Privileges for the Non Resident Indians (NRIs) in Indiafemainindia.com/Image/02. NRI- 23.8.pdf ·...

SatishAgarwal:[email protected]

1 August–2019www.femainindia.com

PrivilegesfortheNonResidentIndians(NRIs)inIndia

(A)PrivilegesforBuyingthePropertiesinIndia

1. NatureandNumbersforbuyingofthepropertiesinIndia

(i) NRIsarepermittedtobuyresidentialor/andcommercialpropertiesinIndia

(ii) NRIs have no restriction on numbers for buying of properties for investments not fortrading

(iii) NRIs arepermitted to buy thepropertiesunderautomatic routewhere general orspecialpermissionisnotrequiredforownuseorinvestmentpurposeboth

(iv) HoweverNRIsarenotpermittedforbuyingofthefollowingsproperties(a)Agriculturalland(b)Plantationland(c)FarmhouseinIndia

2. Funding(Sourcing)forBuyingofthePropertiesinIndia

(i) NRIsarepermittedtofundforbuyingofthepropertiesinfollowingwaysonly:‐(a)DirectremittancefromOutsideIndiathroughregularbankingchannel(b)OutofbalanceislyinginNRO,NREorFCNRaccountasmaintainedinIndia(C)Loanfrombanksorfinancialinstitutionsforpurchaseoftheproperties

(ii)NRIsarepermittedtoobtainaloanfrombanksandfinancialinstitutionswhereconditionsfor marginmoneyandquantumofloanareatparwiththeresidentsofIndiafortheproperties loans

(iii)NRIsarerequiredtomakerepaymentoftheloansinfollowingwaysonly:‐(a)DirectremittancefromOutsideIndiathroughregularbankingchannel(b)OutofbalanceislyinginNRO,NREorFCNRaccountasmaintainedinIndia(C)Outofrentalincomesofthesameproperty(d)OutofloanfromacloserelativewhoisalsoaresidentinIndia

3. MaintenanceofthePropertiesinIndia

(i) NRIsarepermittedtopurchasethepropertiesbywayofaregisteredconveyancedeed

(ii) NRIsarepermittedtoexecuteapowerofattorney in favorofaclose relativeor friend forexecutionofthedocumentsonhisbehalffor(a)Registeringandleasingoftheproperties(b)Signingofthepropertiesagreements(c)Sellingoftheproperties

(iii) NRIsarepermittedtorentoutthepropertiesinIndia

4. RepatriationofMoneyoutoftheRentandsaleProceedsfromIndia.

(i) NRIsarepermitted torepatriate therentamountorsaleproceedsof thepropertiesoutofIndia.

(ii) NRIs are permitted to remit the sale proceeds of the inherited properties through NROaccountwheremaximumUSD1(one)millionperfinancialyearispermitted



(iii) (a)NRIsarenotpermittedtodirectrepatriateoutofsaleproceedsofthepropertieswhichareexceedingtheamountinforeigncurrencypaidatthetimeofacquisitionofthesameproperties.

(b)HenceforthNRIsarepermittedtorepatriatethebalanceamountswhichareexceedingtheamountpaidatthetimeofacquisitionthroughNROaccountwheremaximumUSD1(one)millionperfinancialyearispermitted

(iv) (a) NRIs are not permitted to direct repatriate the sale proceeds of more than 2(two)residentialproperties

(b)HenceforthNRIsarepermittedtorepatriatethebalanceamountwhichareexceedingtheamountpaidatthetimeofacquisitionthroughNROaccountwheremaximumUSD1(one)millionperfinancialyearispermitted

5. DefinitionforaNRIandaPIOinIndia

(i) DefinitionforaNRIinIndiaAn individual who is born in India but now a non‐resident in India is known as NRIirrespective of the fact that whether he is holding an Indianpassport ornotholding anIndianpassport

(ii) DefinitionofaPIOinIndia.An individual who is not born in India and also now non‐resident in India but his/herparentsorgrandparentswereborninIndia



(B)PrivilegesfortheIncomeTaxinIndia

1. Determination of the Residential status for a NRI under the Income Tax for aFinancialyear

(i) ResidentofIndiaisdeterminedwith2(two)options(i) (a)Whenanindividualisstayingforminimum182(Onehundredeightytwo)daysinIndia

inafinancialyeariscalledaresidentinIndiaor

(b) When an individual is staying for minimum 60(sixty) days in India in the previousfinancialyearandalsostayingforminimum365(Threehundredssixtyfive)daysinthelast4(four)precedingtothepreviousfinancialyearsiscalledaresidentinIndia

(ii)ResidentofIndiaisalsodeterminedwith1(one)moreoption(a) An individual is citizen of India andworking outside India or a crewmember of an

Indian ship is called a resident in India, where he is staying for minimum 182 (onehundredeightytwo)daysinIndia

(b)Henceforth2ndoptionof60 (sixty)days tostay in India inprevious financialyearandalso 365(three hundreds sixty five) days in the last 4 (four) preceding to previousfinancial year is not applicable to an individual who is citizen of India andworkingOutsideIndiaoracrewmemberofanIndianship.

2. ApplicabilityoftheProvisionsofIncomeTaxforaFinancialyear

(i) IncomesEarnedOutsideIndiabyaNRI

(a) All ‘100%’Global incomes are taxable in India where a NRI is resident of India in afinancialyear

(b) Only ‘100%’Indianincomesasaccruedorarises,deemedtoaccruedorarisesinIndiaistaxableinIndiawhereNRIisnotresidentofIndiainafinancialyear

(ii)IncomesDeemedtobeearnedinIndiabyaNRI(a) WheresalaryisreceivedinIndiafortheservicesnotprovidedinIndia(b) WheresalaryisreceivedinIndiaoroutsideIndiafortheservicesprovidedinIndia(c) WhereIncomesareagainstpropertiesassituated/locatedinIndia(d) WhereCapitalgainisagainstthetransferofaassetsituated/locatedinIndia(e) WhereInterestincomeisearnedonafixeddepositoronasavingaccountasmaintained

withabankinIndiaistreatedincomeearnedoraccruedinIndia.(f)WhereInterestincomeisearnedonNROaccountasmaintainedinIndia.

(iii)ExemptedInterestIncomesinIndia InterestincomesonNREor/andonFCNRaccountsarenottaxableinIndia.

(iv)FilingofthereturnofIncomesinIndia

NRIs arerequired to submit their returns of the incomeswhere totalgross incomes areexceedingRs2,50,000(twolakhsfiftythousands)duringafinancialyear

(v)LastDateforfilingoftheIncomeTaxReturninIndia(a) 31stJulyfornon‐auditcases(b) 30thSeptemberforauditcases

(vi)LiabilitytopayAdvanceTaxinIndia



(a) Advance tax in India is to be paid where income tax liability is exceeding Rs.10(ten)thousandsoverandabovetheTDSinafinancial

(b) Penal interestsundersection234B and234C are tobepaid for thedefault ismade inpaymentoftheadvancetaxliability

3. TaxabilityoftheIncomesforaNRIinIndia

(i) IncomesundertheHeadSalary(a) IncomesundertheheadsalaryofaNRIistreatedasearnedinIndiawhereservicesare

renderedinIndia(b) Incomes under the head salary of a NRI is treated as earned in India where salary is

receivedinIndiabyhimself/herselforbysomeoneelseonbehalfofhimself/herself(c) Incomes fromsalaryofaNRI is treatedasearned in Indiawhereemployer isGovt.of

IndiaandalsoNRIiscitizenofIndiabesidethatservicesarerenderedOutsideIndia(d) IncomesundertheheadsalaryofaNRIistreatedexemptedwherepaidtoaDiplomator

aAmbassadoretc.whoisworkinginIndiainembassyofaforeigncountry(e) Taxontheincomesundertheheadsalaryistobepaidinaccordancetotheslabrateas

applicabletoaNRIinIndia.(ii)IncomesundertheHeadHouseProperty

(a) Incomesunder theheadhousepropertyofaNRIare treatedasearned in Indiawherepropertyislocated/situatedinIndia.

(b) Standarddeductionformaintenanceoftheproperty@30% isavailabletoaNRIagainsttheincomesundertheheadHouseproperty

(c) NRIispermittedtotakethefollowingdeductionsoutof incomesundertheheadhousepropertyinIndia

(ca)PropertyTaxes (cb)Interestpaidontheloanastakenagainstrentedhouseproperty(d) Taxontheincomesundertheheadhousepropertyistobepaidinaccordancetheslab

rateasapplicabletoaresidentinIndia.(e) IncomesundertheheadhousepropertyofaNRIistreatedasearnedinIndiabesidethat

rentpaymentisdirectlycreditedtohisbankaccountasmaintainedoutsideIndia(f) NRI is permitted to claim a deduction of maximum Rs 2(two) lacs against interest

paid/payableonloantakenontheproperty(g) NRIispermittedtoclaimofmaximum2(two)self‐occupiedpropertieswithoutoffering

asnotionalrentincomes(h) NRI is required tooffernotional rent incomeswhereproperty isnot rentedout for12

(twelve)months(i) NRIispermittedtoclaim11(eleven)monthsasvacancyallowanceoutofthenotional

rentincomeswherepropertyisrentedoutfor1(one)monthsonly

(iii)IncomesundertheHeadBusinessorProfessionIncomesundertheheadbusinessorprofessionofaNRIistreatedasearnedinIndiawherebusinessorprofessioniscontrolledorsetupinIndia

(iv)IncomesundertheHeadCapitalGains(a) IncomesundertheheadcapitalgainsagainsttransferofacapitalassetofaNRIistreated

asearnedinIndiawherehousepropertyislocatedinIndia(b) Incomes under the head capital gains against transfer of the shares and securities is

treatedasearnedinIndiawheresharesandsecuritiesareissuedbyanIndiancompany



(c) Buyer of thehouseproperty is required towithhold (deduct) tax@20% + educationcess@4%+surcharge@10% ,15%,25%or37%ascasemaybefromthepaymentasbeingmadetoaNRI

(d) NRIispermittedtoclaimthefollowingdeductions (da)Exemptionagainsttheinvestmentsinahousepropertyunderthesection54ofthe

IncomeTaxAct,1961 (db)Exemptionagainsttheinvestmentsincapitalgainbondsunderthesection54ECof

the Income Tax Act, 1961 as maximum Rs50 (fifty) lacs per financial year. Thisexemptionisnownotavailableforthecapitalgainsotherthanpropertycases

(e) NRIisrequiredtodeposittheamountofcapitalgainsinaspecifiedbankorinstitutioninIndiaunderthehead ‘capitalgainaccountscheme’whereNRIisunable toinvest theamount of capital gains in new eligibleproperty orunable todeposit in capital gainbondstillMarch31

(f) NowNRIispermittedtoclaimlongtermcapitalgainsonsalesofthecapitalassetswhereholdingperiodis2(two)yearswhereearlierwaspermittedagainstholdingperiodof3(three)years.

(g) NRI is required todeposit in capital gainbondswith in6(six)months from thedateofsale/transferofthehousepropertyunderthesection54EC

(h) NRIisrequiredtoinvestinanewproperty

(ha)within1(one)yearbeforethesale/transferor (hb)within2(two)yearsafterthesale/transferor (hc)within3(three)yearsafterthesale/transferinconstructionanewproperty.

(i) NRIisrequiredtodeductaTDS@1%onthepaymentstobemadeagainstpurchaseofapropertyfromaresidentofIndiawherepurchaseamountisminimumofRs50(fifty)Lacs.

(j) (ja)NRI is required toallow to thepurchaser of property todeductTDS@20% pluseducationcessandsurchargesasapplicableagainstlongtermcapitalgainsandTDS@30%pluseducationcessandsurchargesasapplicableagainstshorttermcapitalgains.(jb)MoreoverTDS@20%or30% isapplicablewithoutapplicabilityofanylimitofRs

50(fifty)Lacs

(k) NRIisrequiredtoholdthecapitalgainbondsforminimumperiodof5(five)years

(v)IncomeUndertheheadOtherSource(a) Interest incomes from fixeddeposits and fromsaving accountsasmaintained in India

willbetreatedasearnedinIndialikeonNROaccount(b) InterestincomesonNREandFCNRaccountsareexemptedinIndia(c) InterestincomesontheNRIandFCNRaccountsaretaxableOutsideIndia

4. SpecialTaxProvisionsforaNRIinIndia

(i) ExemptionagainstfilingoftheIncometaxReturninIndiaNRIisexemptedforfilingoftheIncomeTaxReturnwhere(a)InvestinginspecifiedIndianassetsonly(b)AlreadypaidIncomeTax@20%throughTDSmodeonLongTermCapitalGains(LTGS)

ofsuchspecifiedIndianassets(c)NootherincomesistaxableinIndiaexceptabovementionedincomesonspecifiedIndian

assetsduringthefinancialyearunderconsideration



(ii)AllowabledeductionsagainstthepaymentsandinvestmentsinIndia(a) AllowabledeductionuptoRs1.5LacperfinancialyearundertheSection80C

(aa) Life insurance premium paid on life of himself/herself, spouse and children amaximum@10%ofsuminsured/assured

(ab)Childrentuitionfeepaid (ac)Principalrepaymentsonloanforthepurchaseofahouseproperty (ad)Investmentsintheunitlinkedinsuranceplan(ULIPS) (ae)Investmentsintheequitylinkedsavingscheme(ELSS) (af)5(five)yearsfixeddepositsinaschedulebankinIndia(b)AllowabledeductionuptoRs.25000perfinancialyearundertheSection80D

(ba)Mediclaim Insurance premiumpaid on the life of himself, spouse and dependentchildren

(bb) Mediclaim insurance premium paid on the life of parents up to Rs 50,000‘additionally’

(c)Allowabledeductionagainstinterestpaidoneducationloanunderthesection80E

(ca)NRIispermittedtoclaimadeductionagainstinterestpaidontheeducationloanforhighereducationforhimself,spouseorchildren

(cb)Deductionisnotavailableagainstrepaymentofprincipalloanamount(cc)Deductionisavailableforamaximumperiodof8(eight)yearsortillinterestispaid

whicheverisearlier(d)Allowabledeductionagainstdonationspaidforthesocialcausesunderthesection80G

NRI is permitted to claim a deduction against payments made for donation for thesocialcausesinIndia

(e) Allowable deduction against incomes from interest on saving bank account under thesection80TTA(ea) NRI is permitted to claim a deduction on the interest incomes on saving bank

accountmaximumofRs.10(ten)thousandsperfinancialyear(eb)Henceforththisdeductionisnotpermittedagainsttheinterestincomesonthetime

deposits(fixedtermdeposits)

(f)NotallowabledeductionagainsttheincomeonspecifiedinvestmentsbyNRIunderthesection80C

(fa)NRI isnot permitted todeposit innew PPF account.HoweverNRI ispermitted tocontinuetodepositinexistingaccountasopenedbeforebecomingNRItilloriginalmaturityperiodof15(fifteen)years.Henceforthnotpermittedbeyond15years

(fb)NRIisnotpermittedtodepositincertainschemesafterbecomingNRIlike(fba)InvestmentsinNSCs(fbb)DepositinPostoffice5yeardepositscheme(fbc)Seniorcitizensavingscheme‘etc.’

(g) Not allowable deduction against payment for RAJIV Gandhi Equity Savings Scheme(RGESS)undertheSection80CGS

NRIisnotpermittedtoclaimadeductionwherecontributionismadeforRGESS

(h)NotallowabledeductionformaintenanceandmedicaltreatmentundertheSection80DD,80DDBand80U

NRIisnotpermittedtoclaimadeductionwhereexpensesaremadeformaintenanceandmedicaltreatmentsofdependentandhimself



5. ImportantMiscellaneousClarificationsontheTaxProvisionsforaNRI

(i)DTAA(DoubleTaxationAvoidanceAgreements)BenefitsforaNRI NRIispermittedtoclaimthebenefitsofDTAAwherecanpaytaxinIndiaandcanclaim taxcreditinownresidentcountry(ii)TDS(TaxDeductedatSource)foraNRI (a)Payerofthespecifiedincomesisrequiredtodeduct/withholdanamountofTDS (b)Specifiedincomestoincludethefollowings:‐ (ba)Rent (bb)Feeforprofessionalortechnicalservicesetc. (c)Payerisalsorequiredtosubmitform15CAand15CBbeforemakingthepayments

(iii)ApplicabilityofInheritancetax(EstateDuty)ontheassetsinIndia (a)NRIisalsopermittedtoavailtheexemptiononinheritancetax(Estateduty)onthe assetsinIndiaasthisexemptionisavailabletoaresidentinIndia (b)HoweveraNRIistopaycapitalgaintaxatthetimeofsaleoftheinheritedassets



(C)PrivilegesfortheInvestmentsinSharesandSecuritiesinIndia

IntroductionontheConceptofInvestmentsinSharesandSecuritiesbytheNRIs

(i) NRIs arepermitted to investdirectly inproprietary and/orpartnership concerns in India onnon‐repatriationbasisonly.(ii)NRIsarealsopermitted to invest in the InitialPublicOfficer(IPO) for issueofshares and convertibledebenturesoftheIndianCompanies(iii)NRIs are also permitted to invest under the Foreign Portfolio Investments (FPIs) through secondarymarketlike (a)StockExchangeinIndia (b)PurchasesdirectfromshareholderswithoutinvolvingofastockExchange

(iv) NRIsarepermittedtosetupthenewcompaniesaccordinglytosubscribetotheMemorandum and Articles of Association (M&A) of the new companies under the head automatic approval route

(v) HowevertheNRIsarenotpermittedtoinvestinthecompanieswhereactivitiesrelatingto agriculturalandplantationarebeingcarriedon(vi) (a) NRIsarepermittedtoinvestontherepatriationandnon‐repatriationbasis (both)except to invest inproprietary andpartnership concernswhererepatriations arenotpermitted (b)HoweverNRIsarepermittedtorepatriatethroughNROaccountswherea maximum USD1(one)millionperfinancialyearispermittedtorepatriateOutsideIndia(vii)NRIsarerequiredtomakepaymentsfortheinvestmentsincertainmodesonlylike (a)DirectinwardremittancefromoutsideIndia (b)DebittoNROaccount (c)WithdrawaloutofNREorFCNRaccount

(CA)InvestmentsbytheNRIsinEquitysharesandSecuritiesonNon‐RepatriationbasisinIndia

1. Investments in the Partnership or Proprietorship Concerns onNon‐Repatriation

basis

(i) NRIs are permitted to invest in the partnership or proprietorship concern on non‐repatriation basis under the automatic route where RBI has already granted generalpermissiontotheNRIstoinvestintheconcernsthoseareengagedintheindustrial,tradingorcommercialactivities

(ii)NRIsarerequiredtoinvestthroughnormalbankingchannelortransferoffundsfromtheiraccountsasmaintainedinIndialike(a)NRO(b)NRE(c)FCNRaccounts

(iii)NRIsarenotpermittedtocarrythefollowingactivities



(a)AgriculturalActivities(b)PlantationActivities(c)RealEstatebusinessliketradinginlandandimmovableproperties

(iv)(a) Indian partnership or proprietorship concerns are not required to obtain any priorpermissionfromtheRBIforreceivingofthecapitalcontributionsfromtheNRIswhere theconditionsasspecifiedintheRBInotificationforthispurposearesatisfied.

(b)HowevertheIndianconcernsarerequiredtosubmitthedeclarationsinformDINtotheRBIwithin90(ninety)daysfromthedateofreceiptofaninvestment

(v)(a) Indianconcernsarepermittedtotransfertheprofits inNROaccountasmaintained in India(b)NRIsarepermittedtoremitamaximumUSD1(one)millionperfinancialyear

2.2. Investments in Initial Public Officers (IPOs) of Equity Shares or ConvertibleDebentures(CDs)ofIndianCompaniesonNon‐Repatriationbasis

(i) NRIs are permitted to invest in the equity shares and convertible debentures of the Indian companies on non‐repatriation basis under automatic route where the Indian companiesarenotengagedin(a)agricultural/plantationactivities(b)Realestatebusiness(c)TradinginTDRs(d)ChitfundCompany(e)NidhiCompany

(ii)NRIsarerequiredtomakethepaymentsthroughnormalbankingchannellike (a)DirectinwardremittancefromoutsideIndiaor (b)DebittoNRE,FCNRorNROaccountasmaintainedinIndia

(iii)Indiancompaniesarerequiredtofilethedeclarations informDINwithin90(ninety)days fromthedateofreceiptoftheinvestmentsonnon‐repatriationbasis

(iv) NRIs are permitted to take the credit in theirs NRO accounts against dividend and/or interestonequitysharesand/orconvertibledebenturesrespectively

3. Investments in Non‐Convertible Debentures (NCDs) of the Indian Companies on

Non‐Repatriationbasis(i) NRIsarepermitted to invest in theNCDs onnon‐repatriationbasisunder theautomatic

route

(ii) NRIsarerequiredtomakethepaymentsthroughnormalbankingchannellike (a)DirectInwardremittancefromoutsideIndiaor (b)DebittoNRE,FCNRorNROaccountsasmaintainedinIndia

(iii) RateofinterestontheNCDsarenottoexceedtheprimelendingrate(PLR)ofStateBankof India(SBI)plus300basispoints(3%)

(iv) Minimumperiodforredemptionisrequired3(three)yearsfortheNCDs(v) Indiancompaniesshouldnotbeengagedinthefollowings



(a)Agricultural/plantationactivities(b)Realestatebusiness(c)TradinginTDRs(d)NidhiCompany(e)ChitfundCompany

(vi) Indian companies are required to submit the reports to theRBI with in30(thirty)days fromthedateofreceiptsofremittancefortheNCDs

4. Investments in the Equity shares of Indian companies through Private

arrangementsonNon‐Repatriationbasis

(i) NRIsarerequiredthepriorapprovalspermissions fromtheRBIforpurchasingofshares oftheanIndiancompaniesthroughprivatearrangement(ii) NRIs are required to submit the applications in to the RBI form FNC‐7alongwith undertakingfornon‐repatriation

5. Investments intheDomesticPublicSectorandPrivateSectorMutualFundsontheNon‐repatriationbasis

(i) NRIs are permitted to invest in the Mutual Funds as being owned andmanaged by the domestic public sector and private sector Mutual Funds on the non‐repatriation basis

(ii) NRIsarenotrequiredtosubmittheapplicationsforapproval fromtheRBIforinvesting insuchmutualfunds

(iii) However issuingmutual funds are required to submit the application in Form ISD for issuingtheunitsofmutualfunds

6. InvestmentsinMoneyMarketMutualFunds(MMMFs)onNon‐Repatriationbasis

(i) NRIsarepermittedtoinvestintheMMMFsasfloatedbythefollowings (a)Commercialbanks (b)PublicSectorFinancialInstitutions (c)PrivateSectorFinancialInstitutions

(ii) ThesebanksorfinancialinstitutionsarerequiredtosubmittheapplicationinFormISDfor obtainingtheauthorizationfromtheRBIforfloatingtheMMMFs(iii) NRIsarenotrequiredtoobtaintheseparatepermissionsfromtheRBIforinvestinginthe MMMFs

7. Acceptance of Deposits by the Partnership firms and Companies on the Non‐repatriationbasis

(i) NRIsarepermittedtodepositsthefundswithFirmsandcompaniesonnon‐repatriation basis(ii) Priorapproval is required by thedepositor or by deposit accepting firm or company fromtheRBI



(iii)(a)Howeverdeposit accepting firms orcompanies are required toobtain priorapprovalfromtheRBIforacceptingthedepositsfromNRIsunderPublicdepositscheme

(b)HenceforthNRIsarenotrequiredtoobtainpriorapprovals fromtheRBI foracceptingdepositsunderpublicdepositschemewheredepositacceptingfirmsorcompaniesaremandatoryrequiredtoobtainpriorapprovalfromtheRBI

(CB)InvestmentsbytheNRIsinEquitySharesandSecuritiesonRepatriationbasisinIndia

Introduction on Investments by the NRIs in Equity Shares and Bonds onRepatriationbasis

(i) NRIs are permitted to invest in the equity shares and bonds of the Indian companies on repatriationbasis(ii) HenceforthNRIsarepermittedforrepatriationOutsideIndiaoutofthefollowings:‐ (a)CapitalalreadyinvestedintheIndiancompanies (b)Dividends/incomesearnedontheinvestmentsintheIndiancompanies(iii) NRIsarerequiredtoinvestonrepatriationbasisinforeignexchangeonlylike (a)DirectInwardremittancefromOutsideIndiaor (b)DebittoNRO,NREorFCNRaccountasmaintainedinIndia(iv) NRIs are permitted to invest in the various kinds of ForeignDirect InvestmentsSchemes whicharecommonlyknownasForeignDirectInvestments(FDIs)inIndia(v) FDIsarepermittedforaNRIindifferentschemeslike (a)24%FDIsscheme (b)40%FDIsscheme (c)100%FDIsscheme(vi) NRIs are alsopermitted to invest inDomesticmutual funds as floated by thepublicand privatesectorinstitutionsorbythecompanieslikeUTIandReliancerespectively(vii) NRIs are also permitted to invest in bonds as issued by the public sector under‐

takings(PSUs)(viii) (a) Equity shares and bonds issuing companies are required to obtain the necessary permissionsfromRBIifneededinthecaseofapprovalroute (b) Henceforth NRIs are not required to obtain any separate approval where issuing

company hasalreadybeenobtained anapproval fromRBI underapproval route incaseanautomaticrouteisnotpermittedfortheissueofsharesand/orbonds

1. Investments in Initial Public Offers (IPOs) of the Indian Companies under 24%scheme

(i) NRIsarepermittedtosubscribeupto24%oftheIPOsofequitysharesorconvertible debenturesofanexistingornewpubliccompanieswhoarealreadyengagedorproposedto beengagedinthefollowingactivities



(a)Finance(b)Hirepurchase(c)Leasing(d)Trading(e)Otherservices‘etc.’

(ii) NRIsarenotpermittedtosubscribetheIPOofacompanywhoisengagedinagricultural/ plantationactivitiesandrealestateactivities(iii) AnIndiancompanyissuingIPOisrequiredtosatisfytheconditionsaslaiddownbyRBIfor issueoftheequitysharesorconvertibledebentures‘otherwise’Indiancompanyisrequired toobtainaspecificapprovalfromRBIbeforeissuingtheIPO(iv) AnIndiancompanyisrequiredtosubmitaformISDwithin30daysfromthedateofissueof theIPO(v) NRIsarenotrequiredtoobtainanyspecificapprovalfromRBIwhereIndiancompanyhas already satisfied the specified conditions of the RBI ‘otherwise’ obtained the specific approvalfromtheRBI

2. InvestmentsinIPOsoftheIndianCompaniesunder40%Scheme

(i) NRIsarepermittedtosubscribeupto40%inthefollowingIPOs(a)Equityshares(b)Preferenceshares(c)Convertibledebenturesofneworexistingcompanyonrepatriationbasisaftermaking

paymentsofIndianIncomeTaxbytheNRIs(ii) Indiancompaniesshouldnotbe ‘already’listedatanystockexchangeandalsoshouldnot

be engaged inmanufacturing activities as specified in Annexure‐III to the statement ofIndustrialPolicy1991ofGovt.ofIndia

(iii)IndiancompaniesarerequiredtotakethespecificapprovalsfromtheRBIforanIPOunder thisschemeforthefollowingentities

(a)Industrialandthemanufacturingunits(b)3,4or5starcategoryoftheHotels(c)HospitalandtheDiagnosticcenters(d)ShippingCompanies(e)Developmentofthecomputersoftwares(f)OilExplorationServices

(iv)NRIsarenotrequiredtotakethespecificapprovalsfromRBIwheretheIndiancompanies havealreadybeenobtainedtheapprovals

3. Investments in the IPOs of Indian Priority Sector Industrial Companies under100%Scheme

(i) NRIs arepermitted to subscribe up to 100% on repatriation basis inpriority sectorindustrialcompanieswhichareprimarilyengagedinexporttradingactivities

(ii) IndiancompaniesarepermittedtoissuetheIPOswithoutapprovalfromtheRBI



(iii) Indian Companies are required to submit the form ISDwithin30 days from the date ofissueofshares

(iv) Thisschemeispermittingforopeninganewindustryorexpansion/diversificationoftheexistingindustrialundertakings

4. InvestmentsintheHousingandRealEstateDevelopmentProjects

(i) NRIs are permitted to invest upto 100% in IPOs of the equity shares or convertible debenturesoftheIndiancompaniesinthefollowingsectors

(a) Development of the plots and also construction of built up residential premisesincludingbusinesscentersandoffices

(b)Developmentofatownship(c)Development of a City and region level unban infrastructure facilities like roads and

bridges(d)Manufacturingofthebuildingmaterials(e)FinancingofthehousingDevelopmentprojects

(ii) RepatriationoforiginalinvestmentispermittedbytheRBIafteralockinperiodof3(three) yearsfromthedateofissueofequitysharesorconvertibledebentures.

5. InvestmentsintheAirTaxiOperations

(i) NRIsarepermittedtosetupanIndianCompanywith100%FDIsforcarryingonAirTaxi operationsinaccordingtotheguidelinesasissuedbytheDirectorGeneralAviationforAir TaxioperationinIndia(ii) An Indian company is required to submit a form ISD to the RBI as application for this purpose(iii) Repatriationoftheoriginalinvestmentand/ordividendispermittedafterexpiryof5(five) years of the operations of Air Taxi and also out of accumulated net foreign exchange earningsonly.

6. InvestmentsintheNon‐ConvertibleDebentures(NCDs)

(i) NRIsarepermittedtosubscribetheNCDsasofferedforthepubliconrepatriationbasis(ii) NRIs are required to subscribe theNCDs out of direct inward remittances fromOutside IndiaordebittoNRO,NREorFCNRaccountasmaintainedinIndia(iii) NRIsarepermittedtosubscribeamaximum24%,49%,51%,74%or100%ofeachseries ofNCDswhich isequivalent to theceiling asapplicable for issue of theequityshares or convertibledebenturestothenon‐residentsunderrepatriationbasis(iv) RateofinterestonNCDsisnottoexceedPrimelendingrate(PLR)ofStateBankofIndia (SBI)plus300basispoints(3%)(v) MinimumredemptionperiodofNCDsis3(three)years(vi) Indian companies issuing the NCDs are not permitted to be engaged in the following activities

(a)Agricultural/Plantationactivity(b)RealEstatebusiness



(c)TradinginTDRs(d)ActasNidhiCompany(e)ChitFundCompany

(vii)Indian Companies are required to file a report containing of prescribed informations within30(thirty)daysfromreceiptoftheremittances

7. InvestmentsintheSickIndustrialUnits

(i) NRIsarepermitted toundertake therevivalof thesick industrialunitsbywayofeither bulk investments throughpurchases ofequity shares from theexisting shareholders or subscriptionfornewissueoftheequityshares(ii) Bulk investment is permittedbywayofprivateplacement amaximum100% of equity sharecapitalofthesickcompanyonrepatriationbasis(iii) Indian companies are required to pass the special resolution for new of the issues or transferfromtheexistingsharesholderstotheNRIs(iv) Indian companies are required to be approved as sick unit under the rehabilitation programasrunbythefollowingsbanksandfinancialinstitutions

(a)Publicfinancialinstitution(b)Commercialbank(c)Consortiumofthebanks(d)BoardforIndustrialandFinancialReconstruction(BIFR)

(vi)Indian companies are required to obtain the prior permissions from RBI throughsubmitting the formRSU for transfer of the existing shareholding or issue of new equitysharestotheNRIs

8. InvestmentsintheSchemesofDomesticMutualFunds

(i) NRIsarepermittedtoinvest intheschemesof IndianMutualFundsundertheautomatic routeoftheRBIonrepatriationbasis(ii) HowevertheseschemesaretobeapprovedbytheSEBI(iii) NRI are required to invest through normal banking channel like (a) Direct inward remittancefromOutsideIndiaor(b)DebittoNRO,NREorFCNRaccountasmaintainedin India

9. InvestmentsintheBondsofPublicSectorUndertakings(PSUs)

(i) NRIsarepermittedtosubscribeinthebondsasissuedbythePSUsonrepatriationbasis(ii) PSUsarerequiredtoobtainthenecessaryapprovalsfromtheGovt.ofIndia(GOI)forraising ofthefundsthroughissueofbonds

10. Investments in Equity shares of the PSUs under Disinvestment program of theGovernmentofIndia(GOI)

(i) NRIs are permitted to purchase the equity shares on repatriation basis under the disinvestmentprogramoftheGOI



(ii) SingleNRIisnotpermittedtopurchasemorethan1(one)percentoftheequitysharesofa PSU(iii) NRIsarerequiredtoinvestthroughtransferoffundsunderthenormalbankingchannellike (a)DirectinwardremittancefromOutsideIndia (b)DebittoNRO,NREorFCNRaccountasmaintainedinIndia(iv) NRIsare required tosubmit theapplicationsalongwithdeposit of thebidmoneyorpurchase considerationatthedesignatedbranchoftheSBI

11. InvestmentsthroughFixedDeposits(FDs)intheIndianCompanies

(i) NRIs are permitted to invest in the FDs of the Public limited companies and PSUs on repatriationbasisforaminimumperiodof3(three)years(ii) Indian companies are required to submit the applications with the RBI for approval to acceptFDsfromtheNRIs(iii) NRIs are not required to obtain separate permission from the RBI where Indian companieshavealreadybeenobtaintheapprovalsfromtheRBI

(CC)ForeignPortfolioInvestments(FPIs)bytheNRIsinIndia

1. GeneralRegulationsfortheFPIsbyNRIs

(i) NRIsarerequiredtoobtainpriorpermissionfromRBIforacquiringof(a)Equityshares(b) Convertible Debentures (c) Units of domestics mutual funds (d) Non‐Convertible Debentures(NCDs)(ii) These investments are permitted by the RBI on repatriation andnon‐repatriation basis (both)throughaStockExchangeinIndia(iii) RBIispermittingapriorapprovalforaninitialperiodof5(five)years fortheinvestments undertheheadFPIswhichisfurtherrenewableforanother5(five)years(iv) NRIsarepermittedtoinvestthroughsendingofNSNR

(a)DirectInwardremittancefromOutsideIndiaor(b)DebittoNRE,FCNR,NROorNRSRaccountasmaintainedinIndia

(v) NRIs are permitted to invest in the shares and debentures under the FPIs scheme at prevailingmarketpriceatstockexchangeinIndia

2. LimitfortheFPIsbyNRIs

(i) NRIs cumulatively are permitted for investments in equity shares and convertible debenturesamaximum10%oftotalpaid‐upequitycapitalofthecompanyand10%oftotal convertibledebenturesofeachseriesonrepatriationandnon‐patriationbasis(both)as permittedbytheRBI(ii) ANRIsinglyispermittedfortheinvestmentsinequitysharesand/orpreferencesharesand convertibledebenturesamaximum5%ofthetotalpaidupequity/preferencecapitaland 5%oftheconvertibledebenturesissuedtoa‘single’NRIasFPIsinvestor



3. MiscellaneousRegulationsfortheFPIsbyNRIs

(i) RBIisrequiredtoissueacodenumbertoeachNRIasFPIinvestorforquotinginallfuture correspondencetotheRBI(ii) NRIs are not permitted to invest under FPIs through private placement or off market transactionexceptatstockexchange(iii) NRIsarepermittedtoauthorizean Indianresidentorbrokerofstockexchange as their agentsinIndia(iv) NRIs are required to route the all transactions through a designated branch of a authorizeddealerCategoryIbankonrepatriationornon‐repatriationbasis(v) NRIsarerequiredtoapplytotheRBIforpriorapproval/permissiononrepatriationornon‐ repatriationbasisinformNRIthroughadesignatedbranchofanauthorizeddealerCategory Ibank(vi) NRIsarepermittedtoinvestunderFPIsin

(a)SecuritiesofthecentralorStateGovernmentand(b)TreasuryBillsoftheGovt.ofIndia

(vii) NRIsarenotpermittedtoinvestinthebearersecurities(viii)(a)NRIsarerequiredtotakethedeliveriesforpurchaseofsharesanddebenturesandto givethedeliveriesforthesale (b)NRIsarenotpermittedfornon‐deliverypurchaseandsaleofthesharesanddebentures likespeculativetradings(ix) NRIsarepermittedtoregisterthesharesanddebenturesinnameofthefollowings

(a)Himself(b)Authorizeddealerbank(c)Nomineeoftheauthorizeddealerbank

(x) InvestmentsintheJointNames(a)NRIsarepermittedtopurchasethesharesanddebenturesinthejointnameswithother

NRIswithpriorpermissionoftheRBI(b)Firstholderoftheinvestmentswillbetreatedsingle investorwhereinvestmentsare

madeonrepatriationornon‐repatriationbasis(both)(c)Henceforthsecondandthirdholderwillbeeligibleforseparateinvestmentupto5%per

investorinthesamecompany(d)RBIisalsopermittingforthejointinvestmentswitharesidentofIndia(e) NRIs are not permitted for remitting Outside India where they have inherited the

shares and debentures in India. However NRIs are permitted to remit through NROaccountamaximumUSD1(one)millionperfinancial



(D)PrivilegesfortheInvestmentsinGovt.Securities,NationalPlanorNationalSavingCertificates(NSCs)andunitsofUTIinIndia

1. Investments in theGovt. Securities,NationalPlan&NationalSavingsCertificates (NSCs)

(i) NRIs are permitted to invest freely in securities of the central or State Govt.,National PlancertificatesandNationalsavingcertificates(NSCs)throughthefollowingmodes:‐ (a)DirectInwardremittancefromtheOutsideIndia

(b)DebittoNRO,NREorFCNRaccountsasmaintainedinIndia(ii) (a) Authorized dealers are permitted to invest on behalf the NRIs out of the funds as

available in NRO account where direct repatriation is not permitted for theinvestmentsamountandincomeearnedthereonboth

(b)HoweverNRIs are permitted to remit throughNROaccount amaximumUSD1(one)millionperfinancialyear

2. InvestmentsintheUnitsofUTI

(i) NRIsarepermittedtoinvestintheunitsofUTIthrough(a)DirectInwardremittancefromOutsideIndiaor(b)DebittoNRO,NREorFCNRaccountasmaintainedinIndia

(ii) NRIs are permitted to remit throughNRO account a maximum USD 1(one)million per financialyearagainsttheinvestmentsamountandincomeearnedthereon(both)(iii) RBIhaspermitted anautomatic routemode for the investments inunitsofUTI through grantingofageneralpermissionforpurchasingofunitsdirectlyfromUTI



(E)SummaryonPrivilegesandNon‐PrivilegesfortheNRIsinIndia

1. PrivilegesfortheNRIsinIndia

(i) NRIsarepermittedtohave‘mostoftheprivileges’onnon‐repatriationandrepatriationbasis asareavailablefortheresidentsofIndialike

(a) Investments in theresidential andcommercial properties for the Investmentspurpose withoutanyrestrictiononnumbersoftheproperties

(b)AllowancesanddeductionsoutoftheIncomeTaxLiabilities(c)InvestmentsinthecompaniessharesandsecuritiesandLLPs(d)InvestmentsintheGovt.ofIndiasecurities.

(ii)NRIsarepermittedtoobtaininanoverseascitizenofIndia(OCI)cardtoavoidandobtaining ofseparateVisaforvisitingtheIndia.(iii) NRIs are permitted toparticipate in ‘most of activities’ as available for the Residents of India.(iv) NRIs are permitted to avail anexemption from the liability of Income Tax on the interest incomesonNRE&FCNRaccountsasmaintainedinIndia.

2. Non‐PrivilegesfortheNRIsinIndia.(i) Tax deducted at source (TDS) provisions are comparatively tedious for the NRIs in comparativefortheresidentsofIndia.(ii)NRIsarerequiredtopassthroughthetediousprocessofDTAAtoavoiddoubletaxationon hisincomesearnedinIndiaandalsosameistobetaxedagaininhiscountryoftheresidence.(iii) NRIs arenotpermitted tobuy anyagricultural andplantation properties and alsonot permittedtoengageinanybusinessrelatingtoagriculturalandplantation.(iv) NRIsarerequiredtopayanincometaxontheincomesearnedonNREandFCNRaccounts intheircountryofresidenceoutsideIndia.

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(I)Despiteeveryefforttakentoavoidanyerrororomission,theremaystillbechancesforsucherrorsandomission tobecrept in inadvertently.Author shallnotbe responsible foranydamageor loss inwhatevermanner,consequenttoanyactiontakenonthebasisofcontentsofthisarticle,causedtoanyperson,whetherareaderornot.

(II)The text of this email may contain information, which is proprietary and/or confidential orprivilegedinnaturebelongingtoSatishAgarwal.Therecipientifnottheaddresseeshouldnotusethismessage if erroneously received and access to this email by anyone other than the addressee isunauthorized. The recipient if not the intended addressee should delete themessage. The recipientacknowledges that Satish Agarwalmay be unable to exercise control or ensure or guarantee theintegrityofthetextoftheemailmessageandthetextisnotwarrantedastocompletenessandaccuracyandissubjecttochangewithoutnotice.TherecipientfurtheracknowledgesthattheviewscontainedintheemailmessagearethoseofthesenderandmaynotnecessarilyreflectthoseofSatishAgarwal

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