Published on February 19, 2014
By SiliconIndia | Sunday, February 9, 2014
Bangalore: If you are a non resident Indian (NRI) and you are looking to invest in Indian market, then there are few things that you should consider before investing. Despite of the rising inflation and interest rates, Indian economy has been stable when compared to other countries. Thus even now India emerges as an investment destination. It is advisable that you opt to invest more in your home country than the country where you work or staying at present.
Here is a list of five things that NRIs should keep in mind while investing in India:
1.Types of accounts for NRIs Before making any investments in your home country, you need to know which type of accounts you would be investing from. And, you need to consider certain things before you make the final call, for example, The funds in the bank account from which you are planning to make the investment, obtained from your home country sources or the funds are taken back home from the country you are currently working or saying? Are the fund in the account comprise of your salary? In which currency do you want to hold your account?
You first and the foremost step is to answer these questions based on which you can decide whether you want to invest from your NRE account or NRO account. 1. NRE account: In NRE account, your current funds in foreign currency are converted into Indian rupees, at the same rate prevailing the time of transferring the funds from your account. In the NRE account, the funds are repatriated freely along with the principal and interest. 2. NRO account: NRO account is best for them who are willing to transfer Indian earnings. You can deposit foreign currency in this account. The interest earned is subject to tax deduction at source at the rate of 30 percent in India. You cannot, however, repatriate or deport funds in NRO account abroad.
2.Access to NRI investment possibility First, make up your mind and decide where to make the investment; however, such decisions are not to be taken in a hurry. In India, the investment opportunities are same for both NRIs and the Resident Indians; only nonresident Indians need to take down few points to make the investment smoothly.
From direct equity to mutual fund to real estate, NRIs can select various options to make investments. If you are planning to invest in direct equity, you need to be extra careful about the time horizon of investment, the long term goals and also the risk and return expected on the investment. But when it comes to mutual fund, it is a safest option than direct equity especially for NRIs as they have limited expertise. You need to check the fund house rules and regulations when investing in mutual fund as certain funds don’t accept deposits made by NRIs from USA or Canada. However, it is always better to think before you jump. Also NRIs can invest in their favorite real estate. This investment option is one of the most preferred among NRIs and also it is known as the safest place to park your hard earned money.
3.Investment destination It is no secret that the economy is in a volatile state and so, Indians who are working in foreign country showing more concern about their job security and investment they are making. But alongside they are also managing their finances in a better way by taking professional advice and at the same time thinking of investing more money in India their home country. In terms of economy when compared to other developing nations like Russia, China and Brazil, India is considered as one of the best destinations for investment.
4.Taxation When it comes to taxation, you need to know all the different rules related to different sources of income. For any income that is received arises or accrues in India is taxable and any income that is received outside arises or accrues India is not taxable for an NRI. If you are investing in dividends declared by equity oriented funds or mutual funds, more than 65 percent of assets are invested in equities, and then being an NRI investor, your income is not taxed. Similarly, dividends declared by debt-ridden mutual funds (where less than 65 percent assets are invested in equities) are also tax-free.
Any mutual funds that is held for less than a year, is called a short term capital asset. When you sell units in equity oriented mutual fund are sold (redeemed) within one year of being held, then you acquire either short term gains or loss. The short term gains are taxed at 15 percent on gain. Thus when you sell off debt ridden mutual fund within a year, then tax is levied under slab rules for individuals. When units in equity oriented mutual fund are sold off after duration of more than a year, then gain on such units redemption is tax free. In case you sell off debt ridden mutual funds after being held for more than a year, gains are taxable as long term capital gains.
Other Investments FIIs and NRIs can also invest their money in securities, treasury bills, listed nonconvertible debentures, bonds and many more. However, there are certain restrictions from Reserve Bank of India like NRI, PIO, QFI, FII. Source: http://www.brijj.com/group/manager-senior-manager-investor-relations--link-Quick-Guide-For-Nris-While-Investing-In-India?eid=3767476
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