Why should NRI Invest in india ?
India has received the largest international remittances that show a deep connection of NRIs with their roots. Also their preferences as investors for India. In 2021, remittances to India totalled over $87 billion, an increase of 8% from the previous year.
NRIs can invest in India for various reasons. First, it is a great technique to safeguard your finances from being reliant on the expansion of just one economy. Since India is a developing country with far greater growth potential than mature economies, NRIs are encouraged to invest here.
NRIs can effectively diversify their investments by using a variety of assets. They can invest in mutual funds, bonds, alternative investment funds, etc. Moreover, they can receive a higher interest rate than other countries on their investments.
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Lucrative Investment Products for NRIs in India
Direct Equity
You can invest in the Indian Stock Market through the Portfolio Investment Scheme (PIS). You have to open an NRO or NRE bank account. Moreover, you will need a demat and trading account to take part in the Indian equity market.
Mutual Fund
This is another excellent investment option for NRIs. This open-ended investment draws money from many investors to buy securities. This type of investment involves some risk, but usually caters greater returns than other investment plans.
Real Estate Investment
This is another excellent investment option for NRIs. This open-ended investment draws money from many investors to buy securities. This type of investment involves some risk, but usually caters greater returns than other investment plans.
Bonds
This is another excellent investment option for NRIs. This open-ended investment draws money from many investors to buy securities. This type of investment involves some risk, but usually caters greater returns than other investment plans.
Certificate of Deposits (CD)
NRIs can get CD from Indian banks whose duration is between 7 days to 1 year. These short-term investments are negotiable instruments, and the investor will get the principal amount along with fixed returns.
Government Securities
In this low-risk investment, a bond or debt obligation is issued by the government, which is repaid on maturity. These investments can be long-term or short-term, and the maturity period of securities lies between a few days to 52 weeks.
Non-convertible Debentures
If you are looking for other investment options apart from mutual funds or the stock market, go with NCD. These long-term investments are like fixed deposits but have a higher return. You can make such investments through NRE and NRO accounts.
National Pension Scheme
This is a retirement plan that anyone between 18-60 years of age can avail. Its maturity benefits and withdrawal amount are both taxable. Tier-1 and Tier-2 are the two types of accounts under NPS.
Unlisted Public limited/Pre IPO companies
India is entering into the next league through various startups turning into unicorns. This multiplies the scope and opportunities for NRI investors.
NRI Services
This is a transaction between two different countries. Such transactions are done between companies, individuals, or banks. In this process, the payment gateway plays a pivotal role as it handles safe fund transfer between the merchant, customer, and this issuing and receiving bank.
Types of A/c for NRI
Non-Resident External Account (NRE)
In this account, the amount is deposited in Indian currency. You can maintain accounts in the form of recurring, saving, FD, or current account. Good interest rate, easy transfer, anytime access, low balance required is some of the benefits of NRE.
Non-Resident Ordinary Account (NRO)
These are saving accounts for managing your income earned in India. The amount can be the rent of your property, pension, interest, dividend, etc. You can maintain an account in the form of saving, recurring, or current. But in this account, a 30% tax will be deducted after withdrawal.
Foreign Currency Non-Resident (FCNR)
This is the best type of investment for NRIs who want to invest their foreign currency. No risk involved in this account, and both principal and interest amounts are repatriable. Also, the interest rate depends on the currency you deposit. The different currencies will have a different interest rate.
FAQ's NRI
Yes, you can transfer money from NRE to NRO account.
As per FEMA section 6(5), NRI can still hold the securities which he or she bought being an Indian resident, but should transfer shares to his NRO account.
Yes, they can make a direct investment in shares/debentures of mutual funds. They can also create portfolio investments through the stock exchange. Such facilities are available on both repatriation and non-repatriation basis.
As per FEMA, Indian companies should issue bonus shares to non-resident stakeholders. But, adherence to the sectoral cap may be needed.
It is a scheme of RBI under which NRIs can sell or buy securities of Indian companies. For this, NRIs need to apply in the designated bank, which handles Portfolio Investment. All the transactions will be done through that designated branch.
It is mandatory to take the share delivery you purchased before selling it.
Yes, you can transfer your shares as a gift with ease.
Yes, they can subscribe to NPS, governed, and administered by PFRDA (Pension Fund Regulatory and Development Authority). Such subscriptions happen via NRE or FCNR accounts.
NRI Tax Rate
| Segment | STCG | LTCG |
|---|---|---|
| Equity Stock | 15% | 10% |
| Mutual Funds (Equity) | 15% | 10% |
| Mutual Funds (Debt) | 30% | 20% |
| Derivatives (F&O) | 30% | NA |
