Good news for NRIs who wish to invest in India. The Department for Promotion of Industry and Internal Trade has changed the rules for non-repatriable NRI investments. Such investments will henceforth enjoy the same treatment as domestic investments. These investments will also not be considered for the calculation of an indirect foreign investment. When an NRI invests in India, he/she has to mention in the KYC form whether the funds will be repatriable or not. Non-repatriable investments are those wherein the principal and gains made by the individual are retained in the country. The tax withholding rules for NRIs are different. NRI investments are subjected to TDS when redeemed and they are taxed at the highest rate applicable to such investments. The TDS for long-term capital gains from equity and equity-oriented hybrid funds is 10%; and 20% for debt-oriented hybrid schemes and debt funds. Now, NRI investments will be treated just like domestic investments, so they won`t be subjected to TDS or a high rate of withholding tax. NRIs can invest in stock markets under the portfolio investment scheme (PIS) of the RBI. But, the aggregate investment by NRIs/PIOs could not exceed 10% of the paid-up capital in an Indian company. The new rule for non-repatriable investments will change this, allowing NRIs the same flexibility and benefits that Indian residents enjoy. The change has been incorporated in the consolidated FDI policy which came into effect on 15 October 2020. This means even investments made up to six months earlier will be eligible for this benefit.
Good news for NRIs who wish to invest in India. The Department for Promotion of Industry and Internal Trade has changed the rules for non-repatriable NRI investments. Such investments will henceforth enjoy the same treatment as domestic investments. These investments will also not be considered for the calculation of an indirect foreign investment. When an NRI invests in India, he/she has to mention in the KYC form whether the funds will be repatriable or not. Non-repatriable investments are those wherein the principal and gains made by the individual are retained in the country. The tax withholding rules for NRIs are different. NRI investments are subjected to TDS when redeemed and they are taxed at the highest rate applicable to such investments. The TDS for long-term capital gains from equity and equity-oriented hybrid funds is 10%; and 20% for debt-oriented hybrid schemes and debt funds. Now, NRI investments will be treated just like domestic investments, so they won`t be subjected to TDS or a high rate of withholding tax. NRIs can invest in stock markets under the portfolio investment scheme (PIS) of the RBI. But, the aggregate investment by NRIs/PIOs could not exceed 10% of the paid-up capital in an Indian company. The new rule for non-repatriable investments will change this, allowing NRIs the same flexibility and benefits that Indian residents enjoy. The change has been incorporated in the consolidated FDI policy which came into effect on 15 October 2020. This means even investments made up to six months earlier will be eligible for this benefit.
