Top best Investment Options for NRI in India
An NRI is spoilt for choices when it comes to NRI investment options in India, both in the long-term and the short-term sections.
Many Indians have settled abroad over the years and countries such as the US, Canada, and the UK boast of having a highly vibrant Indian diaspora which contributes heavily toward their economic growth.
Given below are some investment options for NRIs.
NRE / NRO / FCNR Fixed Deposits
As an NRI, you can invest your money in a non-resident external (NRE) account and/or a non-resident ordinary (NRO) account. The money held in these accounts will be in rupees. You can access this as a normal savings account, a term deposit account, or a current account.
A foreign currency non-resident bank deposit (FCNR) is an account where you can deposit your money in foreign currency. Please note that these accounts are not affected by fluctuations in exchange rates and can be held jointly with an Indian resident. The interest on such accounts is not taxed. However, the principal amount is taxed as per the wealth tax regulations.
NRIs can invest in Indian shares through Portfolio Investment Scheme (PIS) of the Reserve Bank of India (RBI). Each transaction through the PIS account is reported to the RBI.
Long term capital gains made on the sale of shares after 1 year from the date of purchase are tax-free Short term capital gains, profits on sale within one year of date of purchase, are subject to a TDS of 15%.
Mutual funds can be both equity as well as debt mutual funds.
Debt funds basically invest in fixed income securities, which include government securities, treasury bills, corporate bonds, money market instruments and more.
The one major advantage with debt mutual funds is that it is managed by experienced fund managers. Also, these are fairly liquid. You can withdraw money as and when you want and you will receive the same in your bank account in about 3-4 business days.
These funds provide safety of capital. While returns are low, given the safety of capital, they are preferred over equity mutual funds in the short term.
Investing in real estate is easy for NRIs under the ambit of Foreign Exchange Management Act (FEMA).
An NRI or a Person of Indian Origin (PIO) can invest in both residential and commercial properties in India. But they are not allowed to invest in agricultural land, plantation property and farm house. They can own such properties only if it is gifted to them or inherited.
Public Provident Fund (PPF)
PPF is a 15 year scheme of the government with an option to extend it after 15 years in blocks of 5 years. It allows tax benefits under Section 80C and the maturity amount is also tax free. This is a good option for debt investing and can be used as a retirement tool to ensure tax free withdrawal.
NRIs can’t open a PPF account. But those who opened a PPF account before they actually got NRI status can continue the account until it matures. But they cannot extend it after 15 years. On maturity, either, they can close the account or can keep it there and enjoy tax free interest till they close the account.
It is recommended that you open a PPF account before becoming an NRI.
National Pension System (NPS)
NPS is an easily accessible, low cost, tax-efficient and flexible retirement savings account. Under the NPS, the individual contributes to his retirement account. NPS is designed on defined contribution basis wherein the subscriber contributes to his own account. The benefit subscribers ultimately receive depends on the amount of contributions, the returns made on the contributions and the period of contributions.
Perpetual bonds are bonds that can never be redeemed. Investors are eligible to receive fixed interest on such bonds.
Such bonds can be issued by a company or government institutions seeking long-term investments.
As you can see, there are lot of NRI investment options for long term and short term. Considering interest rates are near zero in most developed countries ,you must consider safe options back in India.
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