Investment options for NRIs

For overseas Indians, India offers a tremendous opportunity for investment and wealth building as India is slated to grow at the rate of 8%-10% for the next few decades.

Options available for NRIs:

As per the Government of India, NRIs are given the following facilities as far as investment is concerned.

1. Bank accounts in India
2. Investment in securities and debts
3. Investment in immovable properties such as real estate

Types of Accounts

NRE Account: This is rupee denominated account. The interest earned is tax free. The amount in the account is repatriable.

NRO Account: This is also a rupee denominated account. The interest earned is taxable. The repatriation limit is 1 million USD in a year.

NRNR Account: This is a term deposit account with 6 months to 3 years term which can be extended. Only the interest can be repatriated. The interest is not taxable.

FCNR Account: This is a term deposit accounts for maximum of 3 years in foreign currency denominated form. The foreign currencies allowed are US, Australian, Canadian dollar, Euro, Pound, and Japanese Yen.

Investment in securities and debt:

Indian market has been a darling for foreign investors for quite a few years. The market will keep its momentum as India is expected to grow with a respectable rate for a few decades. NRIs can invest in securities and debt instruments to exploit the opportunities presented by Indian stock market. NRIs can invest in stocks and debt funds directly or in mutual fund.

Government of India has allowed NRIs to invest in Indian market directly or through portfolio investment scheme. It has allowed the following types of investment.

Investment in stocks (especially secondary market) through portfolio investment scheme (PIS)

This allows NRIs to invest in Indian security market without obtaining any permission from the RBI or the Government. In some cases, however, they need permission from FIPB (Foreign Investment Promotion Board) in case of investment in agriculture or planation activities. Investing in securities is done through portfolio investment scheme. As per this scheme, NRIs can select one branch designated by RBI for transaction related to investment. The transaction then can happen through the specified branch for stocks and convertible debentures. This can be repatriable or non-repatriable depending upon the situation.

Investment with Repatriation clause:

Investment in domestic mutual fund, bonds, term deposit with companies for at least 3 years, and Government securities are allowed with repatriation benefits.

Investment without repatriation benefit:

Investment in the form of capital contribution in any proprietary or partnership firm is allowed but it is not repatriable. NRIs can also invest in new issues through this route.

Other investment:

Other investment such as money market mutual funds, deposit, non-convertible debentures, and commercial paper are allowed but without any repatriation benefit.

Investment in immovable assets:

NRIs can invest in real estate. They do not need any permission to invest in real estate except in cases where they want to acquire farm land, plantation, and agriculture land. The repatriation clause needs to be looked at in individual cases. The Government allows up to 100% investment in real estate development (including housing societies and commercial space) as well as financing of housing and commercial development.

There are facilities available returning NRIs so that their investment in foreign countries are not disturbed. They can also open resident foreign currency account to freely move money between NRE/FCNR accounts.

Important points:

NRIs can invest in stocks by directly buying stocks of specific company or through mutual fund. Indian market offers variety of mutual funds such as sectoral fund that invests in a specific sector, mid-cap fund that invests in mid cap firms, growth fund that invests in emerging companies, value fund that invests in stable and old companies that give consistent results. There are India specific funds available for investment.

It is important to ascertain the credentials of advisor for any investment requirement. NRIs are considered easy source of money and there is no dearth of quakes to exploit the situation.

You should apply for a PAN card and then open demat and trading account linked to your NRE/NRO account which can be used for trading purposes.

If you are concerned about repatriation clauses, make sure you understand the types of accounts and policies where repatriation is allowed. Open the appropriate account and invest in right instruments to avail repatriation benefits. In most if the cases, repatriation is allowed after a lock in period of 3 years.

-----------------------------------------------------------------

Also, know how to buy mutual funds online:

1) DSP BlackRock Mutual Funds:

http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html

2) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html

3) Birla Sunlife Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-birla-sunlife-mutual-funds.html

4) UTI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-uti-mutual-funds-online.html

5) SBI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-sbi-mutual-funds-online.html

6) Edelweiss Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-edelweiss-mutual-funds-online.html

7) IDFC Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-idfc-mutual-funds-online.html

TDS Rate and Personal Account Number(PAN)

The TDS rate doubles to 20% from 10% if you fail to mention your Personal Account Number IF you run a glance through your pay slip, you will come across something called TDS, which is tax deduction at source. In most cases, the employer deducts this amount at the time of payment of salary itself and pays the total tax amount to the government on behalf of all the employees. If you are a self- employed or practicing professional s, you have to pay this amount yourself. Tax deducted at source is one of the modes of income tax collection by the government. Under the income-tax laws, income tax at specified rates is required to be deducted while making certain payments. The rate of deduction of tax at source on interest and rent payment is 10%. For salary payments, the employers deduct income tax at source on a monthly basis after computing income tax liability on estimated annual taxable income of the employee. Tax benefits on housing loan, investments, etc are consid...

Equity investors should track market developments

The stock markets have been volatile over the last few days. They are in a sideways movement and trying to find the bottom after a fall of 20 percent a week ago. The market sentiments are not very positive at the moment and the recent developments are expected to dampen them further. Globally, governments and central banks are trying to cut rates and announce packages to improve business sentiments. These are some of the major developments in the markets last few month: A) Global On the global front, another large US bank went into a financial crisis. The US government took quick measures to avoid the spread negative sentiments in the markets. The US government announced a bail-out package and agreed to shoulder the losses on the bank's risky assets. China announced a large cut in interest rates and reserve ratio to boost the investor sentiments in the markets. Recently, the World Bank announced China's growth rate next year will come down to 7.5 percent. The European ...

Banks tweak ATM strategies

Unrestricted usage of third-party ATMs ends on Thursday The era of free ATM usage will come to an end on Thursday, October 15. Every transaction carried out on another bank’s ATM could cost an account holder as much as Rs 20 and withdrawals will face a limit of Rs 10,000, the Indian Bank’s Association has said in its guidelines. According to the guidelines, banks can offer savings-account holders five free thirdparty withdrawals every month —they can be charged from the sixth transaction onwards. Current account holders can be charged the fees, which ranges from Rs 18 to Rs 20, from the very first transaction. Most banks are convinced that charging current account and no-frill account customers from the word go is a good idea. It suggests that the usage of ATMs by current-account holders is price-insensitive. For others, banks have decided to frame their charges depending on the profile of the customer. For instance, HDFC Bank is allowing its salary account and premium customers an unl...

Fortis Mutual Fund

Fortis Mutual Fund, a relatively new player, it is still to prove its case and define its position in the industry. In September 2004, it came onto the scene with a bang - three debt schemes, one MIP and one diversified equity scheme. And investors flocked to it. Going by the standards at that time, it had a great start in terms of garnering money. Mopping up over Rs 2,000 crore in five schemes was not bad at all. The fund house has not been too successful in the equity arena, in terms of assets. Though it has seven equity schemes, it is debt and cash funds that corner the major portion of the assets. Most of the schemes are pretty new, and the two that have been around for a while have a 3-star rating each. The last two were Fortis Sustainable Development (April 2007), which received a rather poor response, and Fortis China India (October 2007). Fortis Flexi Debt has been one of the better performing funds, after a dismal performance in 2005. It currently has a 5-star rating. None ...

JP Morgan ASEAN Offshore Fund

JP Morgan ASEAN Offshore Fund - Invest Online JP Morgan ASEAN Offshore Equity Fund is an international equity mutual fund scheme that invests primarily in companies of countries which are part of the Association of South East Asian Nations (ASEAN). Most international funds , apart from those focused on the US market, have been struggling for sometime. This is because of the uncertainties in the global market. International funds are meant for investors who want to diversify their investments across geographies. If you haven't made your investment for this diversification, you should sell your investments in this scheme. Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. IDFC Tax Advantage (ELSS) Fund 4. ICICI Prudential Long Term Equity Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. DSP BlackRock Tax Saver Fund 8. Birla Sun Life Tax Relief 96 9. Reliance Tax Saver (ELSS) Fund 10. HDFC TaxSaver...

Invest in Tax Saving Mutual Funds	Download Any Applications
Transact Mutual Funds Online	Invest Online
Buy Gold Mutual Funds	Invest Now

Invest in Tax Saving Mutual Funds	Download Any Applications
Transact Mutual Funds Online	Invest Online
Buy Gold Mutual Funds	Invest Now

Prajna Capital - An Investment Guide

Search This Blog