India is turning into a profitable ground in terms of NRI investment. The government has been improvising several legislations and rules to attract investment by NRIs in India in 2019. Here are a few options that are going to stretch to the heights of popularity as the best investment option.
- NRE account investment:
- Can open with minimum amount
- Can have joint holding, like your spouse or children
- NRE deposits are tax free in India as they are not counted in your taxable income
- Higher rate of returns on account deposits, i.e. more than 10%
- Highly secure and risk-free investment plan for NRIs
- Easily & freely repatriate or move funds, including interest and principal amount
- Unique accessibility advantages, like shopping globally, booking air tickets online
- Can pay bills within the country
- Mutual funds investment:
- Open NRO/ NRE/ FCNR account, besides SIP account for MF investment
- Manageable from the country where you live in
- Profit making possibilities soar with the appreciation in the rupee value
- Can appoint a Power of Attorney to invest on your behalf
- Tax free mutual fund gains, if they are retained for more than a year.
- Tax is deducted at a source of the capital gains, if you invest the holdings for more than a year. You have to pay 10% tax at a source of long term capital gains. It turns 15% if income is sourced through a short term capital gain.
- Debt funds investment (made for 3 years) adds profit to the NRIs income. Presently, 20% tax is levied on its gain with indexation benefits. If excludes indexation, only 10% tax will be deducted.
- FPI investment: FPI stands for foreign portfolio investors. The SEBI or ‘Securities and Exchange Board of India Panel’ has introduced a route viz. voluntary retention route (VRR) for the NRIs investment in 2019. It aims at introducing a uniform regime for all foreign portfolio investors. What features it comprises are:
- Indian diaspora in foreign can directly invest in the Indian companies.
- NRIs and OCIs can purchase mutual funds units, spend money in private equities and also use the foreign FPI route.
- They can invest in debentures of the Indian companies and government securities, like treasury bills.
- They can retain a minimum required percentage of the long term investment in debt for the period of their choice.
- This investment is free from the macro-prudential and other regulatory prescriptions that are applicable FPIs in debt markets.
- The Reserve Bank of India will stipulate the amount of investment in India.
- The NRIs shall have to retain that amount for at least three years.
- The investor can participate in any currency and interest rate derivative instrument, OTC or exchanged traded to protect their interest rate or currency risk.
- Real-Estate investment: There are many factors that make the real-estate an attractive option for NRI investment.
- Rental income through a property will be an additional source since the prices have been revised a lot in the previous years.
- Rather than investing in the Tier 1 cities, the NRI community is tilted to the Tier 2 and Tier 3 cities. It’s just because of the infrastructure development via property investment is gaining momentum rapidly in India.
- The return on property investment is relatively higher if you invest in the commercial property.
- The weak value of rupees gives dollar-holders strength. The NRIs can invest minimally to buy the property. The discouraged value of the Indian currency enables them to buy more pieces of land.
- The regulatory norms have introduced more transparency and added accountability on the part of the real-estate development agencies while complying with RERA.
- National Pension Scheme: This is a valid investment option for those who have retained Indian citizenship. They can opt for it if they want to re-locate in India after retirement.
- It offers leverages in the tax as it follows EET (Exempt-Exempt-Tax) layout.
- The non-residents can attract good returns.
