Foreign Resident Indian: Comprehensive Definition, Implications, and Advantages | Jagran Josh (Roughly translated)
Investing as a Non-Resident Indian (NRIs): A Comprehensive Guide
Non-Resident Indians (NRIs) are individuals originally from India who now reside abroad. This article aims to provide a clear and concise overview of the investment opportunities available to NRIs in India.
Investment Options for NRIs
NRIs are allowed to invest in a variety of financial instruments within certain limits. They can invest in Fixed Deposits (FDs), bonds, and National Pension System (NPS) accounts. However, investing in Reserve Bank of India (RBI) bonds is not permitted.
For those interested in real estate, NRIs can purchase residential or commercial properties using NRE, NRO, or FCNR accounts. It's important to note that NRIs cannot invest in agricultural land, farmhouses, or plantations, except through inheritance or gifts.
In addition, NRIs can invest in government securities such as bonds and treasury bills, as well as in mutual funds and stocks. To do so, they require a Demat and trading account for stock investments, and can make use of the Portfolio Investment Scheme (PIS).
Digital gold, gold ETFs, and physical gold are also available investment choices for NRIs.
Tax Implications
NRIs are subject to different tax rules and rates than residents in India. The tax treatment of NRIs' income depends on their residential status. If they do not fulfil the residence criteria, they are considered non-residents and pay income tax as an NRI.
To be considered a tax resident in India, a person must live in India for 182 days in one year or 365 days over four years, with at least 60 days in the year under consideration.
OCI and PIO
The Overseas Citizenship of India (OCI) allows individuals of Indian origin to live and work in India indefinitely, with the ability to buy property and make investments. A Person of Indian Origin (PIO) is a foreign national with Indian ancestry, excluding citizens of certain countries like Pakistan, Afghanistan, Bangladesh, China, Iran, Bhutan, Sri Lanka, or Nepal.
Investment Opportunities
The most promising investment opportunities for NRIs in India include real estate in growing metropolitan and Tier 2 cities like Mumbai, Chennai, Kolkata, Coimbatore, Lucknow, and Ahmedabad. These cities offer potential price appreciation and rental income.
NRIs can also benefit from government incentives for business, such as those promoting manufacturing, startups, and MSMEs. Access to institutional funds and Real Estate Investment Trusts (REITs) through platforms offering structured co-investment portfolios is another attractive investment avenue.
Opening Accounts
NRIs can open a Non-Resident External (NRE) account or a Non-Resident Ordinary (NRO) account for their investments in India. NRE accounts are used for foreign currency remittances and are subject to lower tax rates than NRO accounts. NRO accounts, on the other hand, are used for rupee-denominated transactions and are subject to higher tax rates.
Existing Accounts
Existing Public Provident Fund (PPF) accounts can be maintained until maturity by NRIs.
In conclusion, NRIs have a wide range of investment opportunities available to them in India. By understanding the rules, tax implications, and potential investment avenues, NRIs can make informed decisions to grow their wealth and secure their financial future.
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