As per the new rules introduced by the Department for Promotion of Industry and Internal Trade, non-repatriable NRI investments will now be treated at par with domestic investments made by Indian residents. Also, such assets will not be considered while calculating indirect foreign investment.
When NRIs invest in India, the KYC form must mention whether or not the funds are repatriable. A non-repatriable investment is one wherein the principal amount and investment gains are retained within the country where the investment has been made.
NRIs can make non-repatriable investments in the following avenues:
- Futures and options of equities
- Listed equity stocks
- IPOs of companies
- Mutual funds (equity, debt and hybrid)
- Government securities
- Treasury bills (T-bills)
- Listed non-convertible or redeemable debentures
- National pension system
- Chit funds
Tax treatment for NRIs is the same as that for resident Indians. However, tax withholding rates are different for NRIs. Once redeemed, NRI investments are subjected to TDS and taxed at the highest applicable rates. Under the new rules, these investments will not be subjected to TDS or a high withholding tax rate.
NRIs can invest in stock markets under the RBI’s portfolio investment scheme, but the aggregate investment cannot exceed 10% of an Indian company’s paid-up capital. Also, NRIs cannot conduct non-delivery transactions, i.e., no day-trading or short-selling in India. Stocks bought by NRIs can only be sold off after being credited to their Demat account, taking up to 2 days.
The new rule allows NRIs to enjoy the same benefits and flexibility as residents of India. Since the FDI policy came into effect on 15th October 2020, even investments made six months prior can be eligible for these benefits. NRIs must evaluate the situation, make informed investments and take advantage of these progressive changes.
For more information you can contact with our immigration consultants at 8595338595 or [email protected]