What are the things NRIs should keep in mind in finance & investment?

Most schemes are available to NRIs, including mutual funds, fixed deposits, bonds, real estate, certificates of deposits, stocks, exchange-traded funds, etc.

If you are a non-resident Indian (NRI), you may have considered investing in India regularly. Regardless of whether an Indian earns, sends money to India, or lives, making investments in India is constantly on their mind.

As a result of this idea, a huge number of NRIs have made investments in India. Because of its potential future and development possibilities, India, the world’s fastest-expanding economy, has drawn many foreign investments.

Here are a few things to bear in mind if you are an NRI looking to invest in India:

  1. A long-term perspective on tax advantages:

Specify an investment term that might allow you to benefit from tax breaks. You should invest for at least three years. This is particularly useful when purchasing a house as an investment.

If you sell a property within three years of purchasing it, it will be considered short-term capital gains and taxed under Income Tax (IT) regulations.

The profit will also be included from the sale in the NRI’s income. If the property is sold after three years, the IT department gives the option of lowering long-term capital gains tax by investing the proceeds in another property acquisition.

  1. Examine all of the developer organization’s services

Developer organizations, such as the Confederation of Real Estate Developers Association of India (CREDAI), hold exhibits for NRIs regularly and provide various incentives.

Some of them provide spot loans from prominent banks as well as additional discounts. So, before you invest, investigate all such offers to verify that you are getting a decent bargain.

  1. Prepare to file IT returns in India.

If you acquire a property in India, you will have to pay property tax, stamp duty, and registration costs. So, before you invest or send money to India online, consider all of the expenses.

Aside from that, if you earn money by renting out your home in India, you will have to pay income tax. As a result, engage an accountant to submit IT returns in India and handle the paperwork. It is not required to obtain a PAN card before investing in simplifying financial procedures later on.

  1. Bank Account Types

An NRI must also choose which account to invest from and the best way for money transfer to India. But, before we do so, there are a few things to consider:

  • Are the earnings in the bank account into which you would invest sourced in India, or have they been repatriated (brought back home) from the nation in which you work? For example, are they your salary funds?
  • Which currency do you want the bank account to be held in?
  • Do you intend to repatriate the cash in the account back into foreign currency to return to your country of employment?

You can select whether to invest from your NRE (Non-Resident External) account or your NRO (Non-Resident Ordinary) account based on the answers to these questions.

  1. Examine your current mutual fund investments: 

A change in your residency status will need a re-evaluation of your mutual fund investments. When your residence status changes to NRI, begin by updating your KYC papers in your mutual fund and Demat accounts with the new residential status and abroad location.

Fresh investments made from your overseas profits will be routed through your NRE account, while investments made from revenue sources in India would be routed through the NRO account.

Remember that NRI residents in the United States and Canada will no longer be allowed to make new investments with most mutual fund firms since they circumvent the rigorous compliance requirements of those countries.

Conclusion

When a person relocates overseas, a change in his residential status, i.e., from resident Indian to Non-Resident Indian (NRI), has an immediate impact on his financial life.

NRIs mostly prefer online money transfer to India; however, while investing, that individual should take extra care. So, these are the considerations that every NRI should bear in mind before making investments in India.