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Investment options in India for NRIs

May 28, 2009 18:46 IST

NRIs can make investments in India through different avenues.

With increasing opportunities for work cropping up worldwide, more and more Indians are opting to migrate to other countries in the search for greener pastures.

However, being Indians we still feel the need to stay connected to the place of our birth and therefore, we try to make investments in India through different avenues.

Let's take a look at how Non-Resident Indians (NRIs) can make investments in India.

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Can NRIs deal in stocks and shares in India?

May 28, 2009 18:46 IST

Can NRIs make investments in India?

NRIs can make investments in all the investments options which are available to Resident Indians. However, Persons of Indian Origin can only make investments in non-agricultural businesses in the country.

Are NRIs allowed to deal in stocks and shares in India?

Yes. NRIs can invest in shares and stocks by:

Directly subscribing to shares and debentures of Indian companies on a repatriable or non-repatriable basis -- (a) through the Portfolio Investment Scheme and (b) through government securities, certificates and units of UTI through remittances from their domestic accounts or remittances from abroad.

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What accounts can NRIs use for payments?

May 28, 2009 18:46 IST

NRIs need to use specific accounts through which they can invest in India.

What kind of an account does an NRI use to make payments for invesments?

An NRI needs to use an:

NRE Account (Non-Resident External Rupee Account)
NRO Account (Non-Resident Ordinary Rupee Account)
FCNR Account (Foreign Currency Non Resident Account)

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What are the 24% and 40% Schemes?

May 28, 2009 18:46 IST

What are the 24% and 40% Schemes?

The 24% Scheme allows Indian companies, except those engaged in agricultural activities, to issue up to 24% of their shares and debentures to NRIs with repatriation benefits.

Similarly, the 40% scheme allows for purchase of equity, preference shares and convertible debentures not exceeding 51% of the face value of each issue. Repatriation of upto 40% of the new issue is allowed. Under this scheme, NRIs can invest in new projects or in expansion and diversification projects of existing companies.

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What are the investment options available for NRIs?

May 28, 2009 18:46 IST

A foreign worker stands in front of Western Union, a money transfer agency in Dora, east of Beirut.

What are the investment options available for NRIs?

NRIs can invest in:

Bank deposits
Secondary markets through portfolio investment in equity shares/convertible debentures
New issues (shares/convertible debentures)
Non convertible debentures
Mutual funds provided that amount is invested out of NRE/FCNR/NRO account or by inward remittance
Domestic (NRO) funds through deposits in Indian companies (including Non Banking Finance Companies if they are registered with Reserve Bank of India) on non repatriation basis upto 3 years subject to certain formalities to be completed by the concerned company
Bonds provided that amount is invested out of NRE/FCNR/NRO account or by inward remittance
Proprietary or partnership concern in India
Immovable property provided that the amount is not invested for the purchase of agricultural land, plantation property or farm house and investments are made from fresh inward remittance or existing non resident account

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What are the different tax benefits available to NRIs?

May 28, 2009 18:46 IST

Bank deposits investment in shares, units of mutual funds, etc. are exempt from wealth tax in India

What are the different tax benefits available to NRIs?

Bank deposits investment in shares, units of mutual funds, etc. are exempt from wealth tax in India
Interest earned on NRE and FCNR accounts is completely tax-free
Gift tax has been abolished for all types of gifts from the 1st October 1998

However, gifts received on the occasion of marriage or from relative or under will or inheritance would not be subject to tax.