PIS Permission for NRO accounts are not issued any more, however, PIS accounts are re-designated as NRO Invest Savings account/Special Savings accounts. This is done since there involves a complex TDS calculation and a significant operational overhead being the reason not currently supported by most brokers.
The Notification No.FEMA.361/2016-RB issued by RBI brought about this change in FEMA where the PIS requirement for NRO was removed.
However, as a broker this service can be offered only when one can ensure that they can support the below process:
The meaning of the above is explained as under:
“(Net of applicable taxes)” - Like how the bank currently deducts TDS, brokers have to deduct TDS and make payout when the client is withdrawing funds. If the broker doesn’t know the acquisition price, 16.995% TDS of entire sell value has to be deducted and paid. Otherwise, it is 16.995% of capital gain. (Short-Term Capital Gain)
Once Zerodha starts offering the Non-PIS route, this shall be updated on the website and the process for the same shall be added too.
Seems kinda like a grey area.