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  1. Even I have similar concern as Sandeep. I have a demat account (thru Indian financial institutions which is a trading account as well) for Indian stocks and I am in process of filling FBAR. My understanding was that demat is like trading account. Is that not true? And I had 1 more question, though I have not done this, but may be applicable in future, the question is under which section or form do we show the income from stock selling assuming it was a short term gain, and what is description for short term and long term gain from stocks traded in India stock market?

  2. Since there is no other way of holding stocks in India, other than in a Demat account at a bank or brokerage, I think it is equivalent to what we call a brokerage account here in the US. I have not heard of a “brokerage account” in India. Also, shares cannot be bought or sold unless the holder gives instructions to either credit them or take them away from the Demat account and the balance in a Demat account is shown with current stock prices multiplied by the number of shares held. I would be interested in knowing if the IRS has considered a Demat account in India to be anything else than a brokerage account, which from what I have read, is to be reported on the FBAR.

  3. A demat account is separate from your stock brokerage account. It is too complex to explain in a comment reply from a Blackberry 🙂 but think of the demat account as the box where you store your stock certificates virtually. You take stock out of the box to sell it

    The virtue of demat accounts is that all stock is centrally registered so everyone — buyer, seller, and the company itself whose shares are sold — knows that the transaction is legit.

  4. Isn’t a Demat account the same as a stock brokerage account, which is required to be reported on FBARs?

  5. That was a good list Phil. Thnx. A lot of good points to consider for investments anywhere in the world, not just India.

  6. A lot simpler — just buy ADRs of Indian stocks or an Indian index ETF from Blackrock. No fuss, no muss, no PFIC issues.

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Tax laws change over time, and the information in this post above may be less accurate today than it was at the time of the last revision. This post is not tax advice for your specific situation. Please contact an international tax professional to get personalized advice for your situation.