investment opportunities in india for nri's€¦ · 1. foreign direct investment (fdi) a) fdi...
Post on 08-Jul-2020
3 Views
Preview:
TRANSCRIPT
11
C.V.O. CA'S NEWS & VIEWSVOL. 22 - NO. 6 - DECEMBER 2018
ABBREVIATIONS
Particulars Full Form
“DIPP” Department of Industrial Policy & Promotion
“FCNR(B)” Foreign Currency Non-Resident (Bank)
“FDs” Fixed Deposits
“FEMA” Foreign Exchange Management Act
“FY” Financial Year
“NRE” Non-Resident External
“NRNR” Non-Resident Non-Repatriable
“NRO” Non-Resident Ordinary
“NRSR” Non-Resident Special Rupee
“NSC” National Saving Certificates
“PAN” Permanent Account Number
“PPF” Public Provident Fund
“PSU” Public Sector Undertaking
“RBI” Reserve Bank of India
“SBI” State Bank of India
“SEBI” Securities and Exchange Board of India
INVESTMENT OPPORTUNITIESINVESTMENT OPPORTUNITIES
IN INDIA FOR NRI'SIN INDIA FOR NRI'SCA Jini Jain
INTRODUCTION
India, with its fast developing
economy and huge potential for
growth, is a great nation that provides
h o s t o f o p p o r t u n i t i e s f o r
investment.India has been ranked at th77 place in the “Ease of Doing
Business 2019 Survey” among 190
countries surveyed. The climb is 23
places up from the last year's
survey.Thanks to the Indian
government's liberalized policy
regime and robust business
environment that have ensured that
foreign capital keeps flowing into the
country. Further, as NRIs have close
ties with India, they have been offered
a preferential status to encourage
inflow of funds from them in Indian
economy. This Article covers various
avenues for investment to NRIs in
India under different modes. The
broad regulatory framework
impacting various investments can
be comprehended illustratively from
the following regulations:
Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 read with the Consolidated FDI Policy of DIPP
Notification No. FEMA 20(R)/ 2017-RB (Herein referred as Notification No.20(R))
Foreign Exchange Management (Deposi t ) Regulations, 2016
Notification No. FEMA 5(R)/2016-RB
Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018
Notification No. FEMA 21(R)/2018-RB
(Herein referred as Notification No.21(R))
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000
Notification No.FEMA 3 /2000-RB
Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations, 2000
Notification No. FEMA 4/2000-RB
12
C.V.O. CA'S NEWS & VIEWSVOL. 22 - NO. 6 - DECEMBER 2018
Investment Opportunities In India
Strategic Investment
FDI
LLPs
Firm / Proprietary
concern
Non-Strategic Investment
Portfolio Investment
Other Securities
Investment Vehicles
Other Avenues
FDs
Lending Loans
Immovable Property
IMPORTANT DEFINITIONS
1) Capital instruments: Equity shares including partly paid shares, debentures, preference shares and
warrants issued by an Indian company. 'Debentures' and 'Preference Shares' mean fully, compulsorily &
mandatorilyconvertible debentures and preference shares respectively.
2) Non-Resident Indians (NRIs): An individual resident outside India who is citizen of India.
3) Overseas Citizen of India (OCI): An individual resident outside India who is registered as an Overseas
Citizen of India Cardholder under Section 7(A) of the Citizenship Act, 1955
4) Persons of Indian Origin (PIO)(As defined under Notification 5R):A person resident outside India who
Before discussing the various investment options, it is essential to note that the term 'NRI' is defined
specifically in the respective notifications. Alongwith this term, two terms that are commonly referred are 'PIO'
and 'OCI'. Under Notification Nos. 20(R) and 21(R), PIOs are not considered to be a specific category. They are
subsumed under 'OCI'. Therefore, erstwhile PIO cardholders will now be required to obtain OCI card to be
eligible to invest under the above notifications. However, it is pertinent to note that PIOs continue to be a
recognized status under Notification Nos. 4 and 5(R).
Broad coverage of opportunities in India for NRIs:
13
C.V.O. CA'S NEWS & VIEWSVOL. 22 - NO. 6 - DECEMBER 2018
is a citizen of any country other than Bangladesh or Pakistan or such other country as may be specified
by the Central Government, satisfying the following conditions:
a) Who was a citizen of India by virtue of the Constitution of India / Citizenship Act, 1955
or
b) Who belonged to a territory that became part of India after the 15th day of August, 1947or
c) Who is a child or a grandchild or a great grandchild of a citizen of India or of a person referred to
in clause (a) or (b)
or
d) Who is a spouse of foreign origin of a citizen of India or spouse of foreign origin of a person
referred to in clause (a) or (b) or (c)
Explanation: The expression 'Person of Indian Origin' includes an 'Overseas Citizen of India'
cardholder within the meaning of Section 7(A) of the Citizenship Act, 1955.
5) Repatriable Investment:An investment, the sale or maturity proceeds of which are, net of taxes,
eligible to be repatriated out of India.
6) Non-Repatriable Investment:An investment, the sale or maturity proceeds of which are not
eligible to be repatriated out of India.
1. Foreign Direct Investment (FDI)
a) FDI is governed by Schedule 1 of Notification No. 20(R).Under this Schedule, an NRI/OCI is
permitted to invest in capital instruments of an Indian entity as defined above subject to entry
routes (automatic and/or approval) and sectoral caps for foreign investment, pricing guidelines
and reporting requirements.
b) Regulation 16 to FEMA Notification No. 20R prescribes the entry routes, sectoral caps and
conditionalities against specific sectors/activities permitted.
c) Regulation11 of the said Notification prescribes pricing guidelines which have to be fulfilled at the
time of every issue/transfer of capital instruments. The pricing methodology laid down is as under:
i. Incase of a listed company, price should not be less than the price worked out in
accordance with SEBI guidelines.
ii. In case of an unlisted company, price should not be less than the valuation of capital
instruments done as per any internationally accepted pricing methodology for valuation on an
arm's length basis duly certified by a Chartered Accountant or a SEBI registered Merchant Banker
or a practicing Cost Accountant.
d) Reporting Compliance: Single Master Form (SMF) has been made effective from 01.09.2018
which subsumes Form FC-GPR (including reporting of receipt of share application money that was
reported in Advance Reporting Form) for issue of capital instruments and Form FC-TRS for
transfer of capital instruments. All new filings after 01.09.2018 have to be made in SMF only
within the timelines prescribed. The compliances can be summarized as follows:
Particulars Periodicity Compliance
Reporting on issue/transfer of capital
instruments
One-Time Single Master Form
Reporting of foreign investment in
thIndian entity by 15 July for the
previous financial year
Annual Annual Return on Fore ign
Liabilities and Assets
14
C.V.O. CA'S NEWS & VIEWSVOL. 22 - NO. 6 - DECEMBER 2018
1.a) Investment in LLPs under repatriation basis is covered under Schedule 6 of Notification no. 20(R).
Foreign investment by NRIs/OCIs(other than a citizen of Pakistan or Bangladesh) is permissible under
automatic route in LLPs operating in those sectors where 100% FDI is allowed and there are no FDI
linked performance conditions.It means that there should not be any sector specific conditions for LLPs
receiving foreign investment as stipulated in Regulation 16 of the said Notification.
b) Such investment in an LLP is also subject to compliance of the conditions of Limited Liability Partnership
Act, 2008.
c) : The investment should not be less than the fair price
worked out as per any internationally accepted or adopted market practice method of valuation and a
valuation certificate to that effect shall be issued by the Chartered Accountant or by a practicing Cost
Accountant or by an approved valuer from the panel maintained by the Central Government.
d) Pricing guideline at the time of disinvestment:In case of transfer of capital contribution/ profit share :
Investment in Limited Liability Partnerships (LLPs)
Pricing guideline at the time of investment
Particulars Pricing Guideline
From a person resident in India to a person
resident outside India
Consideration should of
capital contribution/ profit share of an LLP.
not be less than the fair price
From a person resident outside India to a
person resident in India
Consideration should of the
capital contribution/ profit share of an LLP.
not be more than the fair price
Particulars Periodicity Compliance
Reporting on issue/transfer of capital/profit share One-Time Single Master Form
Reporting of foreign investment in LLP by 15 July
for the previous financial year
th Annual Annual Return on Foreign
Liabilities and Assets
2.a) Investment in LLPs under repatriation basis is covered under Schedule 6 of Notification no. 20(R).
Foreign investment by NRIs/OCIs(other than a citizen of Pakistan or Bangladesh) is permissible under
automatic route in LLPs operating in those sectors where 100% FDI is allowed and there are no FDI
linked performance conditions.It means that there should not be any sector specific conditions for LLPs
receiving foreign investment as stipulated in Regulation 16 of the said Notification.
b) Such investment in an LLP is also subject to compliance of the conditions of Limited Liability Partnership
Act, 2008.
c) : The investment should not be less than the fair price
worked out as per any internationally accepted or adopted market practice method of valuation and a
valuation certificate to that effect shall be issued by the Chartered Accountant or by a practicing Cost
Accountant or by an approved valuer from the panel maintained by the Central Government.
d) Pricing guideline at the time of disinvestment:In case of transfer of capital contribution/ profit share :
Investment in Limited Liability Partnerships (LLPs)
Pricing guideline at the time of investment
15
C.V.O. CA'S NEWS & VIEWSVOL. 22 - NO. 6 - DECEMBER 2018
a) A company having foreign investment, engaged in a sector where foreign investment up to
100% is permitted under the automatic route and there are no FDI linked performance conditions, can be
converted into an LLP under the automatic route. Similarly, an LLP which satisfies the above conditions
can also be converted into a company under automatic route.
b) Reporting Compliance:SMF has also subsumed the following:
a) Form LLP-I - For investment of capital contribution and profit share
b) Form LLP-II - For disinvestment/transfer of capital contribution and profit share.
Accordingly, after 01.09.2018, such reporting foreign investment in LLP should be made in SMF within
the timelines prescribed.The compliances canbe summarized as follows:
Conversion:
Particulars Periodicity Compliance
Reporting on issue/transfer of capital/profit share One-Time Single Master Form
Reporting of foreign investment in LLP by 15 July
for the previous financial year
th Annual Annual Return on Foreign
Liabilities and Assets
3.a) Under Schedule 4, an NRI/OCI, including company, a trust and a partnership firm incorporated
outside India and owned and controlled by NRIs/OCIs, may purchase/contribute on non-repatriation basis without any limit:i) Any capital instrument issued by an Indian company, whether listed or not.ii) Units issued by an investment vehicle, either on the stock exchange or outside it.iii) Capital of a Limited Liability Partnership.iv) Convertible notes issued by a startup company in accordance with FEMA regulations.
b)residents. This is a major advantage as such investments are not subject to any compliance, conditions or valuation norms as applicable to other foreign investments.
c) However, they are prohibited from making investment in units of Nidhi company, company engaged in agricultural/plantation activities, real estate business, construction of farm house or dealing in TDRs.
d) The amount invested in the capital instruments or units or capital and the capital appreciation thereon shall not be allowed to be repatriated abroad except under One Million Dollar Scheme per financial year.
e) It is to be noted that investment in a firm or proprietary concern in India was earlier governed under a separate notification which has now been included in Notification No.20(R). Thus, an NRI/OCI can invest in a firm or proprietary concern in India provided it is not engaged in agricultural/plantation activity or print media or real estate business. The investment will be a non-repatriable investment governed by Schedule 4 of Notification No. 20(R).
4. Portfolio Investment on Repatriation Basisa) Schedule 3 of Notification No. 20(R) permits portfolio investment in India by NRIs/OCIs i.e they can
invest in capital instruments of Indian companies listed on a recognized stock exchange. Such investments will be considered as repatriable investments.
b) Investment should be routed through only one branch of Authorised Dealer. The NRE Account should be designated as NRE (PIS) and should be exclusively used for such transactions only.
Investment on Non-repatriation basis
Such investment is deemed to be domestic investment at par with investment made by
16
C.V.O. CA'S NEWS & VIEWSVOL. 22 - NO. 6 - DECEMBER 2018
c) Maximum investment limit:
Particulars Investment Limit in Company
Any individual NRI/OCI Not more than 5%*
All NRIs/OCIs put together Not more than 10%*
*
preference shares or share warrants issued by the Indian company. However, the aggregate ceiling of 10% may
be raised to 24% if a special resolution to that effect is passed by the Indian company.
5.a) Under Schedule 5, an NRI/OCI can purchase the following instruments without any limit based on
option of repatriability:
Based ontotal paid-up equity capital on a fully diluted basis or paid-up value of each series of debentures or
Investment in Securities other than Capital Instruments
Repatriable Investment Non- Repatriable Investment
Government dated securities / treasury bills Government dated securities / treasury bills
Units of domestic mutual funds Units of domestic mutual funds
Bonds issued by a PSUs in India Units of Money Market Mutual Funds
National Pension Scheme National Plan/Savings Certificates
Bonds/ Units issued by Infrastructure Debt Funds Authorised Chit funds
Perpetual debt instruments and debt capital
instruments issued by banks in India
Shares in Public Sector Enterprises being
disinvested by the Central Government, provided the
purchase is in accordance with the terms and
conditions stipulated in the notice inviting bids
*
preference shares or share warrants issued by the Indian company. However, the aggregate ceiling of 10% may
be raised to 24% if a special resolution to that effect is passed by the Indian company.
Based ontotal paid-up equity capital on a fully diluted basis or paid-up value of each series of debentures or
6. Investment in Units of an Investment Vehicle
a) Schedule 8 permits NRIs/OCIs (other than citizens of Pakistan or Bangladesh)to invest in the units of
SEBI registered Investment Vehicles.
b) Investment Vehicle is an entity registered and regulated under relevant regulations framed by SEBI or
any other authority designated for the purpose and shall include:
(i) Real Estate Investment Trusts (REITs) governed by the SEBI(REITs) Regulations, 2014
(ii) Infrastructure Investment Trusts (InvIts) governed by the SEBI (InvIts) Regulations, 2014 and
(iii) Alternative Investment Funds (AIFs) governed by the SEBI (AIFs) Regulations, 2012
c) The downstream investment by the Investment Vehicle into an Indian investee entity is treated as
17
C.V.O. CA'S NEWS & VIEWSVOL. 22 - NO. 6 - DECEMBER 2018
Sr. Particulars Schedule Repatriability Limits Mode of Payment Remittance of Sale Proceeds
(Net of taxes)
1 FDI Schedule 1 Repatriable As specified against the sector
a) Inward Remittanceb) Debit NRE/ FCNR(B) A/c
a) Remit abroadb) Credit NRE/ FCNR(B) A/c
2 Portfolio Investment Schedule 3
Repatriable
Individual NRI/ OCI: 5%
All the NRIs/OCIs: 10%*
a)
Inward Remittance
b)
Debit to NRE(PIS) A/c
a)
Remit abroad
b)
Credit to NRE(PIS) A/c
3 Investment on Non -repatriation basis
Schedule 4
Non-Repatriable
Without limit
a)
Inward Remittance
b)
Debit to NRO/ NRE/ FCNR(B) A/c
Credit to NRO A/c
4 Investment in securities other than capital instruments
Schedule 5
Repatriable
Without limit
a)
Inward Remittance
b)
Debit to NRE/ FCNR(B) A/c
a)
Remit abroadb)
Credit to NRE/ FCNR(B)/NRO A/c
Schedule 5
Non-Repatriable
Without limit
a)
Inward Remittance
b)
Debit to NRO/ NRE/ FCNR(B) A/c
Credit to NRO A/c
5 Investment in LLPs Schedule 6
Repatriable
Sectors where 100% FDI is allowed and there are no FDI linked performance conditions.
a)
Inward Remittance
b)
Debit to NRE/ FCNR(B) A/c
a)
Remit abroadb)
Credit to NRE/ FCNR(B) A/c
6 Investment in units of an Investment Vehicle
Schedule 8 Repatriable Depends on the mode of investment in units
a) Inward Remittanceb) Debit to NRE/ FCNR(B) A/c
a) Remit abroadb) Credit to NRE/ FCNR(B) A/c
The investment under various schedules of FEMA Notification No. 20R alongwith the mode of payment and remittance of the sale/maturity proceeds can be summarized as follows:
*
or preference shares or share warrants issued by the Indian company and limit of 10% may be raised to
24% if a special resolution to that effect is passed by the listed Indian company
Based ontotal paid-up equity capital on a fully diluted basis or paid-up value of each series of debentures
domestic investment if the Sponsor, Manager and Investment Manager of the Investment Vehicle are
owned and controlled by resident Indian Citizens.
Having gone through the various investment modes, let us understand briefly the transfer provisions
with respect to the above Notification:
Modes of Transfer by NRIs/OCIs under Notification No. 20(R)
Transfer by NRI/OCI holding capital instruments of Indian company or units on repatriation basis:
(i) NRI/PIO can transfer by way of sale/gift to a Person resident in India or sell on a recognised stock
exchange in India in the manner prescribed by SEBI. The transfer by way of sale shall be in compliance
with pricing guidelines, documentation and reporting requirements as specified by RBI.
(ii) NRI/PIO can transfer by way of sale/gift to a Person resident outside India. However, prior Government
approval shall be required in case the company is engaged in a sector which requires Government
approval.
Transfer by NRI/OCI holding capital instruments of Indian company or units on non-repatriation basis:
(i) NRI/PIO can transfer by way of sale/gift to a Person resident in India or sell on a recognised stock
exchange in India in the manner prescribed by SEBI. Conditions mentioned in (i) above will not apply.
(ii) NRI/PIO can transfer to a Person resident outside India by way of sale, subject to entry routes, sectoral
caps/ investment limits, pricing guidelines, other attendant conditions as applicable and reporting
requirements as specified by RBI. However, these restrictions shall not apply if the transfer is to an
NRI/OCI who shall holditas non-repatriableinvestment.
(iii) NRI/PIO can gift to an NRI/OCI who shall also hold it as non-repatriable investment.
18
C.V.O. CA'S NEWS & VIEWSVOL. 22 - NO. 6 - DECEMBER 2018
Apart from the above, various other investment opportunities available to NRIs are as follows:
7. Investment in Fixed Deposits as covered under Notification No. 5(R)
Investment in fixed deposits with bank is another viable option for NRIs/PIOs. They can invest in bank fixed
deposits through NRE, NRO or FCNR (B) Account. A comparative chart between the three types is as follows:
Description NRE Account FCNR(B) Account NRO Account
Period for fixed deposits From 1 to 3 years.
However, banks are
allowed to accept
NRE deposits above 3
years from their
Asset-Liability view
Not less than 1 year
and not more than 5
years
As applicable to
resident accounts
Denomination Indian Rupee Any permitted
currency
Indian Rupee
Repatriable Yes Yes No, except for balance
under One Million
Dollar per FY. Current
income is freely
repatriable.
Taxability of Interest on
Deposits as per Indian
tax law
Exempt* Taxable*
*
Note:The interest rates shall depend on the guidelines issued by the Department of Banking Regulations.
1.A. Lending of Loans by NRIs in Foreign exchange covered under Notification No. 3
A resident individual can borrow loan from an NRI who is a close relative outside India upto a sum of USD 250000 or its equivalent subject to the following conditions:
(i) the minimum maturity period of the loan is 1 year(ii) the loan is free of interest; and(iii) the loan is from remittance in free foreign exchange throughnormal banking channels or by debit to
NRE/FCNR account of the NRI.
B. Lending of Loans by NRIs/PIOsin INR covered under Notification No. 4a) To Resident Individuals and Entities in India other than Companies
NRI/PIOs can lend loans in INR to a person resident in India, other than a company in India,i.e. to resident individuals, LLPs, firms etc subject to the following terms and conditions:
(i) Borrowing shall be only on a non-repatriation basis(ii) The amount of loan should be received either by inward remittance from outside India or by debit to
NRE/NRO/FCNR(B)/NRNR/NRSR account of the lender in India;(iii) Period of loan shall not exceed 3 years(iv) Maximum Rate of interest = Bank Rate prevailing on the date of availment of loan plus 2%. (At present,
Taxability as per laws of the resident country should also be examined.
Lending of Loans by NRIs
19
C.V.O. CA'S NEWS & VIEWSVOL. 22 - NO. 6 - DECEMBER 2018
the bank rate is 6.75%)(v) Payment of interest and repayment of principal should be made only to the NRO A/c of the NRI/PIO.
b)A company incorporated in India may borrow in INR, on repatriation or non-repatriation basis, from NRIs subject to the following terms and conditions:
(i) Borrowing company does not and shall not:1. Carry on agricultural/plantation/real estate business; or2. Trade in transferable development rights; or3. Act as Nidhi or Chit fund company.
(ii) Borrowing is only by issuance of non-convertible debentures (NCDs) made by public offer.(iii) The rate of interest is not more than the prime lending rate of SBI as on the date on which the resolution
approving the issue is passed in the borrowing company's General Body Meeting plus 3%;(iv) Period of loan shall not be less than 3 years(v) If the lending is on repatriation basis, the lending should be from inward remittance from outside India
or by debit to NRE/FCNR (B) account of the investor maintained in India.(vi) If the lending is on non-repatriation basis, the lending should be from by inward remittance from
outside India or by debit to NRE/NRO/FCNR(B)/NRNR/NRSR account of the investor maintained in India.Payment of interest and repayment of principal shall be made only to the NRO account of the lender.
END USE RESTRICTIONS FOR BOTH (a) & (b) ABOVE:Ø The proceeds shall be utilised only for own business of the borrower. Ø The restriction on real estate does not include development of townships, construction of
residential/commercial premises, roads or bridges.Construction of farm houses is also not a permitted end-use.
Ø The proceeds should not be used for investment or for on-lending.Ø RBI may permit these borrowers to use the borrowed amount for on-lending to infrastructure sector or
to keep in fixed deposits with banks in India, pending utilisation for permissible end-uses.
Comment: Lending of rupee loans by NRIs to Indian companies whether in the capacity as a shareholder or a director is not permitted under FEMA even though it is permissible under Indian corporate law.
2. Investment in Immovable Property in India under Notification No. 21(R)a) General permission: NRIs/OCIscan invest in commercial or residential immovable property in India.
However, acquisition of agricultural land, farm house or plantation property is not allowed. b) Mode of Payment:
(i) Inward remittance from outside India or (ii) Funds held in NRO/NRE/FCNR accounts.
c) Other Mode of Acquisition for an NRI/OCI:(i) By way of gift from a person resident in India or from an NRI or from an OCI who is a relative as per section 2(77) of the Companies Act, 2013.(ii) By way of inheritance from a Person resident outside India who had acquired the property in accordance with the provisions under FEMA(iii) By way of inheritance from a Person resident in India.
Comment: As persection 2(77) of the Companies Act, 2013, 'Relative' are members of HUF, husband and wife and relatives prescribed as follows:
1. Father (includes step-father)2. Mother (includes step-mother)3. Son (includes step-son)4. Son's wife5. Daughter6. Daughter's husband
To Companies in India
20
C.V.O. CA'S NEWS & VIEWSVOL. 22 - NO. 6 - DECEMBER 2018
7. Brother (includes step-brother)8. Sister (includes step-sister)d) No person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran,
Nepal, Bhutan, Hong Kong or Macau or Democratic People's Republic of Korea (DPRK) without prior permission of RBI shall acquire or transfer immovable property in India, other than lease, not exceeding 5 years. This restriction shall not apply to OCIs.
e) Repatriation of Sale Proceeds:On sale of such immovable property, repatriation outside India will be permitted if the amount for acquisition of the immovable property was paid in foreign exchange received through banking channels or out of funds held in FCNR/NRE account. In case of residential property, the repatriation of sale proceeds is restricted to two such properties.
f) Rental Income:Such property can also be let out and the rental income can be credited to the NRO/NRE A/c.
3.a) NRIs are not eligible to open a new PPF account. However, a resident Indian who subsequently
becomes an NRI can continue to hold the existing PPF account till first maturity.
b) According to the Notification issued by the Government on 03.10.2017, PPF and NSCs held by an NRI would be treated as "deemed to be closed with effect from the day he becomes a non-resident" and would earn interest rate of a post office savings account. However, an Office Memorandum dated 23.02.2018 was later issued, keeping the said notification in abeyance till further notice for PPF account held by NRIs. Interestingly, the said memorandum is silent on NSCs.
One may note that NRIs do have a plenty of opportunities to invest in India. However, it is equally important to note certain prerequisites which are required before actually venturing into any investment activity:
a) PANb) OCI Cardc) Designated NRO/NRE for putting through the banking transactionsd) Demat Account for investing in sharese) Tax Residency Certificateand Form 10F for beneficial treatment under Indian tax regimef) Duly executed Power of Attorney specifying clearly the powers delegatedg) Compliance with KYC norms of various authoritiesh) Valid identity and address proof
Apart from the above procedural aspects, one has to bear in mind various regulatory aspects based on the nature of investment such as repatriation or non-repatriation, mode of investment such as capital instruments, debt instruments or properties, terms and conditions applicable to each mode of investment, mode of acquisition such purchase, gift, inheritance as well as transfer of such investments, restrictions of powers under Power of Attorney as well as implications on holding and reporting of the investments upon change of residential status.
Compliance is an important aspect to be looked into as defaults may result into penalties and compounding under FEMA and other laws.
Considering the economic development India is going through, it is very well going to be an investment hub for investors around the globe. NRIs do enjoy a privileged position for investing in India as compared to foreign investors. Having said that, one has to analyse the risk-reward ratioand the viability of that avenue before investing.One may also note that more and more countries are now trying to regulate investments through the Exchange of Information mechanism. These investments are also subject to multiple compliance from the host country as well as from India and therefore, due care of the interplay between various regulations such as FEMA, Income tax, Company law should be taken to make the investments in India hassle-free and compliant.
Restriction:
Continuation of Public Provident Fund Account
PREREQUISITES BEFORE INVESTING
CONCLUSION
top related