For a person of Indian ethnicity living in another nation, investing in their home country is always a matter of immense pride. But, investing in Indian when you are based out of the country is not as easy as it looks. As an NRI investor there are certain things you need to work out on before investing in the Indian market. This blog will talk about the essential things that you must remember as an NRI before investing in India.
When investing as an NRI, it’s critical to understand the rules. It all starts with making sure your residential status in your KYC is updated to NRI and that you exclusively invest through Non-Resident bank accounts. This does necessitate some paperwork at first, but it is critical to stay in compliance with these regulatory guidelines. Noncompliance with FATCA regulations is also crucial, as we’ve seen how noncompliance can result in investments being halted or redemptions being delayed. Another important regulation concerns NRIs based in the United States or Canada, as only a few fund houses accept their applications.
As an NRI investor, if your home country has a Double Taxation Avoidance Treaty (DTAA) with India, you will avoid paying double taxation in both India and your home country. The concept of this treaty is that you should not have to pay taxes twice on the same income. For example, if you pay capital gains tax in India, you won’t have to pay taxes on the same income anywhere else if a DTAA is in place. India now has DTAA agreements with over 85 nations, covering the majority of the world’s major economies. Resident and non-resident Indians pay the same capital gains tax on mutual funds. The only distinction is that tax is deducted at source and remitted with the government for NRIs by the AMC (asset management company).
Where to Invest:
India is one of the fastest growing markets with multiple opportunities for an investor to invest in. As an investor you must be aware of the avenues in India where you can invest. The investing options available to NRIs are largely the same as those available to resident Indians.
NRIs can invest their money directly in the stock market. However, before investing in stock, one should consider the investment’s time horizon, risk and return expectations, and long-term objectives. NRIs can invest in direct equity without any restrictions or limits. For a foreign investor with limited experience, a mutual fund would be a safer investment than direct ownership. An NRI does not need special permission to invest in or withdraw from a mutual fund. Certain mutual funds, on the other hand, may not accept deposits from NRIs based in the United States or Canada. If you are a non-resident alien (NRI) from the United States or Canada, it is very crucial to check the fund house guidelines before investing so that your money is not locked away for a few days before being released to you instead of being invested.
NRIs also like to invest in real estate in India. The obvious advantage is that while you are living in a different nation, you may rent out your apartment or house, generating additional cash. It is also a frequent misconception that an NRI cannot obtain a home loan; however, an NRI can obtain a home loan to acquire a property in India.
Technology must play a critical role in attaining your investment goals. Many businesses invest considerably in their electronic interface to guarantee that clients can see their investments in real time and that transactions are simple. On most investment platforms, this is still a typical feature. Technology, on the other hand, must be effectively utilized in order to give superior and personalized investment solutions to consumers. Technology should enable advisors to provide clients with conflict-free, timely, and effective advice. When an NRI is based outside of India, the investment advisor should be able to communicate regularly and provide appropriate portfolio recommendations. Your advisor will be unable to deliver the finest possible guidance when it is most needed if technology does not enable them.
Finding the right partner(s):
Apart from the factors mentioned above, there are plenty of other factors that must be considered before investing in India. Some of them are trading accounts, bank accounts brokerage, and expert consultants from ground zero. Tradeplus is one of the few discount brokerage firms in India offering extensive services for NRI customers. They say it is not possible for NRIs to trade like resident Indians but our services are designed in such a way that you can trade like a resident Indian without much hassles.