Skip to main content

How NRIs can invest in India?

Here are outlines of rules governing NRI investments in India

Non-resident Indian (NRI) means a 'person resident outside India' who is a citizen of India or is a 'person of Indian origin'. Under the Foreign Exchange Management Act, 1999 (FEMA), a person who is not a 'person resident in India', as defined under Section 2 (v) of the Act is considered a 'person resident outside India'.

'Person of Indian Origin' (PIO) means a citizen of any country other than Bangladesh or Pakistan, if he at any time held an Indian passport; or, he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955; or the person is a spouse of an Indian citizen, or a person referred to in sub-clause (a) or (b).

An investment by a PIO in Indian securities is treated just as investments by non-resident Indians and requires the same approvals, and enjoys the same exemptions. NRIs can purchase existing shares or debentures of Indian companies by private arrangement. The Reserve Bank permits NRIs to purchase shares or debentures of existing Indian companies on non-repatriation basis. An undertaking about no repatriation is to be given.

NRIs can also obtain loans abroad against a collateral of shares or debentures of Indian companies. The authorised dealers have been permitted to grant loans or overdrafts abroad to NRIs through their overseas branches and correspondents against a collateral of the shares or debentures of Indian companies held by them, provided the shares or debentures were acquired on a repatriation basis.

An NRI or PIO can open a demat account with any depository participant (DP). He needs to mention the category ('NRI' as compared to 'resident') and the sub-type ('repatriable' or 'non-repatriable') in the account opening form collected from the DP. No permission is required from the RBI to open a demat account. However, credits and debits from the demat account may require general or specific permissions as the case may be, from designated banks. Further, no special permission is required by an NRI for dematerialisation or rematerialisation of securities.

Holding securities in demat only constitutes change in form and does not need any special permission. However, only those physical securities which already have the status as NR-repatriable or NR-nonrepatriable can be dematerialised in the corresponding depository accounts.

The securities purchased under repatriable and nonrepatriable category cannot be held in a single demat account. An NRI must open separate demat accounts for holding 'repatriable' and 'non-repatriable' securities.

As per Section 6(5) of FEMA, an NRI can continue to hold the securities which he had purchased as a resident Indian, even after he has become a non-resident Indian, on a non-repatriable basis.

In case a NRI becomes a resident in India, he is required to change the status of his holding from nonresident to resident. It is the responsibility of the NRI to inform the change of status to the designated bank branch, through which the investor had made the investments in the Portfolio Investment Scheme and the DP with whom he has opened the demat account. Subsequently, a new demat account in the resident status will have to be opened, and the securities should be transferred from the NRI demat account to the resident account, and then the NRI demat account should be closed.

NRIs are also permitted to make direct investments in shares or debentures of Indian companies, and in units of mutual funds. They are also permitted to make portfolio investments i.e. purchase of share or debentures of Indian companies through stock exchanges. These facilities are granted both on repatriation and non-repatriation basis.

Further, NRIs can purchase securities by subscribing to a public issue. The issuing company is required to issue shares to the NRI on the basis of specific or general permission from the RBI. Therefore, individual NRIs need not obtain any permission to receive bonus or rights shares.

Popular posts from this blog

Debt Mutual Fund Dividends are Taxable

DDT is deducted when a non-equity fund declares dividends. Equity and balanced fund dividends are tax-free The AMC is correct to deduct the dividend distribution tax (DDT) as it is mandated by tax laws. DDT in mutual funds is deducted every time a non-equity fund declares dividends. Equity fund and balanced fund dividends are tax-free . It is possible that you have invested in a non-equity fund for the first time or have received the dividend under a non-equity fund for the first time. That is why this is the first occasion when you have come across DDT.   The rate at which non-equity schemes deduct DDT has also gone up after the July 2014 budget. This is due to a change in calculation methodology. Earlier, if the fund has to declare a dividend of R 100, it used to make a provision for R 128.3, paying R 28.3 to the taxman and distributing the balance to the investor. This allowed the investor to bear less tax since the effective tax rate was 22.07 per ce...

Franklin India High Growth Companies Fund

Franklin India High Growth Companies Fund Online One of the key developments that the Street is keenly waiting for is a cut in interest rates by Reserve Bank of India . With demand rising gradually, a rate cut is expected to boost earnings growth for companies. In such a situation, schemes which invest in high growth companies are best suited, especially when seen from a long-term perspective. One such scheme is Franklin India High Growth Companies Fund. Fund managers Anand Radhakrishnan, Roshi Jain and Srikesh Nair strictly follow valuation parameters when it comes to choosing stocks.Valuation parameters, such as enterprise value, price-to-earnings growth ratio, forward price-to-sales ratio and discounted earnings per share, play a critical role in selecting companies for investments. Taking into account these parameters, the fund managers invest in companies which are poised for high growth in their respective sectors. This approach has been in favour of the scheme and it has perform...

Atal Pension Yojana contribution Tax Benefit for spouse

Contributions to Atal Pension Yojana (APY) are eligible for the same tax benefits as the NPS. This means that the contributions can be claimed under Section 80CCD (1B). The current limit for Section 80CCD (1B) is   Rs   50,000, over and above the   Rs   1.5 lakh limit under Section 80C. Section 80 CCD (1) is a different one, meant to cover employers' contribution towards NPS . You cannot get tax benefit by investing in the name of your spouse under Section 80 CCD . ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in India for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Religare Tax Plan 4. DSP BlackRock Tax Saver Fund 5. Franklin India TaxShield 6. ICICI Prudential Long Term Equity Fund 7. IDFC Tax Advantage (ELSS) Fund 8. Birla Sun Life Tax Relief 96 9. ...

Avoid NFOs

  Don't get taken in by the flurry of new fund offers. You will be better off sticking to the tried and tested schemes.   For the past one year, to cash in on the bull run in equities, mutual fund houses have gone on a new fund offer (NFO) overdrive. But experts are unanimous in their advice: avoid NFOs . While past performance is not an indicator of how a fund will fare in the future, it does tell the investor how skilful the fund manager is. This crucial information is missing in an NFO. Not only is there no track record to judge an NFO by, many NFOs are similar to funds that already exist. If the new fund is similar to existing funds, you are better off investing in the latter. Around 67% of the new launches in 2014 were closed-end products. Investing in the NFO of a closed-end fund is doubly risky. In case the fund's performance is lacklustre, a closed-end fund does not allow you to exit. Even though closed-end funds are listed on the stock...

Mutual Fund Exit Load Changes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Mutual Fund Exit Load Changes AMCs don't communicate about any change in exit load directly with investors, but do update on their website   The exit load applicable to your investments is the load which existed at the time when you invested in the particular fund. Any subsequent changes in the exit load will not be applicable to your investments.   However, Asset Management Companies ( AMCs ) periodically publish addendums in the newspapers, which state any change in exit loads of specific schemes managed by them. Such changes are also posted on their websites. However, a direct communication to an investor is not made, considering the costs involved in doing so. In their own interests, investors should not only track the performance of the funds they i...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now