Economic Reforms of India from 1990-2010

Topics: Non-resident Indian and Person of Indian Origin, Investment, India Pages: 32 (7400 words) Published: December 25, 2010

What is the status of investment in corporate deposits by NRI's ?

Corporate deposits by NRI's have to be made for minimum period of 3 years and a minimum amount of US$10,000 has to be invested. These deposits carry an interest of 14% and are repatriable depending on the depositee company's offer. Interest on corporate deposits are taxed at 20% and this amount is deducted at source.


What is the status of investment in units by NRI's ?

NRI's investing in units have to invest a minimum amount of US$1,000 for a minimum period of 36 months. Principal and returns of units are repatriable if applied out of the initial quota reserved for NRI's. They are not repatriable if applied out of the quota allottable to Indian public. Returns from UTI's US64 scheme are totally exempt from tax in the hands of NRI's. In case of other units, capital gains are taxed @ 20% in case of long term capital gains.


What is the status of investment in IPO's by NRI's ?

If an NRI invests in Initial Public Offerings (IPO's) through the NRI quota, both the principal as well as the returns are repatriable to the country of the NRI's choice. For issuing shares through initial quota, the concerned company has to apply to the RBI for prior permission. Long term capital gains are taxed @ 20%.


What is the status of investment in secondary markets by NRI's ?

Principal and returns on investment in secondary markets are repatriable if the prior permission of the RBI is obtained for such repatriation. Once such permission is obtained, the NRI can continue to invest in the secondary market on a repatriation basis. Rates of taxes on capital gains are the same as the rates on IPO's. However, it needs to be noted that in case of secondary market purchases, RBI provides a blanket permission to the authorized dealer (bank) whereas in case of secondary market sales RBI permission has to be sought on a case-by-case basis for each transaction. It needs to be emphasised that direct investments in the primary and secondary markets on a non-repatriation basis does not require any prior approval from the RBI.


Are there any industry exposure restrictions for NRI portfolio investments ?

Pursuant to a circular issued by the RBI dated May 19, 1995, the entire manufacturing and service sector has been thrown open to NRI investment. NRI's, OCB'S and FII's have now been permitted to invest upto 24% on a repatriable basis in companies engaged in finance, hire-purchase, leasing, trading and other services. Currently, the only restriction on NRI investments is in Agricultural Land, Plantations and Farm Houses.


What is the basis for levying taxes on capital gains ?

Capital gains tax is levied on the dollar value of capital gains. Levies on returns from non-repatriable investments will be after discounting for inflation.


What is the procedure for NRI's to apply for new issues of companies ?

Application to IPO's by NRI's have to be made in the prescribed blue colored form in English. Applications should be made for a minimum of 500 shares and in multiples of 100 thereof. Applications should be made in the name of individuals(not in the names of minors, foreign nationals, partnership firms, institutions or their nominees) of Indian nationality/origin, overseas companies, partnership firms, trusts, societies and other corporate bodies, owned atleast to the extent of 60% by non-resident individuals of Indian nationality/origin.


How should payment for IPO applications be made by NRI's ?

Payment can be made in any one of the following ways :
1. Cheques drawn in Indian rupees on NRE accounts maintained with Indian banks. 2. Bank drafts drawn out of NRE or FCNR accounts in Indian banks. 3. Indian rupee drafts purchased from abroad.

4. Stockinvest purchased out of NRE or FCNR accounts.

What are the...

Links: 4. 2009 News Diary – NRI Business
10. Real Estate and NRIs: A Legal Glance
November 29th, 2010 | Category: Magazine-Articles, NRI Helpline |  Print This Post |  Email This Post |
December 1, 2010 at 5:48 pm
[...] NRI Investment in India – Homecoming With a Purpose [...]
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