How NRIs can invest in Indian shares and mutual funds
I am a United Kingdom citizen of Indian Origin. Can I
Invest in Indian shares/stocks and mutual funds? If yes,
how do I go about it?
— Priyesh
Yes, you can invest in Indian shares and mutual funds.
The Reserve Bank of India has given general permission for
the same. You can invest in MFs directly by filling in the
relevant form and your details. For stock investing, you will
have to approach your bank and open a Portfolio
Investment Scheme account with them. The bank will
guide you about the necessary paperwork in terms of bro-
kerage account, demat account, etc. You can invest in MFs
on your own, whereas for investing in the stock market, get
in touch with your bankers and tell them that you would
like to open a PINS account.
I am relocating to India permanently after living in the
United States for 20 years. Do I have to break my invest-
ments and Non Resident External fixed deposits, which
have been giving me tax-free interest? What is the tax impli-
cation on the returns through such investments?
— Shah
A non-resident Indian who has returned to India perma-
nently is allowed a reasonable time to inform all the banks
(and companies) about the change in his status, wherever
he has his investments. On receipt of this information, the
bank will re-designate the NRE/ Foreign Currency Non
Residential accounts as a resident account. These can be
run up to their maturity but the interest on NRE becomes
taxable from the date of the return whereas the FCNR
interest is tax-free as long as the holder remains an NRI or
becomes a Resident but Not Ordinary Resident.
Alternatively, both the accounts can be converted into
Resident Foreign Currency account without any penalty
but the interest even on RFC is tax-free only for RNORs.
Whether the RFC is tax-free or not, withholding tax will be
applied@30.9percent.Th e NRE and NRO savings
accounts will be re-designated as savings accounts.
I am a mariner working in merchant navy. In case of not
being able to complete more than 182 days outside India I'll
lose my NRI status. What are the tax laws if I am short by
10-15 days? Please note that all my income will be earned in
foreign currency outside India.
– Balsubramaniam
The 182 days rule is critical to decide your NRI status. If
you fall short by 10-15 days, then it is suggested that you do
not come back to India before such time, go on a vacation
directly from the job. This way you would still be consid-
ered out of India on employment. If you come to India and
A N
SHANBHAG
SANDEEP
SHANBHAG
then during the year go out on vacation for the remaining
10-15 day period, it would not be counted as leaving the
country on employment.
I had been to Canada along with my wife for a short
assignment of one year. My son was born in Canada. So by
birth he is Canadian and holds a Canadian passport. Upon
coming back to India, we applied and obtained Person of
Indian Origin card for my son for visa-free entry. I already
have a Public Provident Fund account. I want to know if I
can open a PPF account for my son.
— Kamlesh Rastogi
In our opinion, yes, you can open a PPF account for your
son, as he becomes a tax resident in India as per the Income
Tax Act. He no longer remains an NRI as per the Income
Tax Act. The term PIO is Foreign Exchange Management
Act defined; the Income Tax Act doesn’t recognize it.
I am an NRI employed in a Gulf country. I have been
investing in equity mutual funds. I am confused about taxa-
tion. I would like to know whether I would be charged any
capital gains tax if I exit from these funds during a period of
two to three years. I do not have any income from other
sources in India. Also, I am told that when I wish to exit in
the next two-three years, it will not be under the current
income tax law but some new I-T code that will be opera-
tional. If so, what are the provisions under that code?
— Tapan Biswas
A: As per the current tax laws, if you sell equity-oriented
funds after a holding period of one year, the capital gains
(profit) are tax-free. Under the new Direct Tax Code also,
which is for now proposed to be operational with effect
from April 2012, capital gains from equity and equity
mutual funds continue to be tax exempt so long as the
investments are sold after one year of holding.
Readers who wish to ask A N Shanbhag a question can
fill in the following details and mail the coupon to: The
Business Editor, India Abroad, 42 Broadway, 18th Floor,
New York, NY 10004
Or fax it to 212-727 9730
Your question:
Name:
Address:
A N Shanbhag is an investment consultant and author of In the
Wonderland of Investment; How to Convert a Taxpayer into a
Taxsaver; NRI Investment Guide. This article does not constitute
tax or legal advice. Consult your tax or legal advisor before making
any tax- or legally-related investment decisions. The authors may
be contacted at wonderlandconsultants@yahoo.com
;Page A22
I believe what Steve will be remembered
for most is for his alleged micro-manag-
ing.
It showed that he was the first ‘auteur’
CEO of a major company. The term
auteur, French for ‘author’, is from film
theory and it holds that a film reflects its
director’s personal creative vision. In the
early days of film, the making of a film was
seen as an industrial process. Then, direc-
tors like Alfred Hitchcock with Psycho,
The Birds and Rear Window, and Ingmar
Bergman with Wild Strawberries, with
their distinctive, recognizable style, lifted
film from its base industrial level.
In the world of management, the CEO is
seen by many to be the manager of admin-
istrative processes. This misunderstand-
ing can be traced back to Alfred Sloan and
his famous memoir, My Years with
Steve Jobs:
The CEO as auteur
General Motors. Sloan idealized the CEO
as a rational, shrewd plutocrat managing
a firm with detachment. Much of manage-
ment theory, keeping industrial era firms
in focus, has been built on this. The CEO,
in this vision, is seen to be the man on top
of the pile, the unemotional head of a
command and control hierarchy. Even the
one emotion that was allowed to him, a
messianic belief in the gospel of
Shareholder Value Maximization, has
been denied him now that Jack Welch, the
legendary former CEO of GE, has dis-
missed that ‘the dumbest idea in the
world.’
Steve’s place in management history is
assured for being the role model CEO who
spent most of his waking hours obsessing
about making their products ‘insanely
great’.
Ajit Balakrishnan is Chairman and
Publisher, India Abroad, and Chairman
and CEO, Rediff.com.
By arrangement with Business Standard
