Ans. As per Section 115C of Indian Income Tax Act, 1961 Foreign Exchange Asset means any Specified asset which the assessee has acquired or purchased with, or subscribed to in, convertible Foreign exchange.
Specified Asset means any of the following assets, namely:
Foreign Exchange for the purpose of the above means foreign exchange, which is for time being treated by Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Regulation Act, 1973(46 of 1973), and any rules made thereunder.
Ans. RBI notification is silent on the issue of bonus shares and right entitlements. In the case of bonus shares, one can safely take the view that if the bonus shares are allotted as a result of shares for which payment is made by the way of inward remittance in foreign currency or by debit to NRE / FCNR account they would be treated as foreign Exchange Assets.
Though nothing specific has been mentioned regarding the right entitlement, one can apply the analogy of bonus shares to right entitlements also. If payment for the original shares has been made by the way of inward remittance in foreign currency or by debit to NRE/ FCNR Account they would be treated as foreign exchange assets.
Ans. Investment options available to NRIs under FDI route can be broadly classified under two heads namely:
Presently most of the activities are under Automatic approval Route i.e 100% FDI. No approval is required for FDI in case of activities under Automatic Route only a notification to RBI is required within 30 days.
Cases that are not covered under the Automatic Route fall under Prior Approval from Government Route. Approval from government is required in such cases.
Ans. As per the regulations NRIs are allowed to invest up to a certain percentage of the total paid up capital of the company by directly subscribing to the equity/convertible debentures of the company either though a public offering made by the company or through private placements on one to one basis. Regulations provide for different ceilings on such investments based on the industry to which the company belongs and also the nature of investments (repatriation/non-repatriation basis.
Ans. Portfolio Investment Scheme (PINS) is a scheme of the Reserve Bank of India (RBI) defined in Schedule 3 of Foreign Exchange Management Act 2000 under which the 'Non Resident Indians (NRIs)' and 'Person of Indian Origin (PIOs)' can purchase and sell shares and convertible debentures of Indian Companies on a recognized stock exchange in India by routing all such purchase/sale transactions through their account held with a Designated Bank Branch .
Ans. An NRI should open a new bank account with designated bank branch which is approved by RBI (Reserve Bank of India) for this purpose.
He should apply for a general approval for investment in Indian Stock Market through his designated bank branch.
He should open a Demat Account with a Depository Participant to hold his shares.
He needs to register with a broker to execute his buy/sell orders on the stock exchange(s).
Ans. Funds remitted from abroad or local funds, which can otherwise be remitted abroad to the account holder, can be credited to NRE Accounts. Local funds, which do not qualify for remittance outside India, are required to be credited to NRO accounts.
Ans. NRIs are allowed to invest in Indian equity markets under the Portfolio Investment Scheme. Under this scheme NRIs are permitted to invest in shares/debentures of Indian companies through Stock Exchanges in India. These investments require prior approval of RBI Designated branch of authorized banks have been now empowered to issue such permissions to NRIs.
Ans. Broadly, NRIs are allowed to invest under the Portfolio Investment Scheme (buying through the secondary market) and through the Direct Subscription route (Investments though IPOs/offer for sale /Private Placements).
Ans. Yes. Investment can be made on repatriation as well as non-repatriation basis. However, an NRI will have to open NRE account as well as NRO account with designated bank branch as the sale proceeds of non-repatriation investment can only be credited to NRO account.
Ans. The repatriation of the sale proceeds, net of taxes, are allowed if the original purchase was made on repatriation basis and such investments were made out of funds from NRE/FCNR account or by means of remittance from abroad.
Ans. Yes, NRIs can invest without any limit on non-repatriation basis in shares and convertible debentures of Indian Cos., issued either by public issue or private placement or right issues. NRI can also purchase Govt. Securities (other than bearer securities), treasury bills, units of domestic mutual funds etc on non-repatriation basis.
Ans. Yes. NRIs can invest on repatriation basis in:
The above securities can be sold through stockbrokers on a recognized stock exchange or tender units of mutual funds to the issuer for repurchase or for payment of maturity proceeds or tender Govt. securities/Treasury Bills to RBI for payment of maturity proceeds. The sale proceeds can be repatriated net of Indian Tax.
Ans. An NRI does not require any permission to acquire any immovable property in India or transfer any property in India to a Resident citizen of India.
PIO's who are citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, require prior permission of RBI for acquiring or transferring any immovable property in India.
PIO has some restrictions. He does not require any permission to
Purchase a property out of forex.
Acquire a property by way of gift from a ROI.
Acquire a property by way of inheritance from a Resident or a person Resident outside India who had acquired such property in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or FEMA.
Sell any immovable property in India to a Resident.
Gift or sell agricultural property to a Resident who is a citizen of India.
Gift or sell a residential or commercial property in India to a Resident or person Resident outside India.