KEY ISSUES CONCERNING
NON RESIDENT INDIANS
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What are the key investment opportunities available to NRI's in India ?
An NRI can invest in India by parking their funds in bank deposits, company deposits, mutual funds and investment in primary and secondary markets. NRI's are also permitted to invest in real estate development, companies engaged in real estate development and companies engaged in financing real estate development in India. Effective May 1995, the entire manufacturing and service sector has been thrown open to NRI investments with Agricultural land and farm houses being the only execptions.
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What is an Overseas Corporate Body (OCB) ?
An OCB means any company or body, directly or indirectly owned by NRI's to the extent of 60% or more. It includes a trust in which not less than 60% beneficial interest is held by NRI's irrevocably.
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How can an NRI benefit from an Overseas Corporate Bodies (OCB's) ?
Portfolios of over US$ 0.25m can be routed to India through OCB's incorporated in Mauritius. Levies on such bodies can be lower or nil.
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What is the legal definition of a Non-resident Indian (NRI) for purposes of investment in India?
An Indian citizen or a non resident foreign citizen of Indian origin who
stays abroad for employment or for carrying on business or vocation outside
India or stays abroad under circumstances indicating an intention for an
uncertain duration of stay is a non-resident. Persons posted in U.N.
organizations and officials deputed abroad on Central or State government
or public sector undertakings on temporary assinments are also treated as
non residents. A foreign citizen is deemed to be of Indian origin if
(i) He at any time held an Indian passport or
(ii) He or either of his parents or grandparents was citizen of India by
virtue of the Constitution of India or Citizenship Act 1955.
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What is the definition of an Overseas Corporate Body (OCB) for purposes
of investment in India?
Overseas Corporate Bodies predominantly owned by individuals of Indian
nationality or origin resident outside India include overseas companies,
partnership firms, societies and other corporate bodies which are owned
directly or indirectly, to the extent of at least 60% by individuals of
Indian nationality or origin as also overseas trusts in which at least
60% of the beneficial interest is irrecovably held by such persons.
In order to establish predominant NRI ownership in an OCB, the concerned
corporate body/trust is required to furnish a certificate from an overseas
auditor/chartered accountant/certified public accountant in Form OAC where
the ownership/beneficial interest is directly held by the NRI's and in Form
OAC 1 where the ownership/beneficial interest is held by NRI's indirectly.
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