What does NRO account mean?

NRO Account for Trading Purposes

An NRO account can be used for trading purposes in India under the Portfolio Investment Scheme (PIS) of the Reserve Bank of India (RBI). Here are the key points:

• Trading in Indian Markets:: NRIs can use NRO accounts to trade in Indian stock markets. This includes buying and selling stocks, mutual funds, bonds, and other securities.
• Compliance with PIS: NRIs need to register with a designated bank for Portfolio Investment Scheme (PIS) to invest in the Indian stock market. Transactions under PIS are reported to the RBI.
• Taxation: Capital gains arising from these trades are subject to tax in India. Short-term and long-term capital gains tax rates will apply depending on the holding period of the securities.
• Repatriation: Funds from the sale of securities can be repatriated abroad, subject to the overall limit of USD 1 million per financial year after tax compliance.
• Separate Demat Account: A separate Demat account linked to the NRO account is required for trading purposes. This ensures that the funds used for trading and the investments made are properly tracked and compliant with regulatory requirements.