What are Foreign Exchange Assets and Specified Assets?

  • As one of the fastest growing economies, India offers NRIs a wide range of investment opportunities across a variety of asset classes. NRIs keen to explore investment opportunities in Indian Capital Markets can choose from various investment avenues such as Indian dedicated Mutual Funds Schemes, Portfolio Investment Schemes and other eligible securities.

  • India has continued standing as an attractive investment destination due to a strong Indian Economy and a great performance by the Indian Stock Markets and the Mutual Fund industry. Above all, India is like a tax haven when it comes to investing in equity, as NRIs can enjoy tax benefits on their equity investment such as tax-free long-term capital gains.

  • We offer a convenient and hassle-free way of investing in the Indian Securities Market to NRIs who wish to participate in the Indian growth story. We guide our NRI clients at every step of their investment needs so that they have complete peace of mind about their investments in India. Our capability to analyze relevant information on market trends and the best-in-class investment products play an important role in assisting our NRI clients in making the right decision. Our experience of capital markets & retail financial services makes us a reliable NRI investment solutions company. Our products, services and technology help facilitate an excellent investment experience. Our core competency lies in Mutual und advisory & Realty Services for our NRI Clients. We follow Need-based advisory model after assessing the risk profile and investment objective.

  • At Indian Wealth Management, we offer a variety of NRI services:

  • 1. Determination of your residential status in India

  • 2. Interpretation of DTAA with a view to reducing tax liability in

  • 3. Handling of issues relating to Inheritance, Will, etc.

  • 4. Compliances with respect to the Income-tax Act, 1961, Wealth-tax Act, etc

  • 5. Application for Permanent Account Number (PAN)

  • 6. Filing of India Tax return

  • 7. Advising suitable tax saving investments

  • 8. Opening NRE, NRO and FCNR accounts

FAQs RELATING TO INVESTMENT

  • 1. What are Foreign Exchange Assets and Specified Assets?

  • As per Section 115C of Indian Income Tax Act, 1961 Foreign Exchange Asset means any Specified asset which the assessee has acquired or purchased with, or subscribed to in, convertible Foreign exchange.

  • Specified Asset means any of the following assets, namely:

  • 1. Shares in an Indian company

  • 2. Debentures issued by an Indian company which is not a private company as defined in Companies Act, 1956

  • 3. Deposits with an Indian company which is not a private company as defined in Companies Act, 1956

  • 4. Any security of the Central Government as defined in clause (2) of section 2 of the Public Debt Act, 1944, such other assets as the Central Government may specify in this behalf by notification in the Official Gazette

  • Foreign Exchange for the purpose of the above means foreign exchange, which is for time being treated by Reserve Bank of India as a convertible foreign exchange for the purposes of the Foreign Exchange Regulation Act, 1973(46 of 1973), and any rules made there under.

  • 2. Whether Right Shares and Bonus Shares form part of Foreign Exchange Assets?

  • RBI notification is silent on the issue of bonus shares and right entitlements. In the case of bonus shares, one can safely take the view that if the bonus shares are allotted as a result of shares for which payment is made by the way of inward remittance in foreign currency or by debit to NRE / FCNR account they would be treated as foreign Exchange Assets.

  • Though nothing specific has been mentioned regarding the right entitlement, one can apply the analogy of bonus shares to right entitlements also. If payment for the original shares has been made by the way of inward remittance in foreign currency or by debit to NRE/ FCNR Account, they would be treated as foreign exchange assets.

  • 3. What are the various investment options available to NRIs under FDI route?

  • Investment options available to NRIs under FDI route can be broadly classified under two heads namely:

  • A. Automatic Approval Route.

  • B. Prior Approval from Government Route.

  • Presently, most of the activities are under Automatic Approval Route i.e. 100% FDI. No approval is required for FDI in case of activities under Automatic Route only a notification to RBI is required within 30 days.

  • Cases that are not covered under the Automatic Route fall under Prior Approval from Government Route. Approval from the government is required in such cases.

  • 4. What is meant by investment through direct subscription route?

  • As per the regulations, NRIs are allowed to invest up to a certain percentage of the total paid-up capital of the company by directly subscribing to the equity/convertible debentures of the company either through a public offering made by the company or through private placements on a one-to-one basis. Regulations provided for different ceilings on such investments based on the industry to which the company belongs and also the nature of investments (repatriation/non-repatriation basis).

  • 5. What is the Portfolio Investment Scheme?

  • Portfolio Investment Scheme (PINS) is a scheme of the Reserve Bank of India (RBI) defined in Schedule 3 of Foreign Exchange Management Act 2000 under which the ‘Non Resident Indians (NRIs)’ and ‘Person of Indian Origin (PIOs)’ can purchase and sell shares and convertible debentures of Indian Companies on a recognized stock exchange in India by routing all such purchase/sale transactions through their account held with a Designated Bank Branch.

  • 6. What steps does an NRI need to take to begin his or her investment in the Indian Stock Market?

  • An NRI should open a new bank account with designated bank branch which is approved by RBI (Reserve Bank of India) for this purpose.

  • He should apply for a general approval for investment in Indian Stock Market through his designated bank branch. He should open a Demat Account with a Depository Participant to hold his shares. He needs to register with a broker to execute his buy/sell orders on the stock exchange(s).

  • 7. What is the distinction between NRE and NRO accounts?

  • Funds remitted from abroad or local funds, which can otherwise be remitted abroad to the account holder, can be credited to NRE Accounts. Local funds, which do not qualify for remittance outside India, are required to be credited to NRO accounts.

  • 8. What is the permission, which an NRI has to obtain to invest under the Portfolio Investment Scheme?

  • NRIs are allowed to invest in Indian equity markets under the Portfolio Investment Scheme. Under this scheme, NRIs are permitted to invest in shares/debentures of Indian companies through Stock Exchanges in India. These investments require prior approval of RBI Designated branch of authorized banks have been now empowered to issue such permissions to NRIs.

  • 9. Which are the broad schemes under which an NRI can make investments in the Indian companies?

  • Broadly, NRIs are allowed to invest under the Portfolio Investment Scheme (buying through the secondary market) and through the Direct Subscription route (Investments though IPOs/offer for sale /Private Placements).

  • 10. Can an NRI have investments under Portfolio Investment Scheme on repatriation as well as a non-repatriation basis?

  • Yes. Investment can be made on repatriation as well as non-repatriation basis. However, an NRI will have to open NRE account, as well as NRO account with designated bank branch as the sale proceeds of non-repatriation investment, can only be credited to NRO account.





FAQs RELATING TO RETURNING INDIANS

  • 1. What happens when NRI/PIO returns to India?

  • When an NRI/PIO returns to India

  • He continues holding any assets in foreign currency (foreign securities and properties situated outside India) if the same were acquired while being an NRI or a PIO.

  • Balances will continue to remain in NRI accounts in India.

  • Balances held in NRO account will have to be converted to resident status.

  • Balances lying in the NRE/FCNR Term Deposit may be continued till maturity at the originally contracted interest rates or can be converted into Resident Foreign Currency Account (RFC), at the option of the account holder.

  • Any proceeds of assets held outside India at the time of return as well as salary/pension or other dues received subsequently can also be credited to these deposits.

  • All the above funds are free from all restrictions on usage.

  • 2. Can NRI/PIO returning to India hold assets abroad?

  • Under section 6(4) of FEMA, a person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.

  • There is no need of any approval from RBI even after the NRI becomes, after his return, a person resident in India.

  • This general permission will not apply in respect of any asset received after becoming a resident by way of gift or inheritance from abroad. Similarly, the benefit is not available on earnings from employment secured subsequent to the return. If the ex-NRI wishes to retain such assets abroad or liquidate them and deposit the money in an RFC account, he has to apply for permission from RBI.

  • 3. What will be status of the accounts of an NRI on his/her return to India?

  • A returning Indian’s NRE/FCNR accounts will be designated as Resident account. However, they will continue to run till maturity at the contracted rate of interest.

  • 4. Is NRI subject to tax after returning to India and can he maintain a Foreign Currency Account?

  • Yes, earnings of NRIs are subject to tax laws of India and the returning NRI can get his NRE, FCNR accounts converted into RFC accounts.

  • 5. Who can open RFC account?

  • A returning NRI who was resident outside India earlier and is returning now for residing permanently is permitted to open RFC account.

WILL WRITING

  • A Will is a legal declaration of a person, with respect to his properties and assets, which he desires to be carried into effect after his death. In the case, if you reside outside India but own immovable assets in India, these assets will be distributed as per the Indian succession laws in the absence of a Will. It is therefore advisable to write a separate Will for your assets situated in India. This will ensure a hassle-free transfer of assets and prevent unnecessary delays. You can choose anyone you wish, to pass on your assets. Also, you always have the flexibility to modify your Will to capture required changes.

  • At Indian Wealth Management, we understand that Will Writing is a cumbersome process and you may need guidance at various steps. Our team of Will specialists, who are familiar with the Indian regulations and laws, can provide best in class advice on passing on your immovable property in India to your chosen heirs in India or abroad in the most tax-efficient way.

DO’S & DON’TS

  • DO’S

  • 1. The details provided by you help us serve you better & thus, you are required to provide correct details & keep it updated.

  • 2. Be aware of the risk associated with your Cash Market and Futures & Options positions in the market and margin calls on them.

  • 3. Always check the RBI notifications for scrips in which further investment is disallowed.

  • 4. Comply with SEBI & RBI regulation related to NRIs.

  • 5. Do inform respective persons/entities of change in residential status.

  • 6. Confirm the delivery of shares in your Demat Account before selling.

  • DONT ‘S

  • 1. Do not provide wrong details.

  • 2. Do not trade in shares which have been prohibited for NRIs

  • 3. Do not trade in any product without knowing the risk involved. Keep yourself aware of equity market investments.

  • 4. Do not trade on behalf of others.

  • 5. Do not trade on the basis of market rumors. Always verify the authenticity of such rumors. Analyze the information available to make investments.

CHANGING JOBS

If you’re moving to another employer, you will have some big decisions to make. Should you take your old employer’s retirement plan money with you? Which benefit options should you choose? How will your job change impact your financial situation? The Legal Bankcan helps you with some of the questions, while you are changing jobs:
• Do you understand your new benefits package and options, including health care, life, long-term care, and disability income insurance? Will you need additional insurance?
• Have you determined how your job change might affect existing employee stock options?
• How might your income and expense changes impact your future financial goals?

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