabled accounts NRIs need to submit a ‘Application for designating a bank account for PIS' form to their bank. On approval of the same, the respective accounts are deemed PIS enabled. A specific branch of the bank, authorized by the RBI, must be appointed as the Designated Bank for PIS.

NRI Trading Account and associated charges

An NRI Trading Account is a must for NRIs to trade in Stocks, Stock Derivatives, IPOs, Mutual Funds, and Bonds at BSE and NSE. NRI trading accounts are required to trade in stock and stock derivatives, mutual funds, IPOs, and bonds at the national level stock exchanges i.e., the BSE and the NSE. These trading accounts can be opened with recognized stockbrokers.

The following are the charges associated with trading accounts-

  • a. NRI Trading Account Opening Fee
  • b. NRI Trading Brokerage Charges.
    The commission of the brokers charged for the transactions.
  • c. Call & Trade Fee
    Most brokers charge a fee for each order placed by calling the trading desk.
  • d. Exchange Transaction Charges
    It is the charge per transaction levied by the stock exchange and is calculated as a percentage of the trading value.
  • e. Taxes
    • Security Transaction Tax (STT) - 0.1% on both Buy and Sell
    • GST - 18% on Brokerage + Transaction Charge
    • SEBI Charges - ₹5/Crore
    • SEBI Charges - ₹5/Crore

NRI Demat Account and associated charges

A demat account is like a bank account to hold securities in electronic forms, which are opened with the brokerage. It is a must for an NRI to trade in Indian stocks.

The charges associated with a demat account are:

  • a. Account Opening Fee
  • b. AMC
    This is charged on a yearly basis by the brokerage for maintaining the demat account and is charged regardless of whether transactions are made using the account.
  • c. Debit Transaction Charges
    This charge is levied when shares withdrawn from the account are sold and is charged for every withdrawal.
  • d. Other Charges
    Pledge fees and the charge for updating and/or modifying information and linked bank accounts.

Read More here: NRI Demat Account Opening Process

Conclusion

Trading in stock markets and trading accounts come with a host of fees and taxes. The goal of an investor is to get maximum profits while bearing as little costs as possible. Comparing all rates of charges and interests across brokerage plans is the best way to find the plan that fits your needs the best.

Open Demat Account at IIFL