STEP by STEP Process of NRI Demat Opening

Step 1: Verify NRI Status

You qualify as an NRI if you reside outside India for more than 182 days in a financial year. Status affects which investment accounts, options, and tax regulations apply.

Step 2: Open the Required Bank Accounts

• NRE Account: For repatriable funds (money can be sent abroad freely).
• NRO Account: For India-sourced income (rent, dividends). Limited repatriation.
• FCNR Account: Optional, if you prefer foreign currency deposits.

Step 3: Complete KYC

KYC Documents:

• PAN Card
• Passport
• Visa
• Notarised Overseas & Indian address proof
• Recent passport-size photo
• NRE/NRO bank account proof

Many platforms offer online e-KYC for NRIs.

Step 4: Open Investment Accounts

• Mutual Funds: Can invest directly via fund house websites or online brokers. NRE/NRO account linked; Demat account optional.
• Stock Market: Open an NRI Demat & Trading Account. Link it to Portfolio Investment Scheme (PIS) account for equity trading. Popular brokers for NRIs: ICICI Direct, HDFC Securities, Kotak Securities, Axis Direct, Zerodha (NRI), Motilal Oswal etc.

Step 5: Fund Your Accounts

Transfer funds from NRE/NRO account to your investment account. NRE account funds are fully repatriable; NRO funds are partially repatriable. Ensure compliance with FEMA regulations.

Step 6: Choose Your Investments

Mutual Funds

• Determine your investment objective: growth, income, or balanced portfolio.
• Choose fund types: Equity, Debt, or Hybrid.
• Decide between lump sum or SIP (Systematic Investment Plan).
• Complete the online application, confirm payment, and units are credited electronically.

Stock Market

• Research stocks using NSE/BSE-listed companies.
• Place buy/sell orders via your Demat/trading platform.
• Stocks, ETFs, and bonds are held in your Demat account.
• Monitor dividends and corporate actions; income credited to NRE/NRO accounts.

Step 7: Track and Manage Investments

Monitor your mutual fund portfolio via fund house apps or broker dashboards. Track stocks via your trading platform. Rebalance portfolio periodically based on risk profile and financial goals.

Step 8: Taxation of Stock and Mutual Funds

Asset Type	Short-Term Capital Gains (STCG)	Long-Term Capital Gains (LTCG)
Stocks	20%	12.50%
Equity Mutual Funds	20%	12.50%
Debt and Non-Equity Mutual Funds	As per Income Tax Slab	As per Income Tax Slab
Listed Bonds	20%	12.50%
Gold / Silver ETFs	20%	12.50%

Double Taxation Avoidance Agreement (DTAA)

Double Taxation Avoidance Agreement (DTAA) ensures NRIs are not taxed twice on the same income in India and their resident country by allowing reduced TDS rates or tax credits. Even if you do not pay income tax in Middle Eastern countries like the UAE, Qatar, Oman, Bahrain, Kuwait or Saudi Arabia, you are still eligible for DTAA benefits because these nations have valid tax treaties with India. By submitting a Tax Residency Certificate (TRC), NRIs can claim reduced or NIL tax on mutual fund capital gains and avoid double taxation.

DTAA can materially reduce or eliminate Indian capital gains tax on mutual fund redemptions for NRIs who are tax residents of certain GCC jurisdictions. To benefit, investors must ensure correct residency status, complete NRI KYC updates and submit the necessary documentation to the AMC/RTA before redemption.

DTAA Benefits for Middle East Countries

• United Arab Emirates (UAE)
• Saudi Arabia
• Qatar
• Kuwait
• Oman
• Bahrain

Why DTAA Matters for Mutual Fund Investors

• Many DTAAs allocate the exclusive right to tax capital gains to the investor's country of residence, potentially preventing India from taxing redemption gains.
• Dividend income and certain other payments may attract reduced withholding under the treaty; exact rates vary by treaty article.
• GCC jurisdictions commonly impose low or zero capital gains tax, enhancing post-tax returns for qualifying residents.

When DTAA Benefits Apply

• Eligibility is determined by the investor's tax residency at the time of redemption or income receipt, not by the date of investment.
• The investor must be a genuine tax resident of the treaty partner country in the relevant financial year (as evidenced by the TRC).
• Maintain supporting evidence of residency such as visa/residence permit, Emirates ID, tenancy agreement, employment contract and bank statements.

Documents Required (Submit Before Redemption)

• Tax Residency Certificate (TRC) issued by the foreign tax authority for the relevant year.
• Form 10F (India) where the TRC does not contain mandatory particulars required by the payer/AMC.
• Updated NRI KYC at the AMC/RTA (passport, visa/residence proof, overseas address proof).
• PAN copy, FATCA/CRS declaration and any AMC-specific DTAA declaration forms, as requested by the AMC.
• Bank mandate for redemption proceeds (NRE/NRO or a broker-accepted payout account).

Step 9: Repatriation of Funds

• Funds from NRE accounts: Fully repatriable.
• Funds from NRO accounts: Up to USD 1 million per financial year with proper documentation.

Mutual fund redemptions and stock sale proceeds can be repatriated under RBI regulations.