There are many reasons why NRIs are looking to invest in India such as- Traditional investment such as FD, CD, NPS, Government Securities, but now in this modern era has another safe investment option available which is called Mutual Fund, Equity Market, PMS (Portfolio Management System), ULIP. NRI should consider certain account NRE – NRO as per their investment style in India. Difference between NRE and NRO Particulars NRE (Non Resident External) NRO (Non Resident Ordinary) Meaning It is an account of an NRI to transfer foreign earnings to India. It is an account of an NRI to manage the income earned in India Suitable You should opt for NRE Accounts if you want to hold or maintain your overseas earnings in Indian currency. NRE Accounts are also suitable if you wish to keep your savings liquid You should opt for NRO Accounts if you want to save your earnings from India in Indian currency itself. These earnings could include rent, income, dividend, sale of Property etc. Holding structure You can open an NRE account with another NRI and close relative Resident Indian You can open an NRO account with an NRI as well as any Indian resident. Reparability i.e.Transferability Money from NRE accounts is freely repatriable i.e. both the Principal amount and interest earned are freely and completely transferable Funds from the NRO Accounts can be repatriated post payment of applicable taxes with a limit of USD 1 million in a financial year Joint account Can be opened by two NRIs Can be opened by an NRI along with an Indian citizen or another NRI Taxability Interest earned is tax free Interest earned is taxable. Deposit and withdrawals Can deposit in foreign currency, and withdraw in Indian currency Can deposit in foreign as well as Indian currency, and withdraw in Indian currency Equity Market– NRI can invest in the Indian stock market through the PNS (Portfolio investment scheme) of RBI. For this, need to open a Demat account with an Indian broker and should have an NRE/NRO account and also can have a trading account. This is high risk high reward investment – so do take advice from registered financial advisor for better result. Mutual Funds – It is one of the Best NRI Investment Options in India. NRIs can invest in Indian mutual funds but they have to follow the rules and regulations of the Foreign Exchange Management Act (FEMA). Some Mutual Fund Companies do not allow investments from NRIs due to some code of conduct. The Mutual Fund taxation depends on the type of mutual fund such as long term or short term capital gains. PMS (Portfolio Management Services) – An NRI can invest in (PMS) through their NRO/NRE account. PMS can turn to be a good investment option because of following reasons:
