NRI investment in India

NRIs to invest in India, requires to follow certain simple procedures and get the returns easily without facing double taxation.

Can NRIs invest in India?

The non-resident Indians wishing to invest in Indian products can put their money in - IPO, mutual funds, SEBI registered stock exchange, portfolio management services, derivative trading, bonds, alternative investment funds etc.

To initiate an investment, the NRI should have a bank account in one of the Indian banks, and operate based on the kind of their income - whether the income is from India or the income is from a foreign country.

What is a portfolio investment scheme and what does it require?

The NRIs can invest in the secondary capital market in India through the portfolio investment scheme, where the NRIs can acquire shares of the Indian companies through the stock exchanges in India.

To start with the investment, the NRI requires to open a Demat account with SEBI registered brokers in India, and for that, the application to open the Demat account must be accompanied by these documents:

● Copy of passport and visa

● OCI or PIO card in case of a foreign passport.

● Foreign address proof

● Indian address proof for the communication purpose

● PIS permission letter

● Proof of bank account.

How can NRIs invest in mutual funds in India?

The NRIs can invest in the Indian Mutual fund following the policy prescribed by the Foreign Exchange Management Act (FEMA). As per Regulation 2 of FEMA Notification No. 13, the non-resident Indian is defined as a person who is a citizen of India but resides outside India. As per the Income Tax Act 1961, a person is a non-resident of India who does not stay for at least 180 days in India in the preceding year. It does not require to be at a stretch.

The procedure by which an NRI can invest in the mutual fund in India:

Step One: Setting up an account

The mutual funds cannot be invested in foreign currency, therefore the investor requires to open a savings account with any of the Indian banks, specifying the NRE (earning from a foreign country) or NRO (earning from India).

Step Two: KYC verification

The KYC procedure is given importance for the investment in the Indian mutual funds, where the investor requires to submit a copy of passport, date of birth, photo and address in the foreign country. Moreover, the address details of the temporary or permanent residence in India should also be provided.

Step 3: Redeem the Investment

For mutual funds, the redemption procedure follows the instructions by the fund houses. Different fund houses have different procedures of redemption. The AMC shall credit the investment and the gain over the investment on the fund redemption to the account in the Indian bank.

How is the income taxed?

India has DTAA with over 80 countries; it plans to sign such treaties with more countries. The major countries with which it has signed the DTAA are the US, the United Kingdom, the UAE, Canada, Australia, Saudi Arabia, Singapore and New Zealand.

Though there are certain initial hassles, the NRIs can easily invest in India, and they do not face any double taxation. They also get a TDS certificate for the equity funds that are tax exempted if held for more than a year.