How are funds in NRI accounts settled after the sale of securities?
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How are funds in NRI accounts settled after the sale of securities?

The funds for NRI PIS and NRI Non-PIS accounts are settled as follows:

PIS account

Funds are settled to the bank account on T+1 and are available for trading from T+2 onward, since it involves RBI reporting and TDS computation by banks.

Example scenario

  1. On Monday (T-Day), stocks are sold from the demat account.
  2. Zerodha sends a sell contract note to the bank at the end of the day for reporting and settlement.
  3. The proceeds from the sale are credited to the PIS bank account on Tuesday (T+1).
  4. On the same day, the bank sends a report to Zerodha with the PIS balance.
  5. On Wednesday (T+2), the PIS balance is updated as margins in the Zerodha account before the market opens.

Non-PIS account

When stocks are sold, the funds are settled in the trading account, but only 60% 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. To learn more about provisional TDS, see What is the “Provisional TDS amount blocked” entry in the ledger? 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.

Example scenario

  1. On Monday (T-Day), stocks worth ₹20,000 were sold from the demat account.
  2. 60% of the sale proceeds, which is ₹12,000, is released on the same day.
  3. Zerodha blocks ₹3,588 as provisional TDS (about 17.94%) at the end of the day.
  4. By the end of Tuesday (T+1), the provisional TDS of ₹3,588 is reversed, and the entire sale proceeds are available for withdrawal. However, they can only be used for trading from Wednesday (T+2) onwards.

Did you know? NRO account holders who trade in F&O have their trade settlement and margin reporting managed by Orbis, the custodian. To learn more about trading restrictions for NRIs, see What are the trading restrictions for NRIs?