NRIs keen to invest in Indian MF

By SiliconIndia   |   Friday, August 21, 2009   |    1 Comments
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Bangalore: Many non-resident Indians are keen to keep their Indian ties intact and invest in various avenues like mutual funds (MFs), fixed deposits, real estate and so on. Suresh Sadagopan, Chief Financial Planner, Ladder7 Financial advisories says, "Most of these people look to return to India finally. That is one of the reasons why they are keen to invest here." Apart of emotional reasons, it also makes sense as the economy of India is growing at better rate than other countries in the current situation. A wealth manager with a bank says, "The chances of getting double digit returns abroad are limited. In India, you can always hope to get 8-10 percent returns. For example, Indian stock market has given even 100 percent returns till a few years ago, something one can never dream of in a developed country." However, financial advisors caution NRIs that they have to be careful while listing the details at the time of investment. They should clearly mention their status, complete with relevant documents and details. Sadagopan offers an example of investing in MFs, "They should clearly mention in the application form that they are NRIs. They should also provide their overseas address. In case of fixed deposits, they should know the difference between various deposits like NRE account and NRO account. This is crucial because you can repatriate the income under NRO, while you can't do the same in NRE account." The issue of relevant papers and documents is something that creeps up regularly in conversations with financial experts. They all insist that having relevant documents is a key factor. "Some investments may require the investor's status card abroad. If they are going for insurance cover, the company may ask for details like work permit in some cases. It can vary from company to company," says Sadagopan.
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Reader's comments(1)
1: In case of NRI investments the interest earned was not Taxed at Source, and as such it was a welcome step for NRIs to invest freely. But lately Indian Tax Law has been changed vide Sec.60 of the Law that Interest earned is Taxed @333 % which is a big highhandedness and indirectly a source of Graft / greesing the palms of I/Tax officials. One can apply for Refund of the Tax deducted as TDS but at what cost as it involves paying tips to the Tax offixials. The new change as explained above needs to be reverted back to old system.
Posted by:Omkar N. Wali - 22 Aug, 2009
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