NRIs can invest in stocks in India. First you have to open an NRI demat account. Then, there are 2 ways. For NRE Account, NRI can invest in secondary capital market through portfolio investment scheme (PINS). For NRO Account, NRI can invest without having portfolio investment scheme. NRIs can also invest in PMS in India like the way they invest in stocks.
The Reserve Bank of India (RBI) under the Liberalized Remittance Scheme (LRS) permits to transfer out of India an amount of $250,000 per person per financial year i.e. from April to March. In broad terms, the LRS allows Indian citizens to transfer money abroad for the following purposes: • To cover the costs of overseas education and living expenses for students living abroad • Travel and tourism costs, as well as business travel expenses • Medical treatment abroad • Purchase of shares or property overseas • Supporting family members living abroad • Gifts and donations - it’s worth noting that some organisations don’t qualify under LRS rules To remit over USD 250,000 in one year you’ll need special permission from the RBI.
NRIs PIOs presently have the facility of maintaining bank accounts and undertaking financial transactions in India subject to certain exchange control regulations. In order to simplify the procedures and to provide greater freedom to NRIs/PIOs for putting through financial transactions in India, NRIs and PIOs are now permitted to open bank accounts in India, which will be at par with rupee accounts, maintained by residents. They can now open Non-Resident (Special) Rupee Accounts with banks in India which will have the same facilities and restrictions as are applicable to rupee accounts maintained in India by residents relating to repatriation of funds held in these accounts andor incomeinterest earned on them. The procedure for opening such accounts is the same as that of domestic accounts of resident individuals.
1. Repatriation: NRE account is freely repatriable (Principal and interest earned) while the NRO account has restricted repatriability i.e permitted remittance allowed from NRO is up to USD 1 million net of applicable taxes in a financial year after giving undertaking along with a certificate from a chartered accountant. 2. Tax Treatment: NRE account is Tax free (no Income tax, wealth tax and gift tax) in India. On the other hand the interest earned in NRO account and credit balances are subject to respective income tax bracket and are also subject to applicable wealth and gift tax. 3. Deposit of Rupee funds generated in India: If an NRI/PIO/OCI is earning income originating in India (such as salary, rent, dividends etc.) he/she is only allowed to deposit it in NRO account. Deposit of such earnings is not permitted in NRE account. 4. Joint Holding: NRE account can be jointly held with another NRI but not with resident Indian. On the other hand NRO account can be held with NRI as well as resident Indian (close relative) as defined under Section 6 of the Companies Act 1956.
NRIs can invest in Indian Mutual Funds through their NRE or NRO accounts. There are two ways of going about investing in Indian mutual funds—self or through a power of attorney. The power of attorney holder must be KYC compliant. Payment can be made by cheque drawn on the NRE or NRO account. A foreign inward remittance certificate may have to be submitted to confirm source of funds. Investments can be redeemed by following the redemption procedure mentioned by the fund. Different fund houses have different procedures for redemption by NRIs. Redemption proceeds shall be credited to the respective NRE/NRO bank account of the investor. Before investing the KYC of the investors (all holders) must be completed. For this the KYC form which is available on the websites of mutual funds, Amfi and KYC Registration Agencies (KRAs). The completed form duly signed along with the necessary documents, should be submitted to a KRA's point of service in person. You can also be send it by post/courier to the KRA agency if the In-Person Verification (IPV) is completed. In the case of NRIs/PIOs, the IPV should be completed by the distributor, who is certified by NISM/Amfi and has complied with the know your distributor (KYD) formalities, or a scheduled commercial bank. Here is a list of documents you may require to complete the process: A recent photograph, PAN card, identity and address proof, a certified copy of the passport, overseas and permanent address, and PIO card (for PIOs) need to be submitted. NRIs or PIOs can get the above documents attested by authorised officials of overseas branches of scheduled commercial banks registered in India, public notaries, court magistrate, judge, or the Indian embassy/consulate general in the country that they reside. If the proof of identity/address or other specified documents are in a foreign language, they have to be translated into English before submission.
NRI investors residing in USA and Canada can invest in certain mutual fund schemes. Most fund houses in India don’t allow NRIs from US and Canada because of the cumbersome compliance requirements under FATCA or Foreign Account Tax Compliance Act. When FATCA came into place, fund houses stopped taking investments from the USA and Canada because of the complexity associated with the compliance. Most fund houses in India don’t allow NRIs from US and Canada because of the cumbersome compliance requirements under FATCA or Foreign Account Tax Compliance Act. There are two ways of going about investing in Indian mutual funds—self or through a power of attorney. The power of attorney holder must be KYC compliant. Payment can be made by cheque drawn on the NRE or NRO account. A foreign inward remittance certificate may have to be submitted to confirm source of funds. Investments can be redeemed by following the redemption procedure mentioned by the fund. Different fund houses have different procedures for redemption by NRIs. Redemption proceeds shall be credited to the respective NRE/NRO bank account of the investor.