It is mandatory for all Indian citizens to have a permanent account number and to pay tax under Income Tax Act, 1961. NRIs holding bank accounts in India already pay tax in the form of TDS that is deducted by banks from your bank accounts. No tax returns need to be filed for this type of income. However in many cases it may be advantageous for some NRIs to file a tax return and claim part or most of the tax that is deducted from your Indian bank accounts.

PAN stands for Permanent Account Number (PAN) which consists of 10 digits alphanumeric number issued by the Income Tax Authority of India in the form of a laminated card. The National Securities Depository Limited (NSDL) has also been engaged to allot PAN cards from TIN facilitation centers.

Why do NRIs need PAN card?

It is mandatory to submit PAN in all financial related transactions carried out in India and on tax returns. It serves as an Indian ID proof and is required for Demat account opening, buying real estate, stock investment, to get loan, while applying for visa or passport, rental income, etc.

How to apply for PAN?

Certain documents are required while applying for PAN. Those include:

• Identity and residence proof
• Colored photographs
• Code of the concerned Assessing Officer of the IT Department obtainable from the IT office where form is submitted

PIO allows free visa travel and gives several benefits to the card holder. It is guided by the Registration of Foreigners Act, 1939 and Registration of Foreigners Rules, 1992.It states that Persons of Indian origin visiting India on a visa valid for 180 days must register at the nearest Foreigners Regional Registration Office. The PIO Card is aimed at increasing and facilitating the participation of non-resident Indians (or NRIs) in the development of their country, in simpler, easier, flexible and trouble-free ways.

A PIO card is valid for about 15 years from the date of issue subject to the validity of foreign passport. An application for issue of a PIO Card shall be made to an Indian Embassy or Consulate in the country/area where the applicant is ordinarily a resident.

Eligibility for PIO:

• Any person who at anytime has held an Indian passport
• He/she or his/her parents or grandparents who were born in and are permanently resident in India as defined by the government of India act, 1935.
• Any person who is a spouse of a citizen of India or a Person of Indian Origin as mentioned above.
• Nationals of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Bhutan, Nepal and China do not qualify for a PIO card.

Benefits of PIO card

• No separate tourist visa, student visa or employment visa required for visiting India.
• Separate counters for immigration are provided to PIO Card holders at International airports in India.
• Registration, only if he/she stays in India for more than six months at a stretch.
• Facilities like those available to children of NRIs for getting admission to educational institutions in India including Medical Colleges, Engineering Colleges, Institutes of Technology, and Institutes of Management etc. under the general categories.
• Facilities available under the various housing schemes of LIC, State Governments and other Government agencies.

This is an efficient way of protecting and safeguarding all your shares and eligible securities by holding in an electronic and dematerialized form. NRIs can easily transfer shares from any other Demat account to NRI account. Also, this Demat account will help the NRIs to do online trading and invest their money in India.

NRI Demat Account: No special permission from the RBI is required by NRIs to open a Demat account, though specific cases may require authorization from the designated authorized dealers. NRIs require separate Demat accounts for securities under the foreign direct investment (FDI) scheme, which is repatriable.

When an NRI returns permanently to India, he must inform his designated authorized dealer of his new status, and request him to open a new account. The securities held in the NRI Demat account needs to be transferred to the new resident Demat account and the NRI Demat account gets closed.

Advantages of having a Demat accoun

• Elimination of problems associated with physical certificates
• Saves stamp duty, paperwork on transfer deeds
• Gives immediate benefits from bonus shares and stock splits
• Way to get your money/shares faster
• Convenient mode of transacting shares
• Avoids delays due to wrong/incorrect signatures, post, and misplacement of certificates
• Prevents risks like forgery and counterfeit, theft or damage to documents
• Freedom of buying/selling shares through any broker of your choice

There are two types of Demat accounts:

• The Repatriable Demat Account: This account is for the shares purchased by using repatriable funds.
• The Non-Repatriable Demat account: This account is for the shares purchased by using non-repatriable funds or when you were an Indian resident.

Banks i.e. Depository Participants offer Demat account. The advantage of holding an account with banks is that it enables quick on-line dealings, ensuring credit of a transaction to the account holder's savings account by the third day.

Documents required for opening a Demat Account

• PAN card
• Identity proof
• Address, date of birth proof
• A photograph of all the joint holders along with a crossed signature on it
• DP-client agreement on non-judicial stamp paper
• One photograph and signature of nominee