Indian Stock Market Demat Accounts

Readers Questions/Answers Page Twelve

Information provided is for general knowledge only and should not be deemed to be professional advice. For professional advice kindly consult professional immigration advisors or tax consultants depending on your personal situation. This website is a one person operation, Please spell check your questions as I normally just cut and paste questions from emails. Answers to most questions asked are usually posted within five days. Answers are posted on this website and no personal emails are sent.

Email questions to: V. K. Chand at: question@nriinformation.com Answers are normally posted in five days.

Indian Stock Market - Demat Account

Q: Hello Mr Chand,

I am a Canadian citizen of Indian origin. I along with my husband and children immigrated to Canada in 1996. I have recently got my OCI status. I have following questions:

Prior to coming to Canada we had invested in Indian Share market and we still hold the shares. All the shares are in paper version and have not been demated as yet. Along with this we have also received some shares (again in paper version) from my father-in-law as gift. Now we would like to sell all the shares but we do not have a pan card to demat the shares. please advise us about the procedure to obtain the Pan card number and to demat these shares. My husband still does not have OCI status.

Also we invested in a flat in Delhi which is still under construction. If we want to sell this flat , do we have to open a bank account in India? if yes then can we open one while sitting in Canada and what type of account are we eligible to open?
we will appreciate your help on these questions.
Thanks
Sonia

Getting a PAN is a simple process and can be done online even from Canada. Read 'How to get a Pan Card from abroad' on Nri Information.
You can demat the shares you own by opening a bank account at many banks that cater to NRIs. Even State Bank of India has offices in Canada. You can select the bank of your choice. Some banks will even help you get your PAN just to get your demat account business.
Regarding shares that your father in law gifted to you:

Your father could open a demat account for his shares and then transfer to your account. He could always close his demat account once shares are transferred.

If your father in law is reluctant to get a demat account, then I believe you may have to first get the paper shares transferred to your name and this will involve filling out appropriate forms and sending to the companies that issued the stocks to make the required changes.

Your bank where you eventually open a demat account should also be able to guide you in this regard.

Another option would be to use a stock broker in India (called share brokers) to handle the transfer of shares for you as they have the necessary forms, however I would be careful before handing over the actual paper stocks.
I don't see the requirement that one must have a bank account to sell a flat in India. However you will need one to deposit the proceeds from the sale of your property.

You can open an account from Canada without any problem with most banks in India. Some Indian banks have branches in Canada also and many others offer online bank account opening facilities.

You will need to open a NRO (non resident ordinary) account which is where Indian Rupees can be deposited.

Returning To India

Q: Mr. Chand, Your site has invaluable information. This stuff is hard to find elsewhere..thanks! I have a quick question.

My daughter (born in Canada) who's is 41/2 years old and I are Canadian citizens and OCI card holders. My son who is 4 months was born here in Canada as well and my wife recently got her Canadian citizenship.

We are all moving back to India for good by end of this year. I have the following three questions:

1. Should my wife apply for OCI here in Toronto or will be able to move to India and stay there with her Indian Passport.

2. Do we all have to register with FRRO before 180 days

3. If we all choose to apply for Indian passports after a year of stay in India...do we need to give away our Candian citizenships?

Thanking you in Advance,

Siddhartha

Since your wife is now a Canadian citizen, she cannot stay in India with her Indian Passport. If fact she now needs a visa to travel to India and the Indian consulate in Toronto will only grant her a visa after they cancel her Indian Passport.

Your wife and son should apply for OCI but I doubt they will get it by end of this year as you are already close to mid September. So their option would be to apply for a tourist visa to travel to India and apply for OCI in India.
OCI holders do not need to register with FRRO. However those traveling to India on tourist visa who intend to stay more than 180 days need to register within 14 days of arrival.
You cannot apply for Indian passports after a one year stay in India. OCI holders can apply for Indian citizenship five years after OCI registration provided they stay in India for one year before applying for Indian citizenship.

The only way you could get Indian citizenship after a one year of stay in India would be to give up Canadian Citizenship.

While Canada allows dual citizenship and have no problem with you retaining your Indian citizenship as well as Canadian; India will allow you only to have one passport at a time and hence you may have to give up Canadian citizenship to get Indian citizenship.

Your best option may be to keep your Canadian citizenship, get OCI for all members of your family and live in India for as long as you want as OCI is a visa for life. This way if you or your children ever wanted to return to Canada in the future you would not have any problems.

OCI Holder Buying Flat in Kolkata India

Q: I am AOCI card holder. I have Irish passport and working in Ireland. I like to buy a flat in Kolkata. Do I need Income tax clearance before registration Do I need any clearance or any approval from Reserve bank of India.

Can I buy it by NRO account. My NRO a/c has money which went from NRE ac after term deposits in NRE were expired. Also some money were earned in India when I had no NRI status in the past. In those years I did submit income tax return and advance tax though my impression was that I was below tax limit. I was never returned the any overpayment of tax back. I did not hear any thing from tax department either.

Or is it safer to buy with NRE account after transferring money in that account from abroad.

Looking forward to hearing from you.
Regards Dr Ray

As an OCI holder you should be able to buy a flat in India without any clearance from the Reserve Bank of India.
As far as registration of the flat is concerned, NRIs don't require income tax clearance to register a property in India. There are however some unscrupulous agents who will make you believe that you do and try and get money from you on some pretext or the other. If you are buying a new flat, make it part of the agreement that the builder will get the registration formalities done.
As long as the source of the money you use is legal, it should not matter what type of account it comes from. So NRE or NRO accounts should not make any difference.
When income tax is paid in India in advance or from banks etc on interest earned, the tax department will only refund tax paid to you if you file a proper return and claim a refund. If you filed a return, claimed a refund and they did not respond, then you should check with them and ask for an explanation.

Sell Flat in India - Transfer Money from India to USA

Dear Mr. Chand -- I refer to the attached link (http://www.nriinformation.com/questions_one.htm) and specifically the below Q&A. Though I'm not the person who originally asked the question below I have a similar background (and similar interest in purchasing a flat in India) and have 3 follow-up questions:

1. As a US citizen (residing outside India) and OCI card holder, is it required (or advisable) for me to first obtain a PAN card before purchasing a flat in India? I'm asking because you mention taxes having to be paid in India on any capital gains.

2. With respect to tax on any capital gains, do you know whether my US citizenship would result in additional capital gains taxes having to be paid in the US?

3. You mention below only being able to repatriate USD up to the amount of the original purchase price once the property is sold: is this until taxes on any capital gains have been settled in India or rather indefinitely -- if the latter, is there no other legal means to take these gains out of India?

Thanks, AJ
_______________________________

ORIGINAL QUERY:
OCI Holder Buying Flat in India

Q: Hello Sir, I have found your site from a Google search and I was wondering whether you can help me with this question. I am a US Citizen that holds an OCI card. I am interested in investing in a flat in India with the sole purpose of reselling after a 5-6 years and reconverting the amount back in US Dollars. Is this even possible? Is there a limit on the amount of Rupees I can convert to US Dollars. And where would the taxes be paid on such a transaction? Thanks, Thomas Kunnumpurath

A: As a OCI holder you can purchase a flat in India. Once the property is sold, you can reconvert the money into US dollars and bring it back to the United States. However you can only bring back the amount you originally submitted. The profit will be taxed as capital gains in India. Unfortunately, many properties are bought and sold with cash that is unaccounted for and is commonly referred to as black money. Many buyers insist on paying a sizeable amount of money in cash and there is no record of such a payment. India no longer has a foreign currency shortage and it is now quite easy of any Indian citizen to submit funds abroad as long as the transaction is done via legal banking channels and the source of the money can be accounted for. When selling a property in India one should insist on getting maximum amount of money for the sale by way of bank cheques and drafts.

Pan Card is not mandatory for NRIs to purchase property in India. Getting a Pan Card is a simple process that hardly takes a few weeks. As you have not bought the flat yet the question of capital gains currently does not arise. While it may not be legal, people supposedly buy and sell properties in India with a considerable sum of money changing hands that is in the form of cash. A good accountant in India can advise you better and perhaps save you money.
India and the United States have a tax treaty agreement whereby double taxation is avoided. However check with your accountant in the US who should be able to guide you further in this regard.
It is now easier to transfer money out of India. As long as the source of the money is legal and can be verified. So if you decide to sell a property, get payments by way of documented bank transactions like cheques and avoid cash deals. Once taxes are paid money can usually be transferred out.

Buy Agricultural land in India - Transfer money abroad received from sale of property in India

Q: Dear Sir/Madam,

Is there a universal law right across India that OCI can inherited land but can not buy new agriculture land? Please clarify.

Thanks

H D Patel
Wellington NZ

A: Yes! you have it right. OCI or for that matter NRIs and even Foreigners can acquire agricultural land by virtue of inheritance only. Once you acquire land by inheritance then certain rules have to be followed if such land is to be sold.

You specifically mention OCI in your email. Remember OCI allows the holders to stay in India lifelong but does not give them Indian Citizenship, they still remain foreigners. To keep your OCI status you must have a foreign passport.

For additional information on selling land or properties in India and transferring money out of India that is acquired from the sale of property please visit my page on property acquisition and sale by NRIs

OCI Holders Applying For Indian Citizenship

Dear Sir,

After living in USA for 30 years I plan to return to India for good. I am a US citizen but want to reconvert to my Indian Citizenship. I have been OCI for 4 years. I see that the website says that one can apply for Indian Citizenship after being OCI for 5 years and also do 1 year in India. I have been visiting India for about a month during the last 4 years every year. In other words I have spent 4 months in India since I got my OCI card.

Can I now stay in India for 8 months and get Indian Citizenship or do I have to stay the whole 1 year.

Geeta

A: As per the provisions of section 5(1) (g) of the Citizenship Act, 1955, a person who is registered as an OCI for 5 years and is residing in
India for 1 year out of the above 5 years, is eligible to apply for Indian Citizenship.

Indian Driving License

Q: Dear Mr. Chand

My son is in New Zealand and visiting India. Can I apply for Car Driving license to him? Please let me know procedure.

Regards

Yours sincerely

(Dr. V K Tiwari)

A: Getting a drivers license in India is discussed on Nri Information in detail. To view the article please click here.