India has emerged as one of the fastest growing major economies in the world, thus providing plenty of investing opportunities for Non Resident Indians (NRIs). Various factors including government reforms, a strong capital market and a sturdy banking system have only amplified the climate of investment, domestic as well as foreign. This phenomenal growth story has attracted and intensified investments here from all quarters and NRIs having the repute of highest savings rate in the world are looking no beyond than their home country to invest.
Subsequently, the next step for NRIs would be to ascertain how to start investing and take advantage of the growing Indian markets.
This is where 1kto1Cr comes into the picture - it is an online investment and research platform for Mutual Funds and Corporate Fixed Deposits to help all investors plan and invest their savings in a structured and hassle-free manner using various analytical tools and customized investment solutions.
NRIs can invest in all Mutual Funds open for investments through 1kto1Cr.
However, NRIs of USA and Canada have provision to invest in limited mutual fund houses. This constraint is due to the regulatory compliances under FATCA that the AMCs have to go through.
It is mandatory for every NRI investor to have an NRE or NRO account with an Indian Bank.
PAN or PERMANENT ACCOUNT NUMBER is mandatory for financial transactions in India.
ACCOUNT OPENING +
Steps to open an NRI account with 1k to1Cr are:
- Step 1 - Sign up by filling the account opening form.
- Step 2 - An email will be sent to your registered email id with the pre-filled forms and list of documents to be submitted.
- Step 3 - Once your documents are ready, we will schedule a pick-up of the same on your preferred date and time. We charge a nominal courier fee for the same. One time physical submission of documents is mandatory.
- Step 4 - We will initiate activation of your account after receiving the documents.
- Step 5 - You will receive an intimation of account activation and you can start investing.
KYC is mandatory for all investors. Non KYC compliant investors need to submit the required documents for KYC compliance along with account activation documents.
The following documents are required for account activation:
If KYC Compliant If Non-KYC Compliant
- Duly signed Registration Form
- Duly signed OTM form (mandatory for SIPs)
- Cancelled cheque (If the name is not printed on the cheque, it must be duly signed by the investor)
You need the following documents IN ADDITION TO the documents required for KYC compliant investor:
- Duly signed KYC form (with photograph)
- Self-attested copy of PAN card
- Self-attested copy of passport
- Self-attested copy of address proof of overseas address
For minors, the guardian must be KYC compliant. Proof of Date of Birth is also required along with the above mentioned documents.
PAYMENT SOLUTIONS / MODES +
Net Banking: Investor can make the payment through our website using Net Banking for any investment once account is opened.
One Time Bank mandate will be registered with bank and then investment can be done via SIP.
The following table elaborates the taxation pattern for NRIs:
NRI TAXATION EQUITY ORIENTED SCHEMES Short term capital gain (Holding period <=12 months) 15% Long term capital gain upto Rs 1 Lakh (Holding period >12 months) NIL Long term capital gain exceeding Rs 1 Lakh (Holding period >12 months) * 10% OTHER THAN EQUITY ORIENTED SCHEMES Short term capital gain (Holding period <=36 months) According to tax slab Long term capital gain (Holding period >36 months)
- Listed: 20% with indexation
- Unlisted: 10% without indexation and without considering foreign exchange fluctuation
Short term / long term capital gain tax will be deducted at the time of redemption of units.
* Gains incurred til 31st January 2018 will remain exempted from tax. All gains made thereafter this date will be taxed.
What is DTAA (Double Taxation Avoidance Agreement)?
An important aspect of taxation for NRIs is the Double Tax Avoidance Agreement (DTAA). It is essentially a bilateral agreement entered into between two countries that aims to avoid or eliminate double taxation of the same income in two countries.
To give an example, India has a DTAA with the US. If an NRI based in the US makes short-term capital gains from equity investments in India, he pays 15% tax. Let’s assume the rate for such gains is 30% in the US. The investor will need to pay tax only for the difference in rate i.e. 15% in US. This means he gets a deduction on the tax paid in India from his tax payable in the US.
India has Double Taxation Avoidance Agreement (DTAA) with around 85-90 countries.
Repatriation is the process of converting a foreign currency into the currency of one's own country. The NRI investor has the option to invest either on a repatriable or non-repatriable basis according to their choice. The following conditions must be met while choosing:
- Repatriable Basis
- The customer must have an NRE account in India.
- The investment must be made to the AMC by inward remittance through normal banking channels, or by debit to an NRE account of the investor.
- The dividend / interest and maturity proceeds of units may be remitted through normal banking channels or credited to NRE account of the investor, as desired by him subject to payment of applicable tax.
NRE account is freely repatriable (Principal and interest earned).
- Non-Repatriable Basis
- Investments must be made through NRO Bank account.
- The investment must be made to the AMC by inward remittance through normal banking channels or by debit to the NRO account.
The current income in the form of dividends is allowed to be repatriated. NRO account has restricted repatriability of principal amount i.e. permitted remittance allowed is up to USD 1 million net of applicable taxes in a financial year.
- Repatriable Basis
Can an Indian resident be my nominee?
Yes, an Indian resident can be your nominee.
Can I invest from a foreign bank account?
No, since Indian mutual fund houses are only allowed to take investments in Indian currency, NRIs can only invest either from NRE or NRO accounts with Indian Banks.
When will the TDS certificate be issued to me?
TDS Certificates (Form 16A) will be dispatched to the investors once every quarter by the respective AMCs.
How is an NRE account different from an NRO account?
NRE account is used to park the foreign earnings of an NRI. They are exempt from tax and both the principal amount and interest can be repatriated.
NRO account is used to manage the earnings of an NRI originating in India. It is taxable and has limited repatriability, the interest amount can be repatriated entirely but the principle amount is subject to repatriation upto USD 1 million net of applicable taxes in a financial year.
Can I appoint a Power of Attorney on my behalf?
No, this provision is not allowed to NRIs as of now.