Quick guide for nri is while investing in India.

1. By SiliconIndia | Sunday, February 9, 2014

2. Bangalore: If you are a non resident Indian (NRI) and
you are looking to invest in Indian market, then there
are few things that you should consider before
investing. Despite of the rising inflation and interest
rates, Indian economy has been stable when compared
to other countries. Thus even now India emerges as an
investment destination. It is advisable that you opt to
invest more in your home country than the country
where you work or staying at present.

3. Here is a list of five things that
NRIs should keep in mind while
investing in India:

4. 1.Types of accounts for NRIs
Before making any investments in your home country,
you need to know which type of accounts you would be
investing from. And, you need to consider certain things
before you make the final call, for example, The funds in
the bank account from which you are planning to make
the investment, obtained from your home country
sources or the funds are taken back home from the
country you are currently working or saying? Are the
fund in the account comprise of your salary? In which
currency do you want to hold your account?

5. You first and the foremost step is to answer these questions
based on which you can decide whether you want to invest
from your NRE account or NRO account.
1. NRE account: In NRE account, your current funds in
foreign currency are converted into Indian rupees, at the
same rate prevailing the time of transferring the funds from
your account. In the NRE account, the funds are
repatriated freely along with the principal and interest.
2. NRO account: NRO account is best for them who are
willing to transfer Indian earnings. You can deposit foreign
currency in this account. The interest earned is subject to
tax deduction at source at the rate of 30 percent in India.
You cannot, however, repatriate or deport funds in NRO
account abroad.

6. 2.Access to NRI investment possibility
First, make up your mind and decide where to make the
investment; however, such decisions are not to be taken
in a hurry. In India, the investment opportunities are
same for both NRIs and the Resident Indians; only nonresident Indians need to take down few points to make
the investment smoothly.

7. From direct equity to mutual fund to real estate, NRIs can select
various options to make investments. If you are planning to invest
in direct equity, you need to be extra careful about the time
horizon of investment, the long term goals and also the risk and
return expected on the investment.
But when it comes to mutual fund, it is a safest option than direct
equity especially for NRIs as they have limited expertise. You need
to check the fund house rules and regulations when investing in
mutual fund as certain funds don’t accept deposits made by NRIs
from USA or Canada. However, it is always better to think before
you jump.
Also NRIs can invest in their favorite real estate. This investment
option is one of the most preferred among NRIs and also it is
known as the safest place to park your hard earned money.

8. 3.Investment destination
It is no secret that the economy is in a volatile
state and so, Indians who are working in
foreign country showing more concern about
their job security and investment they are
making. But alongside they are also managing
their finances in a better way by taking
professional advice and at the same time
thinking of investing more money in India
their home country. In terms of economy when
compared to other developing nations like
Russia, China and Brazil, India is considered as
one of the best destinations for investment.

9. 4.Taxation
When it comes to taxation, you need to know
all the different rules related to different
sources of income. For any income that is
received arises or accrues in India is taxable
and any income that is received outside arises
or accrues India is not taxable for an NRI.
If you are investing in dividends declared by
equity oriented funds or mutual funds, more
than 65 percent of assets are invested in
equities, and then being an NRI investor,
your income is not taxed. Similarly, dividends
declared by debt-ridden mutual funds
(where less than 65 percent assets are
invested in equities) are also tax-free.

10.  Any mutual funds that is held for less than a year, is called a
short term capital asset. When you sell units in equity
oriented mutual fund are sold (redeemed) within one year
of being held, then you acquire either short term gains or
loss. The short term gains are taxed at 15 percent on gain.
Thus when you sell off debt ridden mutual fund within a
year, then tax is levied under slab rules for individuals.

When units in equity oriented mutual fund are sold off
after duration of more than a year, then gain on such units
redemption is tax free. In case you sell off debt ridden
mutual funds after being held for more than a year, gains
are taxable as long term capital gains.

11. Other Investments
FIIs and NRIs can also invest their money in securities,
treasury bills, listed nonconvertible debentures, bonds
and many more. However, there are certain
restrictions from Reserve Bank of India like NRI, PIO,
QFI, FII.
Source: http://www.brijj.com/group/manager-senior-manager-investor-relations--link-Quick-Guide-For-Nris-While-Investing-In-India?eid=3767476