Skip to main content

Investment by NRI onRepatriation Basis and Non-Repatriation Basis

Government of India has provided special treatment to NRIs for providing flexibility to invest through different commercial feasible structures under the extant Consolidated FDI Policy of 2017 (“FDI Policy”) and the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 (“TISPRO Regulations”) issued by the Reserve Bank of India (“RBI”), without losing their status and benefits available as ‘non-residents’.TISPRO Regulations allow NRI investors to invest in India, either on repatriation basis or non-repatriation basis. So, what is repatriation or non-repatriation basisinvestment?
1.      TwoOptions of Investments
For all investments in mutual funds made through the money remitted from abroad, the redemption proceeds can be remitted back to the originating account (NRE or FCNR) and can be repatriated. Such investments are called Repatriable investments.On the other hand, investments made in mutual funds secured through the money sourced from an NRO account cannot be taken outside India and have to be retained in India such investments are called Non- Repatriable Investments.
2.      Which is Better?
The benefit of making an investment on the non-repatriation basis lies in the fact that the investments so made are considered as domestic investments and can be made without any limit, in contrast to the investment made on a repatriation basis, where the investor has to adhere to the sector guidelines. 

3.      Transfer of Share
Repatriation basis: The transfer can be made to any person resident outside India on repatriation basis. The transfer shall be made under schedule 1 of TISPRO and shall be subject to the sectoral caps and the filing requirements with RBI.
Non-Repatriation basis: As sale to any other NRI or OCI or as a gift to any other NRI or OCI who agrees to hold the instruments on a non-repatriation basis.
4.      Permission to Invest
·         On Repatriation Basis, NRIs may invest in the following:
a.       Government dated securities / Treasury bills
b.      Units of domestic Mutual funds
c.       Bonds issued by a Public Sector Undertaking (PSU) in India
d.      Non-convertible debentures of a company incorporated in India
e.      Perpetual debt instruments and debt capital instruments issued by Banks in India
f.        Shares in Public Sector Enterprises being disinvested by the Government of India, provided the purchase is in accordance with the terms and conditions stipulated in the notice inviting bids
g.       Shares and convertible debentures of Indian companies under FDI scheme (including automatic route &FIPB)
h.      Shares and convertible debentures of Indian companies through stock exchange under Portfolio Investment Scheme
·         On Non repatriation Basis, NRIs may invest in the following:
a.       Government dated securities/Treasury bills
b.      Units of domestic Mutual funds
c.       Units of Money Market Mutual Funds
d.      National Plan/Savings Certificates
e.      Non-convertible debentures of a company incorporated in India
f.        Shares and convertible debentures of Indian companies through stock exchange under Portfolio Investment Scheme
g.       Exchange traded derivative contracts approved by the SEBI, from time to time, out of INR funds held in India on a non-repatriable basis, subject to the limits prescribed by the SEBI


The information provided in this article is generic in nature and for informational purposes only. It is in no manner can act as a substitute for specific advice in your own circumstances. We strongly recommend you to seek professional guidance pertaining to your query or doubt.

Comments

Post a Comment

Popular posts from this blog

Six Steps to Open an NRO account

An NRO (Non-Resident Ordinary) savings account is where you can maintain and manage your income earned in India such as rent, dividends, pension, etc. An NRO account can be opened in the form of a savings, current or fixed deposit account. Repatriation of funds from NRO accounts is permitted by RBI, subject to certain limits. Procedure for opening an NRO account is as follows: 1.       Options The non-resident Indian can convert his/her existing resident account in India to the NRO account or open a new NRO account. Documentary proof that the account holder is a non-resident as defined in Indian tax laws is a prerequisite for NRI accounts. 2.       Difference between NRO & NRE Account Unlike NRE accounts, interest earned on this account is taxed at the rate of 30% (plus surcharge) and other applicable taxes in India according to the ITA. In order to take the benefit of lower rates of tax as per double taxation avoidanc...
Post a Comment
Read more

Everything an NRI needs to know about Investment Options in India

If you’re an NRI looking for investing in India but don’t know the best options, considering the returns here the following investment options for you: 1.       Fixed Deposit There are three types of FD for NRI. NRE FD, NRO FD, and FCNR FD. NRE FD is maintained in Indian rupees. No tax is applicable to NRE FD. The principal and interest earned are fully repatriable. The interest rate applicable to NRO FD is similar to FD taken by Indian residents. Tax is applicable on NRO FD. In the case of NRO FD, only interest amount can be repatriated. NRO FD can be opened for 7 days to 10 years. FCNR FD is a foreign currency FD. This type of FD can be opened by depositing income earned overseas. 2.       Real Estate NRIs can invest in both residential and commercial properties with no restrictions on the amount or size of the property. However, NRIs are not permitted to buy agricultural lands, farmhouse or plantations. However, selling of ...
Post a Comment
Read more

Chennai Corporation Hosts Concert in City Parks!

The Chennai Corporation, along with UNESCO Creative Cities Network, launched a collective that will curate and present unique collaborative performances in parks across the city. Chennai made it to the UNESCO Creative Cities Network (UCCN) for its rich musical tradition in 2017. According to UNESCO, the goal of UCCN is to foster international cooperation among member cities committed to investing in culture and creativity for sustainable urban development, social inclusion and cultural vibrancy. The Greater Chennai corporation earlier this year in July launched the ‘concerts at the park’ initiative at Anna Tower Park. The civic body has planned to host music concerts in which both professional and amateur artists (singers and dancers) will perform every weekend. About 42 such big parks in the city have been identified that have an open amphitheater to take music closer to the residentsand as a way of encouraging Chennai’s unique art and culture in public spaces. More people will be en...
Post a Comment
Read more