The investments by NRIs in India are regulated according to the Foreign Exchange Management Act, 1999. The act is modified from time to time along with the FDI policy brought in place by the Government of India. For effective regulation, the government permits investments under two routes: the automatic route and the government route.Read more
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As the name depicts, the government route requires the prior approval of the Government of India or the Ministry of Finance, or the Foreign Investment promotion board.
Listed below are the activities that are excluded for NRI investment:
Non-resident Indians can buy any immovable property in India other than agricultural land or a plantation. However, NRIs should pay out of the funds earned in India through normal banking channels or a non-resident account maintained in compliance with FEMA.
The payments made in any other mode are not permitted. Accordingly, travellers’ cheques or any foreign currency notes are not acceptable.
For inherited farmhouse or agricultural land or plantation, NRIs should transfer it to an Indian citizen permanently residing in India. Property other than plantation or agricultural land can be sold to a person residing outside India who is an Indian citizen, a Person of Indian Origin (PIO) residing outside India, or a person resident in India.
The property can be transferred in the form of a gift to an NRI or PIO or a person resident in India and/or sold to the person resident in India.
The regulations further prescribe that no citizen of Bangladesh, China, Iran, Afghanistan, Pakistan, Nepal, Bhutan, or Sri Lanka is allowed to buy any immovable property in India. However, they can lease for five years with the prior permission of the Reserve Bank of India.
The Government of India has allowed the Non-Resident Indians and the Persons of Indian Origin to invest in the secondary capital market in India. Shares of Indian companies can be acquired through the stock exchanges in India via the PIS account.
In this context, the following documents are required:
NRIs should make delivery-based transactions, avoid trading in banned and caution scripts, maintain a PIS account with only one bank, and purchase not more than 5% of the company's paid-up capital.
As a Non-Resident Indian, you cannot hold a savings bank account. However, you can open one of the following types of accounts:
Following two alternatives are provided to invest in mutual funds:
Overseas Corporate Body is a company, partnership fund, overseas trust, society that the Non-Resident Indians own. They are allowed to undertake activities covered under the general permissions in the Foreign Exchange Management Act.
The provisions of taxation are as per the Income Tax Act, 1961. An individual is considered as a Non-Resident if he/she does not reside in India for at least 182 days in the financial year or at least 365 days during the 4 years preceding that year and at least 60 days in that year.
NRIs need to acquaint themselves with multiple investment options, their inclusions and exclusions. You must note that all investments are subject to distinct regulations and restrictions prescribed by the Government of India.
Past 10 Year annualised returns as on 01-12-2023
^Tax benefit are for Investments made up to Rs.2.5 L/ yr and are subject to change as per tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
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