NRI Investment


Investment in Non-Convertible Debentures of Indian Companies
The Reserve Bank of India vides its notification No. F.E.R.A. has granted general permission to Indian companies to issue, by way of public issue, non-convertible debentures (NCDs) to NRIs/PIOs/OBCs on repatriation basis following conditions: (i) The amount of subscription should be received by inward remittance from abroad through normal banking channels or by debit to the non-residentís NRE/FCNR account, as the case may be, with an authorised dealer in India. Further, the percentage of such NCDs issued to NRIs/OCBs to the total paid-up value of each series of NCDs issued should not exceed the ceiling applicable for issue of equity shares/convertible debentures as prescribed by the Reserve Bank from time to time, under the respective schemes viz. 24% 51% 100% etc. for investment by NRIs/OCBs on repatriation basis in the capital of the issuer company, the minimum period for redemption of such NCDs should be three years. The company raising funds through NCDs should not be engaged in agricultural/plantation activity, real estate business, trading in transferable development rights (TDRs) or act as Nidhi/Chit Fund company. The issuer company files with the Regional Office of the Reserve Bank, not later than thirty days from the date of receipt of remittance, a report containing the required information and documents as stipulated by the RBI.
Purchase of shares of Public Sector Enterprises (PSEs) by NRIs/OCBs
The Reserve Bank has granted permission to NRIs/ OCBs to purchase the shares on repatriation basis disinvested by Government of India in certain public sector enterprises (PSEs) and to PSEs to register in their books the overseas address of such NRIs/OCBs, subject to the conditions that 
(a) the holding of shares by a NRI or by an OCB, at any time does not exceed one percent of the paid up capital of the PSE concerned.
(b) the purchase consideration bid money is received by way of remittance from abroad through normal banking channels or by transfer of funds held in investorís NRE/FCNR accounts.
(c) the application is submitted along with deposit of bid money/purchase consideration at the branch of State Bank of India designated by the Government of India for that purpose in the notice inviting the bids.
Wealth Tax and NRIs
Wealth tax is levied on all items of net non-productive assets of an NRI at the rate of 1% of the amount by which such net wealth exceeds 15 lakh. The following are non-productive assets: 
1. Residential property, which is not let out for a minimum period of 300 days in a year. 
2. Urban land. 
3. Motor cars.
4. Yachts, boats and aircraft.
5. Cash in hand in excess of Rs 50,000.
Out of the above, the deductions are made towards a house or a part of house or a plot of land at the option of a non-resident Indian and any debts incurred for procuring the above non-productive assets.The balance arrived at is called the net-productive assets on which wealth tax is leviable at 1% of the amount by which such wealth exceeds 15 lakhs. As the Gift Tax Act has been abolished, the non-resident Indian can gift any property to a person in India or to any other non-resident Indian. When a non-resident Indian gives a gift to his/her spouse or to their children, then the income earned out of the gifted asset shall be clubbed with the income of the person who has gifted it.