There are certainly attractive avenues in India, where NRIs obtain the freedom of investing into diversified investment portfolio and significantly build up their investment portfolio. India is emerging as being fastest growing investment destinations for NRIs.
NRIs can now invest into investment vehicles by saving into:
Secondary markets through Portfolio investment in equity shares/convertible debentures.
New issues (shares/convertible debentures).
Non convertible debentures.
Mutual funds provided that amount is invested out of NRE/FCNR/NRO account or by inward remittance.
Domestic (NRO) funds through deposits in Indian companies (including Non Banking Finance Companies if they are registered with Reserve Bank of India) on non repatriation basis upto 3 years subject to certain formalities to be completed by the concerned company.
Bonds provided that amount is invested out of NRE/FCNR/NRO account or by inward remittance.
Proprietary or partnership concern in India.
Immovable property provided that the amount is not invested for the purchase of agricultural land, plantation property or farm house and investments are made from fresh inward remittance or existing non resident account.
Tax benefits available to NRIs
Bank Deposits investment in shares, units of Mutual Funds etc. are exempt from wealth tax in India.
In 1997, gift tax was abolished. So both the donor as well as the recipient did not have to pay any tax on the gifts received. Consequently people started misusing the vacuum left behind by scrapping of gift tax. There was a widespread transfer of insincere gifts from the non-relatives. In order to fill up this void, Section 56 (2)(v) of Income Tax Act was passed in 2004.As per Section 56 (2)(v) of the Income Tax Act , any amount exceeding Rs 25,000 obtained by a person or a Hindu Undivided Family (HUF) without any consideration from non-relative would be taxed. The only cases exempted were the gifts given during marriage, inheritance left behind in a will or if the payer has died.