Better infrastructure, health and education centers and profound economy growth by reaps and bounds are the prominent interpreters of NRIs enhancing faith in India. Its local markets registered swollen investment worth $10 billion in the first half of the year 2015 by NRIs. It frequently jumped to $ 121.8 billion till September in the same financial year. There is no chance of this investment to go down in flames in the coming future.
Non-residents of India (NRIs) have automatic as well as government route. They can choose either route as the best investment option in India. The latter option comprises government securities, treasury bills, mutual funds, PSU’s bonds, certificate of deposits, perpetual bonds, stocks, ETF, money market mutual funds, real estate property, company deposits and so on.
Before planning where to invest money in India, NRIs should have bank accounts for channelizing that either long or short term investment. With their features, these are:
NRO (Non Resident Ordinary):
- Up to USD 1 million of Indian earning can be deposited in it for free.
- CA certified tax paid certificate is to be submitted before repatriation.
- Interest on this deposit is taxable in India.
- The tax will be deducted at 30% of the subject source in addition to education and application surcharges.
NRE (Non Resident External):
- Here, conversion of foreign currency into INR takes place.
- The foreign currency’s conversion is done on the rate prevalent then.
- Principal amount, NRE funds and interests are subject matters of repatriation.
- It can be for NRE savings, recurring and fixed deposit account.
FCNR (Foreign Currency Non Resident):
- Only term or fixed deposits of the NRIs foreign currency can be deposited in it.
- It provides conversion at the fixed rate and thereby, helps in avoiding loss due to fluctuating rate.
- In association with an Indian native, an NRI can open this joint account.
- Its duration may last from one year to 5 years.
- Interest on the investment is tax free but principal amount is taxable. Its interest rate stays in between 1.5 % to 2%.
Here, we have two dominant options for Best Investment Plans in India for NRIs:
- National Pension Scheme (NPS):
- It lets the savings pile up against the corpus.
- It gives the NRI an option for opening an annuity after retirement.
- Anyone in between the age group of 18 to 60 years can open it.
- It would strictly be an individual’s account.
- Having filled the initial form, a PRAN is subscribed.
- Online transaction can be done.
- At the time the NRI returns his citizenship of India, the account is to be closed.
- The account can be open with INR 500 (minimum)
- 40% of the investment is mandatorily to be reinvested in annuity scheme which is a good investment scheme in India.
- NRE/NRO accounts can be utilized as the channel to inflow cash to NPS account.
- The NRI NPS account holder should invest 10% of the gross national income.
- Customized choice of investment- it can be in government securities, equity related or fixed income. Tax upto INR 1,50,000 is deducted in associated with contribution to other plans.
- INR 50,000 is deducted towards the investment in NPS account under Section 80CCD (1B).
- Annual withdrawal or lump sum drawings from NPS account will be taxable.
- Fixed Deposit:
- NRIs can have NRE or FCNR account for this investment plan.
- Around 8.5 % can be earned as interest on investment if channelizing through NRE account.
- This investment is tax free.
- Rate of return on FCNR account varies in comparison to the deposited amount.
- Fixed deposit (FD) can be open in NRO account. The income at source is liable for tax and interest cannot be repatriated.
- Interest rate on NRO FD falls in between 4 % to 7.75% as per maturity period.