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Each and every NRI is capable of
investing in the Indian equities market.Experts suggest that investing in
Indian stock market is an exciting prospect as the market will be growing at a
steady pace in the years to come in the future. For NRI’s wanting to invest in
the stock market there are two option available. One of them is the direct
route in which they could opt for investing in buying stocks of various listed
companies while the other could be investing in mutual funds. For those people
who want to directly buy the stocks, there is an option
provided by the Reserve Bank of India called the Portfolio Investment Scheme which
is available for non-repatriableand also repatriable basis. For those people
who do not have a clear understanding of the stock market, mutual funds could
be the best option. Any NRI wanting to invest in the Indian stock market
through any of the above mentioned scheme does not require any kind of prior
permission from the RBI.For NRI who prefer the direct route of making their
investments in India, they can invest up to a limit of 5% of the total paid
capital of any of the listed Indian companies. NRIs also have complete approval
to invest in the secondary market where transaction of stocks takes place. One
more added advantage is that NRI can also apply for Initial Public Offers
(IPOs) of any company. The only requirement is that the company offering IPO
must comply with the norms of offering shares to NRI’s.
The Initial beginning – For every NRI the first step to invest
money in the Indian stock market would be to ensure that all the currency has
to be in rupees (INR). Foreign currency is not accepted for investment in mutual
funds in our country. So for making such investments every NRI needs to create
bank account in any local Indian bank. One of those accounts is an NRE account,
which is an account which has the option of sending money back to your country
of residence. Foreign currency or Indian currency both can be used to open such
an account. Another such account is known as the NRO account which is a
non-repatriable type of rupee account. The last kind of account is the FCNR
account which almost same as the NRE account. The only difference between the
two is thatin FCNR account the money is help in the form of foreign currency.In
case of the investment by residents, they have to submit some other documents which
includethe PAN card as well as an address proof.
The appointment of PoA – Most of the times for NRI investors it is
not possible to keep a track of their investment and conduct transactions
according to the market situation. It is not possible because in most scenarios
they are away and don’t get the time to react to market fluctuation.
Mutual
funds have a provision of power of attorney (PoA) where the he can take the decisions
on his behalf. The only requirement is an original or the signed and verified
copy of the PoA to be submitted to the issuing authority. Each and every PoA document
should contain signatures the PoA holder as well as the NRI investor which
would be verified before conducting any transaction.
Redeeming the earnings – Redemption of the funds is done through
payment either in the form of cheques or in the form of cash directly to the
bank account of the investor. All the earnings are paid in the form of Indian
currency.
Taxation regulations – All the taxes which are payable by any
investor who is a NRI are similar to the liabilities of any investor who is an
Indian resident. In certain cases the NRIs are also liable to pay double taxes,
once in their investing country which is India and once in their country of
residence again. But if the Government of India has ascheme of avoidance of
double taxation treaty (ADTT) with the country of residence of the NRI, then he
won’t have to pay their taxes twice
Ability to buy IPO- All the shares which are issued in the form of
initial public offerings (IPOs) don not come under PIS. For issuing IPO,the
company which issues the IPO is liable to inform RBI about the quantity of
shares which it has provided to any NRI.
Any of the shares which are acquired
through the IPOs can be easily sold even without holding a PIS account.But each
and every NRI has to provide all their bank details must furnish their bank
details, for calculating the tax applicable onall the gains which they have
been able to gain.