5 Tips for NRI's Investing in India

[Parag]

India is fast emerging as a lucrative investment destination for NRI's because of its growing economy. Foreign funds are flowing into India and China as they have been among the few star performers when the global economy is struggling to emerge out of the meltdown. With the Indian economy on a long-term growth curve, the non-resident Indians (NRI's) should look at multiple investment options to park their funds in their home country.

Avoid investment in Mutual Fund
If you plan to invest in Indian Mutual Funds you should be aware of how U.S. taxes capital gains or dividends from International Mutual Funds. Mutual Funds in India (or any other country outside U.S.) mostly qualify as Passive Foreign Investment Company. These investments need to be declared to IRS every year by 30 June 2011. Capital gains and dividend income from these investments are taxed at the highest Income tax rate and not as capital gains. Additionally deferred taxes (non-payment of taxes till asset is sold to realize capital gain) are charged interest. Therefore investing in Mutual Fund will not be a wise investment.


Investment in Real Estate
If you are sitting back and thinking whether it's a good idea to invest in property and real estate in India? Then you will
be more than happy to know that Reserve Bank of India has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase immovable property in India for their bona fide residential purpose. They are, therefore, not required to obtain any prior permission of Reserve Bank. Further, the Reserve Bank has granted general permission for sale of such property without its permission. Investment in agricultural land/plantation property/farm house is, however, not allowed.


Investment in Equity Markets
Many investors wanting to speculate in stocks are coming over to India as the market is booming and in the last few deca
des there has been a huge inflow of money into the stock markets. You have to close your demat account and open a new NRO Demat Account. You don't have to seek permission from the RBI. Investing in securities is done through portfolio investment scheme. As per this scheme, NRIs can select one branch designated by RBI for transaction related to investment. The transaction then can happen through the specified branch for stocks and convertible debentures.

Invest in Insurance

NRIs can take the privilege of investing in life insurance policies in India without any limit on the cover. However they have to
be present in India, while taking the Insurance. Some companies offer foreign-currency denominated policies and also allow you to pay the premium in foreign currency. One important point, is that the premiums should be paid from NRE account, if the maturity value is to be repatriable, else only the partial amount will be repatriable. The Government of India even today, owns the largest life insurance company.

Invest in Gold
Indians are known for their obsession with gold. Now you have different options for investing in gold. You could buy gold coins, gold
bars. Investment in Indian gold shares has an advantages for NRI investors that is "Higher Return and Low Risk." If the global economy continues to be unstable, gold will be in even higher demand raising the total value. Investment companies are responding to this increased demand by offering special incentives for purchasing gold options.

[bhaveshshah]

NRIs can invest in India through portfolio management services offered by GEPL Capital, a reputed stock broking firm. They offer a whole suite of investment services like equity & commodity investments, mutual funds investment, insurance advisory, portfolio management & wealth management services. They also provide an online trading platform to their customers for convenience in monitoring and trading of their investments. One can contact them to take the advantages of these services.

[anafinconsulting]

You also need to be aware of dual taxation and the India US treaty on that front. E.g. Dividend can be taxable in India and also needs to be declared on your US tax return where it can get taxed at a higher rate. So you need to compute the post tax return before investing..

[invest]

Hi all,

I am new member of this forum, I wanted to invest in india in equities or mutual funds now or in coming 2 to 3 months . But is it a good option??