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

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

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.

  1. 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.

  1. 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.

  1. 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
  1. 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.
  1. 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.

How NRIs Can Make More Money via Investment In India in 2017?

How NRIs Can Make More Money via Investment In India in 2017?

Are you soon settling in the foreign country?

Do you have Public Provident Fund (PPF) account and National Saving Certificate (NSC)?

If yes, you must be updated with the current update. But first, let’s catch a brief over PPF account.

What is PPF account?

As stated above, PPF stands for the Public Provident Fund. It’s a long term investment plan. The government imposes no tax over it. It implies that this 15-year long investment plan gives a sigh of relief from the tax. The smart parents or guardians go for this investment on behalf of their minors. It safeguards INR 500 to INR 1.5 lakh for 15 years with the benefit of high interest rate. Currently, the investor gets 7.8% interest rate over such kind of investment.

Until this year (2017), the non-resident diaspora was delighted to save tax via it. But the recent update has disappointed them. The tax free investment for NRIs via PPF is forbidden. Only residents of India can sink money into this government scheme.

What’s the update regarding PPF and NSC?

If you’re likely to shift abroad, you must know that:

  • Your PPF account would be deemed close.
  • The NSC will return you the interest amount @ 4% that is currently prevalent in the Post Office saving account.

Earlier, it was yielding 7.8% return on the overall PPF & NSC account investment. But now, this practice is over.

Let’s consider a scenario wherein you are likely to shift in the foreign country. You hold a PPF account that makes you worthy to accumulate the interest of 7.8% over total investment. The day you shed off your residential status, your this account would be closed. And the interest rate would be slashed to 4% as per post office saving account’s rate. But the slashed interest rate would be applied from the previous month when your PPF account was closed.

It implies that your account would be matured before its actual maturity date. This is why you need to encash the accumulated amount when you become an NRI.

How can you save more money after this update?

The financial advisors recommend that it would be a wise idea to encash the invested amount. The accumulated amount should be withdrawn. If you want to invest it further, it’s better to sink your amount into the equity that offers repatriability of Indian investments. Go through the tax intricacies as well.

NPS-the best money saving investment for NRIs:

National Pension System (NPS) is one of the best investment options in India (2017) if you’re planning to re-settle in India. It conserves your money for the long term after retirement. Besides this, you’d get a golden chance to multiply your amount via a great rate of interest.

But, do remember to look into the foreign investment rules of the resident country. Some countries will not charge any tax if you have paid it in India over your capital income. Let’s say, you’re living in the US. You have to reveal the source of ‘how much’ equity as well as asset you possess. The tenet of FATCA makes you bound to its rules. The US tax authority would definitely want to know your total investment and annuity. This is how it would compute the amount of tax over your income.

On the other side, the Gulf countries would not seek access to such investment details. Neither do they impose taxes on the income sourced through Indian asset or equity. Therefore, if you desire to resettle in India after a long stay in such countries, NPS will be a good alternative.

How to Choose a Bank for NRI Investment?

How to Choose a Bank for NRI Investment?

An investor always loves to choose the bank that offers more rate of interest on deposits. It implies higher interest rate always attracts more investors. Non-residents of India (NRIs) are no bar from such intensions.

What’s prevalent rate of interest on saving account in India?

Indian banks mark an edge over European banks. They offer higher interest rate than that of western countries’ banks. Swiss or American banks’ cut off of interest rate remains under 1% for saving account. On the contrary, SBI, HDFC, Axis and PNB facilitate 4% interest rate on saving account. And this interest rate appreciates upto 8 % when one goes for the fixed account investment.

What apex bank Reserve Bank of India (RBI) states?

Reserve Bank of India (RBI) is an apex banking institution. It regulates banking system and norms in India. It used to fix the rate of interest for various accounts. But it has parted itself from regulating deposit interest rate after October 25, 2011. However, it has optioned two:

  • All banks in Indian must restrict their rate of interest on saving account worth Rs. 1 Lakh.
  • Exceeding INR 1 lakh saving deposit entertains the investors with different interest rate. And also, the apex banking authority will not intrude in the matter of interest paid on current, saving and FD account. It also looks up whether the similar amount, acceptance of cheque and OD or any other.

Indian banks deliver a lot of NRI investment services, rebates or special service offers for banking. Taking pay bills for expenses into account, one can estimate why India magnetizes them for investment.  It facilitates property maintenance, life insurance premium and sending money to family in India.

What things an NRI should notice before investment?

Interest rates do attract but what if its customer support throws ordeals? So, the Indian diaspora should keep in their memory that:

  • The bank should have its branch overseas. If it is so, the customer support can help them out in sorting any bank related issue.
  • Accessibility of the banks means a lot. Sometimes, NRIs have to wait in lanes for hours to resolve their banking issues. Check out whether the bank sends its representative to the client’s place or not for facilitating with NRI services. If it happens, the clients will be associated with it for long time.
  • Notice whether the bank provides special offers time to time especially for NRIs or not.
  • Notice the interest rate for NRIs. Compare them with the interest rates of other banks as well.
  • Check whether the bank offers deposit insurance or not. Don’t assume that the bank generally offers. Sometime, it may not.

CA Certification for NRI Investment No More Compulsory

CA Certification for NRI Investment No More Compulsory

Taxation policy updates are the alarming bells set for the tax payers. Non-residents of India used to find them chill wind to encounter with. Over the years, scenario has been changed. Relaxation in stringent taxation policies is introduced. This is done to get migrants head around NRI investment in various sectors, such as real-estate, housing, finance and technology.

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