NRI Investment Services

Best NRI Investment Options in India in 2019

January 30, 2019 Manoj Sodhani Comments 0 Comment

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.

Tax, TDS & Return Filing Benefits of NRI Investment In India

December 21, 2018 Manoj Sodhani Comments 0 Comment

India has shown potential to grow exponentially. Now, the non-resident diaspora is also turning its head towards this country. It’s just because of the leverages and tax benefits on the NRI investment services in India. If you look at the country’s fiscal policy, this community, including OCIs (Overseas Citizens of India) and PIOs (Persons of Indian Origin), can delve into the non-repatriable investment. It offers an amazing opportunity to save millions of currencies.

If you have any ifs or buts regarding tax policy, consult them with a reputed S2NRI’s NRI investment services or any other one in India.

Interesting Facts about NRI investments in India:

You should come across some interesting facts. The Indian govt. has been treating NRI’s non-repatriable investment as a domestic investment since 2015. Moreover, it doesn’t segment this investment under the foreign direct investment caps. Even, if any non-resident chooses an Indian bank to save his money in the NRE account, he doesn’t need to pay tax on the interest earned on that deposit. Besides, he can completely repatriate that amount.

I bet that you’re feeling awe after reading the foregone facts. Let’s have a rundown of some more benefits that the NRIs can have if they invest in the domestic market.

NRI Status:

This fact is the foremost one that you should know about. Your status (either resident or non-resident) defines what treatment you would get from the tax department. You’re a resident of this country, if you have stayed 182 or more days in a fiscal year. This is what the Income Tax law prescribes.

Taxable Income for NRIs:

The tax is levied on the income of the residents. The non-residents are kept away of such a taxable crew, if they don’t have income from Indian resources. Simply put, if you have income that you have earned abroad, you’re exempt from paying income tax.

On the flip side, the NRIs may have to pay tax here on provided that they have accrued income in India. There is probability to pay because they should have enough accrued income that is grouped under the tax slab. Now, the question is which income is taxable. To name a few, they can be any salary received in India, income from property like rental income, capital gains from the transfer of an asset in India and the interest earned on bank deposits.

Tax Deduction at Source (TDS):

Every income, be it from stocks, equities, mutual funds, property or gold, is worth to TDS. However, the tax rate is relatively higher for the non-residents than that of the local residents. But, there is a loop that leads to a cue that directs them to reduce the burden of TDS. They can become a third party by joining hands with a native investor. It will ensure them to choose the joint investments. Let’s look into the TDS percent on NRIs’ diverse income sources. But, this percentage is a subject matter of changes to revised fiscal policies.

Income from technical fees- 30 percent+3 percent education cess
Income from royalty- 10 percent+3 percent education cess
Income from professional services-10 percent+ 3 percent education cess
Income from rent- 30 percent+3 percent education cess
Income from short term capital gains via Mutual Funds- 15 percent+3 percent education cess
Dividend earned from the Mutual Funds and equities- Zero
Interest earned on NRE or FCNR account deposits-Zero
Interest earned on NRO account-30 percent
Income above INR 10 lakh-10 percent surcharge

Investment options for NRI income:

As for the recent period, the PPF investment scheme is open for the NRIs. This scheme invites investors for at least 15 years to invest, which is relatively considered as a long term investment. On the flip side, the door for short term investments is not open for them. Besides, you should have these arrangements for the savings and investments:

You should have an NRO account to manage it from anywhere in the world.
If you have stocks or equities like MF, open a SIP account and undergo the KYC with the selected bank.
Inform the bank and the brokerage about the opted-out investment plans. Thereby, the bank authority will update you regarding the selected investment plan.
If you’re going to transfer the foreign currency for NRI investment, open an NRE account.

Income Tax Returns Filing: As aforesaid, you (the NRIs) are liable to pay tax if your income has a definitive size for NRIs according to the tax slab. The income tax returns filing helps them to compute what amount of tax they have to pay off.

For this financial year, you should have the income beyond INR 2.5 lakh to become eligible for tax payment.

Remittance Rules Are Crucial in India’s NRI Investment Law

August 6, 2018 Manoj Sodhani Comments 0 Comment

Do you invest in India from abroad?

Or, do you transfer money from your NRO or NRE account from a foreign country?

Making transactions from any bank in the world is permissible. But, you need to know the related rules and regulations. You can remit hundreds to millions of rupees. But at the same time, you should know your transaction limits and taxability. If you want to save your money, you should know about the remittance guidelines.

Yes, an insight of these guidelines would prevent you from uncertain loss via tax. This article will help you to know the nuts and bolts of these norms. Catch them below:

What do you mean by remittance of funds?

Do you send money to parents or any relative in India from overseas? If yes, your money transfer is known as the remittance of funds. Be it a peer-to-peer bank transfer, or an online delivery, your transaction would be considered the remittance of funds.

In all, it implies the transferability of funds. India’s Reserve Bank (RBI) is the regulator of this kind of foreign and indigenous exchange of money. It has set up separate investment laws non-residents (NRIs), citizens and foreigners to invest in India. The NRIs can invest in many profitable and tax-saving schemes, like PPF. But first, they should be acknowledged of the remittance policy.

Let’s have a look over the defined guidelines for NRIs to transfer money.

Rules Regarding Remittance for NRIs:

Defined Limit: The RBI has defined how much amount you could transfer in a financial year (FY). Currently, you (NRI) can remit $250,000 per FY. If your fund transfer falls behind this limit, it’s permissible. But, it must not exceed. (This Apex fund regulation authority can change this limit the next year.) And, you can remit from your current account or capital transaction (that falls under the Liberalized Remittance Scheme or LRS). If you want to know more about LRS, you can check its details from the official website of the RBI (i.e. https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=11255&Mode=0).
Defined Status: The Apex Bank regulation authority permits only the citizens of India to transfer funds under the LRS scheme. It has defined the citizens as a person who has been in India for more than 182 days or more in the previous financial year.

If you’ve any doubt to identify your status, you can consider these facts:

A foreigner who has come to an appointment in India or to carry out his business or to accommodate India for an uncertain period will not be deemed the resident of India, although he has been here for more than 182 days.
An Indian who settled abroad on appointment or to carry out business or accommodate a foreign country will not be deemed the resident, although he has been here for more than 182 days.

Defined Transactions: The NRI can’t deal in all fund transfer. He can transact for:

Travel expenses outside India
Donations
Gifts
Helping close relative abroad
Business trip
Foreign study
Medical treatment
Foreign immovable property
Foreign investment
Lending Rupees to NRIs/PIOs under certain conditions.

Defined Prohibitions: The non-residents are disallowed to transfer money for:

Purchasing lottery ticket
Purchasing foreign convertible bond via an Indian company that deals in foreign market.

Defined Relaxation: If you want leniency, you can seek it. But, the limit criterion will be there. It would be $250,000 or less. Here are a few permissible grants:

Medical treatment abroad
Study in the foreign country

If the remittance exceeds the defined limit, you can seek a general permission from the doctor or a university. It would be granted when you would prove that your necessity is genuine.

Transactional Policies for NRIs:

Permissible bank accounts: Generally, NRIs are permitted to open account in any of the four types of bank accounts. They are NRE, NRO, FCNR and the special non-resident rupee account. The popular accounts in Indian diaspora are NRE and NRO accounts.
Privileges:

The NRE account is meant for the resident Indians who live abroad. It’s repatriable. Also, the foreign citizens who originally belong to India can also open this account. The NRE account holders can remit funds from the foreign country. Even, this remittance covers the income from NRI investment in India, current income and so on.

On the other hand, the NRO account is meant for the non-residents, including the foreigners originated from India. If you have this type of account, the inward remittance is permissible. It means that you can make transactions from overseas. The rental income from Indian property, pension and interest can also be remitted via this account. If you ask about the repatriable amount, the NRO account holders can transfer $1million as per prescribed regulation of the RBI.

How NRIs can comply for paying tax?

What documents should they have?

The amount that you remit from overseas would be taxable. The amount would be debited to the Indian treasure. You should have all these documents to pay tax:

Form A2
A Chartered Accountant’s Certificate (Form 15 CB)
Self-declaration form (Form 15 CA)
PAN card, if you’re remitting amount exceeds $250,000 under the LRS.

Tax on gift:

The relatives of the NRIs can gift anything. But, its valuation should not exceed $250,000 in a FY. Otherwise, it’s taxable.

Tax Implications for NRI Property Investment in India

May 4, 2018 Manoj Sodhani Comments 0 Comment

Do you know that you’ve to pay tax if you want to sell or purchase property in India from abroad?

Yes, you have to pay. Before taking any such step, you should know the property investment taxation laws for NRIs. Otherwise, your taxable money would mount a lot.

To get rid of such awkward situation, you should know the taxation policy for the non-residents in India. This blog is written with a view to make acknowledged to you of Indian tax norms. The below mentioned guidelines are strictly meant for selling and purchasing of property of expats with Indian passport.

Let’s begin.

Taxation law if an NRI sells a property:

The selling procedure of any property will be similar for domestic as well as PIOs/NRIs. The amount received from the sale of the property would be taxable. Now, the question arises-will it be taken as a long term capital gain or a short term gain?

Difference between long term and short term capital gain:

Answer-The gain received from the sale of the property would be considered a capital gain. To distinguish whether it is the long term or the short term gain, you should count the number of years from when you purchased it. If you sell it after 2 years or more of its purchase, it would be the long term capital gain. But, if that selling time is less than the said timeframe from its purchasing date, it would be the short term capital gain.

Taxability:

Your gain would undergo for TDS deduction. The Indian living overseas would be subjected to pay 20% TDS if it’s the long term capital gain. The TDS value will scroll up to 30% if it’s the short term capital gain. Therefore, the NRIs should invest in Indian property while keeping these tax implications.

Repatriation:

If you think of repatriation, you can go for it. But, you can repatriate upto $1 million in a financial year. You should have a PAN card. Quote it in the challan-cum-statement in a Form 26QB. This form discloses that you deposit withhold tax.

If you have any doubt or confusion, dispel it with an advocate who deals in the NRI’s property management cases.

Taxation law if the NRI sells an inherited property:

It’s true that non-residents can’t invest in immovable property. But, this law becomes null and void when it comes to inherited or gifted property. You can sell it willingly.

Capital gain:

The capital gain will be computed on the gain on the sale of the property. It will be similar to, as if that property is yours. Therefore, the cost of acquisition would be same for you as of the owner. The cost of indexing should be calculated from the year of purchase by the original property owner.

Capital gain=Sale proceeds-indexed cost of acquisition

If you sell it less than two years from holding that property, it would be short term capital gain. Otherwise, it would be long term capital gain.

Taxability:

After determining the capital gain, you would have to evaluate tax value. If it’s a long term capital gain, the tax would be 20% of the gain. When it comes to the short term capital gain, you should integrate it with your income. And then, you should calculate the tax amount. It differs financial year to financial year. So, you can check the income tax slab for deriving that value.

TDS:

If you want to save your tax, you should show the TDS deduction with the buyer. If it’s a long term capital gain, 20% TDS will be deducted, otherwise, it would be 30%. You should report about it in your country of residence.

Tax Exemption:

You can get off paying tax amount. Show zero TDS to the income tax officer.

Tax Benefits for NRIs Over Real Estate Investment in India

March 12, 2018 Manoj Sodhani Comments 0 Comment

The homesickness tends to attract non-residents in their native country. Their nostalgia compels them to plan for shifting here again after retirement. At that point, they often sweat out.

Reason?

Many factors are responsible for it. So far, there are a few massive obstacles that can trap you (if you’re the NRI) up. Let’s share a few vital points that are significant from your aspect if you’re planning to invest in the real estate in India.

I’ll begin with what FEMA states.

What FEMA says?

The Foreign Exchange Management Act (FEMA) is the licit regulation that states the rules & guidelines for the expats. The real estate investment of the NRIs comes within its index. This regulatory act is governed by the Reserve Bank of India (RBI). It’s basically drafted to pat the foreign investment in this sector.

This Act subtly reads that the PIOs/OCIs/NRIs own right to purchase a piece of land or any property here. This is permissible provided that the land or property must not be an agricultural land or a farm house. Moreover, they can invest in any commercial land.

However, if anyone is a blue blood, the property can be any immovable or movable one.

What about the loan availability for NRIs?

The expat with an Indian passport, mostly, have foreign currency. So, they intend to transact in that currency. But, the regulatory Act denies such kind of permission. Only Indian currency is valid for making this kind of deal. Also, the conduit must be an Indian bank, like PNB or SBI. They must have their account in any of these banks.

As far as the loan is concerned, you as the NRI/PIO/OCI can owe it if you get a green signal in paperwork. Many real-estate companies attract foreign clients to transact in the residential or commercial land/property. The investor must make sure that all your payments towards inward remittance should be through NRE/NRO account.

Moreover, they offer loan availability as well. So, if you’re on a shoestring, you can dream of a house of your own. To enjoy this loan facility, you should have at least 20% of the total value of the property. It means that you can get around 80% of the loan from any reliable source.

What if you’ll not be physically present to deal?

The physical unavailability can be answered through Power of Attorney (PoA). It defines that it’s ok if you can’t be present at the deal. You can go a round of discussion with your lawyer. Thereafter, it won’t be a big deal to empower the third party (like your lawyer or relative or builder or a trusted associate) with the PoA.

Drill in your head that it’s an extremely sensitive issue. You can lose your hard-earned money into the hands of any fraud. So, make sure that the chosen attorney would be reliable and trustworthy.

What are the tax benefits for the non-residents?

The Section 80C of the Income Tax Act, 1961 clearly defines that the foreign resident with Indian passport can claim for the tax deduction. It’s available upto 1 Lakh. But the Act has two provisions:

The property sold within 3 years of its purchase
The property sold after 3 years of its purchase

The first case would be termed as a short term capital gain. If you’ve earned any rental income in this case, it would be taxable. The second case would define as a long term capital gain. In this case, the expat can utilize his money by investing in another property.

Tax Benefits for NRIs in India through PPF & NSC Investment

February 27, 2018 Manoj Sodhani Comments 1 comment

Smart people move ahead while securing their future. The digitization and email marketing have given a break to the monopoly of the highly educated bank and corporate officials. Now, the investment policies and plans are vulnerable to the commoners as well.

Haven’t you noticed the email prompts from the banks and financial institutions?

I’m dead sure that you’d have glimpsed it. It’s an open invitation through the frequent prompts to invest specific amount. Whether you would be a permanent resident or an NRI (non-resident Indian), the volley of these messages tend to ping on your mobile phone. Even, the inbox seems filled with half a dozen of the lucrative investment plans.

Why do people save money in the PPF account?

Do you know why people tend to chop off a good share of their hard earned money in the PPF (Public Provident Fund) account? Why do corporates die to get a National Saving certificate?

It’s a traditional instrument of securing funds for long term for the salaried employees. They tend to enjoy the privilege of tax deduction. Of course, nobody likes to deduct a good share of his hard-earned money as tax. Hence, they like to invest in the PPF account. This is a government approved privilege that assures save on the tax.

There is one more provision of serving the same purpose. It’s based on the National Saving Certificate (NSC).

What’s the NSC?

It’s basically related to the small savings. The government offers savings bonds in its form. The Indian Postal Service (IPS) is the competent authority that issues it. This is a good alternative to choose for a small NRI investment and saving tax.

What’re the benefits of PPF (Public Provident Fund) and NSC (National Saving Certificate)?

Risk free long term investment:

Since these are the offerings of the Indian government, any NRI or permanent citizen can invest. The government takes guarantee to credit the licit and prevailing interest rate on them. The chances of money laundering and fraud will be negligible.

Interest income from PPF a/c & the NSC exempt:

As per the Section 80 C of the Income Tax Act, 1961, the eligible investors can take leverage in the tax up to INR 1.5 lakh. Those who have the NSC can also have the same privilege of tax deduction.

However, these schemes are subject matter of the government affair. Therefore, it is the only competent body that can make the changes in it.

Perks from government in Tax:

The government offers 7.6% per annum interest rate over PPF & NSC. It was around 8 percent during the previous financial year, i.e. January-March 2018. This rate of interest is altered quarterly.
As foretold, the government is a decision maker that defines the applicability of these schemes over the NRIs. Recently, it pushed them out of these schemes’ benefits. Their benefits are meant for only residents now.
If its holder would qualify for an NRI status, the PPF fund or the NSC account would be terminated. The accumulated money in these accounts would draw the minimum interest that would be equal to a Post Office Savings Account (POSA). Currently, it’s around 4%.

Tax deduction applicability:

Section 80C of the Income Tax Act would be identically applicable over the residents and non-resident Indians. Therefore, the NRIs would be able to enjoy the privilege of tax deductibility under this Act.
The residency would be no issue under the tax laws and the foreign exchange regulations. It would define the non-residents on the basis of the physical presentism in India. There are a few contradictions since the Foreign Exchange Management Act (FEMA) distinguishes the NRIs as the ones living in the foreign. So, this clause needs more clarifications.
If the non-residents want to invest in the other NRI services, like the EPF (Employees Provident Fund) in India, the other international treaty as the India-Singapore Comprehensive Economic Cooperation Agreement (CECA) would not be impacted.

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