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Money is settled differently after buying or selling securities in a PIS and Non-PIS account. The differences are as follows:
PIS account settlement
Buying stocks
- Zerodha sends a buy contract note to the bank at the end of the day (T day).
- The bank debits the amount from the PIS savings account and credits Zerodha on the next working day (T+1 day).
Selling stocks
- Zerodha sends a sell contract note to the bank at the end of the day (T day).
- The bank calculates the applicable TDS and credits the PIS savings account on the next working day (T+1 day).
- At the end of the day (T+1 day), the bank sends Zerodha a report with the PIS balance.
- Zerodha updates the margins on the next working day (T+2 day).
Example scenario
- Stocks are sold from the demat account on Monday (T-Day). At the end of the day, Zerodha sends a sell contract note to the bank for reporting and settlement.
- The proceeds from the sale are credited to the PIS bank account on Tuesday (T+1).
- On Tuesday (T+1), the bank sends a report to Zerodha with the PIS balance.
- On Wednesday (T+2), the PIS balance is updated as margins in the Zerodha account before the market opens.
Futures and Option (F&O)
PIS account holders cannot trade in Futures and Options (F&O).
Non-PIS account settlement
Buying and selling stocks
Buying and selling stocks in an NRO Non-PIS account is similar to a resident individual account.
However, when stocks are sold, the funds are settled in the trading account, but only 75% of the proceeds will be made available for trading on the same day (T-day). The remaining funds will be available for trading the next day (T+1) after Zerodha blocks provisional TDS on capital gains. The
provisional TDS
is released at the end of the day on T+1, and the entire sale proceeds become available. If there is a profit, the actual TDS is deducted after releasing the blocked TDS amount. TDS will not be deducted if there is a loss when the shares are sold. To learn more about TDS for NRI non-PIS accounts, see
How does Zerodha deduct TDS for NRI NON-PIS accounts?
Example scenario
- On Monday (T Day), stocks worth ₹20,000 were sold from the demat account.
- 75% of the sale proceeds, which is ₹15,000, is released on the same day.
- Zerodha blocks ₹4,784 as provisional TDS at the rate of 23.92% (₹20,000 × 23.92%) at the end of the day.
- By the end of Tuesday (T+1), the provisional TDS of ₹4,784 is reversed, and the entire ₹20,000 sale proceeds are available for withdrawal. However, they can only be used for trading from Wednesday (T+2) onwards.
As an NRI, you can invest in equity delivery and trade in F&O (derivatives) via NRO NON-PIS accounts. However, you will face certain trading restrictions depending on your account type and country of residence.
Did you know?
- To learn the difference between PIS and Non-PIS accounts, see What is the difference between a PIS and a NON-PIS account?
- To convert an NRO PIS account to an NRO NON-PIS account, see What documents are required to convert an NRO PIS account to an NRO Non-PIS account?