Moving out of India may affect your process of holding and maintaining your shares in the country. Just moving out does not solve the problem; rather, there is a need to update all of your records with regard to your status. This way, you will know what needs to be updated in order to accomplish this without selling your shares.
Understand what changes
A Demat account holds shares in digital form. When your status changes after a move abroad, you must tell your depository participant, or DP. This is the firm through which you hold the account.
An NRI Demat Account records your status as a non-resident Indian. The change may be made within the existing account if the DP allows it. Some firms may ask you to open a new account and move your shares. Check the process before you start.
1. Check your status
The Foreign Exchange Management Act, or FEMA, sets the rules for this status. The reason for leaving India matters, such as a move to take up a job. Do not rely only on a count of days spent abroad.
Tax residency is governed by another set of rules. Whether one is a tax resident or not will decide which type of account to choose; inform the bank and DP about your move and the date of your move.
2. Ask the DP how to proceed
Ask for the form to change your status. Ask if you can keep the same account number. NSDL allows resident ordinary accounts to change to NRI non-repatriable status. The DP must follow the set steps.
In case the company requests an account opening, find out how the process of transfer of the shares will be done. Find out about the associated charges and duration of time. Find out what actions can be taken while waiting. Find out how the process will change if the shares are pledged or locked.
3. Update the linked bank account
Tell your bank of the change too. The bank must change your resident account to Non-Resident Ordinary, or NRO, once you become a person resident outside India. Get proof of the new bank details for the DP.
An NRO account and a Non-Resident External account, called NRE, have distinct uses. Shares held before the move are generally classed as non-repatriable. They do not gain free transfer rights abroad just because an NRE bank account is opened or linked.
4. Get the documents ready
Ask for a list of what to send. This may include PAN, passport, proof of your address abroad and proof of your status. The DP may ask for a visa or residence permit, bank proof, a photo and fresh KYC forms.
KYC means Know Your Customer. Check names and dates on all forms. Fill in tax status forms if asked. Ask if copies need to be certified and who can do this abroad. Use the DP’s list. A passport scan on its own may not be enough.
5. Send and track the forms
Fill in the status change form and update your address, phone number, email and bank details. Sign where asked. Use the route the DP gives you. Some steps may need signed papers. An app may not handle the whole task.
Keep copies, a receipt and the tracking code. Check for requests for missing proof. Tell the broker too, since the trading account may need its own update. Ask which services can be used while you wait. Get proof of the change before you use the new setup.
6. Check your shares
If the shares were purchased when you were a resident, they can be retained even after relocation. For instance, having 100 shares before you relocate will not necessitate their sale in order to switch your status. Verify the mode of holding and association with your bank.
Non-repatriable doesn’t imply that all international remittances are permanently prohibited. It will be necessary for you to ensure that your transfer of money is done in accordance with the laws of the banks, taxation and FEMA. Inquire with your bank about how your money should be transferred.
7. Check the final details
Check the account status, holder names, bank details and share balances once the DP says the change is done. If shares were moved, check both statements. Make sure the share counts match and ask about any missing entry.
Check where cash from sales and dividends will go. Review the broker’s NRI charges and trading rules. Keep proof of the changes and report errors to the DP before making new trades.
Conclusion
Check your status, tell the DP and bank, send the forms and review your shares. You may keep the account or move to a new one. Keep proof that the changes are in place.
