has making investments for NRIs seeking repatriation benefit
NRIs can make the following investments in India through
foreign currency remittances or out of NRE/ FCNRA with the
benefits of repatriation. This is true not only of the initial
amount of investment, but also of the interest and dividend
income, as well as the appreciation on initial investment
realized by way of capital gains.
is the benefit to an NRI returning to
Upon return to India for settlement, the balance of NRE/FCNRA
can be transferred to the Resident Foreign Currency (RFC)
Account, which can be maintained either as a Savings or Term
Deposit Account in US Dollar, Sterling Pound or Deutsche Mark.
The benefit of repatriation can be availed of with respect to
balance in RFC A/c.
developments have been made in portfolio investment in
equity/preference shares or convertible debentures through
stock exchanges in
Purchase of shares or convertible debentures by a single
investor should not exceed 1% of the total paid-up capital or
paid-up value of convertible debentures of that series issued
by the company. There is also an overall ceiling of 24%
investment by all Non-Residents put together.
September, 1994 the lock-in period of one year for availing
the repatriation benefit on transfer under this category has
been done away with. Shares/debentures can now be transferred
at any time after purchase and the sale proceeds can be
repatriated after payment of income tax on the amount of
taxable capital gains.
any concession applicable on tax
In the event of shares/debentures being held for more than one
year before transfer, the resultant capital gains would be
treated long-term and the applicable tax rate would be at a
concessional rate of 10%.
are the different schemes available to NRIs for direct
investments in India with repatriation
NRIs can make investments in new issues of shares/convertible
debentures of Indian companies under direct investment schemes
such as 24% scheme/ 40% scheme/ 100% scheme. They can also
invest in the schemes of domestic Mutual Funds floated by
public/private sector institutions/companies and bonds issued
by public sector undertakings. The company concerned will have
to obtain permission from the Reserve Bank.
can NRIs benefit from 24%
Under the 24% scheme, Indian companies engaged or proposing to
engage in any activity including finance, hire purchase,
leasing, trading or other services, establishment of
schools/colleges etc. (except agricultural/plantation
activities) are allowed by Reserve Bank to issue
shares/debentures to NRIs with repatriation benefits to the
extent of 24% of the new issue.
are the special features of 40%
Under the 40% Scheme, Indian companies engaged or proposing to
engage in the following activities are allowed by Reserve Bank
to issue shares/debentures to NRIs with repatriation benefits
to the extent of 40% of the new issue.
are the specified industries under the 100%
and Manufacturing units
with 3, 4 or 5 star category
and diagnostic centers
of computer software
Under 100% Scheme, NRIs are permitted to invest in high
priority industries listed in Annexure III to the Statement on
Industrial Policy dated 24th July 1991 of the Government of
India up to 100% of the new issue.
dividend/interest earned in respect of investment made under
the 100% Scheme freely remittable to the NRIs
Dividend/interest can be remitted freely except in the case of
consumer goods industries where the outflow on account of
dividend is required to be balanced by export earnings of the
company either in the year of declaration of dividend or in
the years prior to the declaration of dividend. This
requirement is enforced for a period of seven years from the
commencement of commercial production.
is the Resident Foreign Currency (RFC) Accounts
This is a Scheme initiated by the Reserve Bank for persons of
Indian nationality or origin, who have returned to India on or
after 18th April 1992 for permanent settlement, having stayed
outside India for a continuous period of not less than one
year. The scheme allows them to open foreign currency accounts
with banks in India for holding funds brought by them to
Persons who have returned to India before 18th
April 1992 can also open RFC account if (a) they are holding
foreign currency assets abroad with Reserve Bank's permission
or (b) are in receipt of pension or other monetary benefits
from their erstwhile employers abroad.
funds can be credited to RFC accounts of Returning
The entire amount of foreign exchange brought to India at the
time of their return to India for permanent settlement as well
as the balances standing to the credit of their NRE and FCNR
accounts at the time of return can be credited to RFC
However, the foreign exchange brought to
India in the form of foreign currency notes/bank
notes/travelers' cheques should have been declared to Customs
at the time of arrival on the Currency Declaration Form (CDF)
if it exceeded U.S. $ 10,000 or its equivalent. In the case of
foreign currency/bank notes, declaration of form CDF is
compulsory if the amount exceeds U.S. dollar 5,000 or its
income received from overseas assets in the form of dividends
etc, or sale proceeds of such assets credited to RFC
Yes. Income from such assets or sale proceeds of such assets
repatriated to India can be credited to RFC
pension received by the account holder from abroad be credited
to his RFC
Yes. The entire amount of pension received from abroad can be
credited to his RFC account.
Can funds in RFC accounts
be remitted abroad?
Funds in RFC accounts can be remitted abroad for any bonafide
purpose of the account holder or his dependents including
exchange required for travel and other personal purposes and