With commodity trading in India at a bloom, the Reserve Bank of India has allowed NRIs to trade in equities as well as derivatives. However, with a wide array of exchanges and brokers, NRIs can have a hard time choosing a broker and understanding its functioning. Zerodha NRI Account is one of those offerings that can make your life easier.
We will discuss everything from opening an account to all the account charges.
Zerodha is an online discount broker that offers broking services in commodities, currencies, stocks, mutual funds, and bonds. It is a discount broker that charges some of the lowest transaction and brokerage fee in the market.
Zerodha NRI Account Requirements
To open an NRI Demat Account with Zerodha, you need one of these two types of bank accounts:
Non-Resident Ordinary Account (NRO):
An NRO account is a general savings account that is opened for Non-Resident Indians. An NRI cannot take out the funds of this account outside of India. If an NRI wants to transfer these funds outside India, he needs to take permission from the RBI.
Non-Resident (External) Rupee Account (NRE):
NRE account is an external account opened for the purpose of NRI savings. With this account, an NRI can transfer his funds to any other country as well.
Before getting started with opening an account in Zerodha, you would also need a PIS letter from the Reserve Bank of India. The term PIS implies ‘Portfolio Investment Scheme’. It was launched by Reserve Bank of India in order to facilitate NRI investment in equities and trading.
To obtain this PIS letter, you can take the assistance of the bank where you have opened your account.
Please note that you can open both NRE and NRO accounts if you are an NRI. However, only one of them can be used for your trading and Demat account.
At the same time, it needs to be known that you will be allowed to trade only in the Equity Segment if you are using an NRE account in Zerodha. Although, with an NRO account, you can extend your fields to equity as well as derivatives.
To open an account for trading in this platform, you would need the following documents:
Copy of the Portfolio Investment Scheme Permission Letter.
For trading in Zerodha, you would need a copy of FEMA Declarations (1). For trading in Zerodha Securities, you would need a copy of FEMA Declaration (2).
Copy of your PAN Card
Proof of address of your overseas residence. For this purpose, the documents that will do are driving license, foreign passport, bank statements, utility bills, notarized copies of rent agreements, leave & license agreements, and sale deeds.
Proof of address in India, if present.
Passport size photograph
If you have an Indian passport, you would need a photocopy of the passport along with the visa.
If you have a foreign passport, you would need a copy of the PIO/OCI card.
You would also need proof of the NRE or NRO bank account. For this purpose, you can use a cancelled check or a bank statement.
Declaration of Post Office Box number the foreign country of residence
Foreign Account Tax Compliance Act (FACTA) Declaration Form
Please note that for the photocopies of passports, foreign address proofs, and pan card, you need to get them notarized. These can be done through the Indian embassy. Other authorities like officials of overseas branches of Indian banks can notarize them as well.
Additionally, public notaries, magistrates, judges, or consulate generals can notarize these as well. The attesting authority needs to notarize the photocopies with stamps that mention the authority, signature of the authority, and the date.
To start trading on Zerodha, an NRI needs to do the following steps:
First and foremost, NRI should assign funds from the bank account, either NRO or NRE, to his PIS.
The bank will then communicate with Zerodha and tell them the amount of funds that the NRI has assigned.
The Zerodha trading account gets updated with this amount of money.
When the NRI purchases any equity, Zerodha will reach out to the bank with the buy contract note and the day’s end. The bank will make debit in the PIS account of the NRI of that same amount. The same amount will be credited to Zerodha.
When some share of your equity is sold, Zerodha will send a sell contract note to the bank. The bank will credit the PIS account with the same amount of money that came from the sale.
An important thing to consider is that separate contract notes are sent to the bank for the buying and the selling. Therefore, the nets profits or losses include all the charges that are incurred on these notes individually.
NRI trading account in Zerodha only works if the NRI opens his NRE or NRO accounts in Axis Bank, Yes Bank, or HDFC bank.
Zerodha NRI Account Taxation Information:
The income made from trading in F&O is considered taxable income (business income). Taxation upon it is imposed according to the Business income taxation slabs in India.
The financial year ends in India on March 31st. To file the Income Tax Returns, the last date is July 31st.
Zerodha NRI Account Charges
As far as the account opening charges are concerned, Zerodha NRI Account for both trading as well as demat comes at a price of ₹300.
Apart from that, there are a few other charges including STT, Transaction charges, SEBI charges, GST, brokerage etc that one needs to bear.
Here are the details on the brokerage fee charged:
Zerodha NRI Account Brokerage Fee
Zerodha charges higher brokerage fee from NRIs as compared to Indian Resident Traders. This is due to the fact that extra effort is involved in servicing NRI clients.
The brokerage fee is ₹100 per order for Equity F&O. For equity, the brokerage fee is 0.1% or ₹200 per executed order, whichever is lower.
Here is a quick summary on Zerodha NRI Account Charges:
0.1% or ₹200 per executed order, whichever is lower
Equity Futures Brokerage
₹100 per order
Equity Options Brokerage
₹100 per order
Stamp duty on contracts is charged according to the state of residence in the proof of address. If the address of the person lies outside India, the stamp duty is chargeable according to the State of Karnataka rules.
Zerodha NRI Account Benefits
Here are some quick benefits of opening up a Zerodha NRI Account that you must know of:
A completely online process with limited hassles makes your life easy.
Wide range of trading platforms across web, mobile and terminal software
Reasonable brokerage charges
Regular product initiatives towards providing customer delight
Zerodha NRI Account Risks
At the same time, here are a few problems with Zerodha NRI account that have been talked about: