Benefits of Investing in India from the Viewpoint of an NRI or Foreigner
Why Should an NRI or Foreign Investor Invest in India? What are the advantages of investing in India for NRIs or foreigners?
Why Should an NRI or Foreign Investor Invest in India? What are the advantages of investing in India for NRIs or foreigners?
India, why? Anyone looking to invest their hard-earned cash would consider this before moving toward India. You will discover ample justifications in this post on why it would be advantageous for an NRI or foreigner to invest in India. Let's look at some statistics that show the advantages of investing in India clearly and are compelling enough for anyone to do so, whether they are Indian residents, Non Resident Indians (NRIs), people of foreign origin, or international businesses.
In India, registering a business is a simple and online process. Everyone would agree that India is a country with countless potential and a talented workforce. Investing and starting a business in India have never been so simple, affordable, or rapid. Anywhere in India is a viable place to launch a totally owned Indian subsidiary.
Most rapid economic growth
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India has surpassed the $70 billion threshold in FY 2019–20, according to the Department of Promotion of Industry and Internal Trade, Government of India, and for the first time, the country has registered a total FDI inflow of $73.45 billion.
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Additionally, the Atmanirbhar Bharat Abhiyan (Self-reliant India) unique economic and comprehensive package, equal to 10% of India's entire GDP, has been announced by the Indian government.
largest population of youth
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India has the greatest number of young people in the entire world, which is the second most significant factor.
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The majority of adolescents and young people live in India. India is about to launch a groundbreaking project to build top-notch infrastructure all across the nation, not just in terms of population but also in terms of infrastructure. By the end of 2030, the global bank predicts that over 42% of India's population would live in urban areas.
Efficiency of Business
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In the World Bank's "Ease of Doing Business Ranking 2020," India has moved 79 positions up the rankings in the category of "Ease of Doing Business" policies, moving up from 142nd to 63rd in just 5 years.
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An NRI or foreigner can now register a "One Person Company" in India, which was previously prohibited, in addition to forming a Private Limited Company and Limited Liability Partnership, according to the Finance Minister.
Increase in LLP and Company Incorporation
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The Ministry of Corporate Affairs recently announced an increase in the fees for forming companies and limited liability partnerships in India.
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According to one research, the number of companies and LLPs incorporated in India increased by 27% and 17%, respectively, over the previous fiscal year.
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We previously discussed statistics, but are there any concrete advantages for foreigners and NRIs looking to invest in India? Are there any financial advantages to investing in India from the standpoint of an NRI or foreigner?
Yes, it is the answer. For NRIs and foreigners intending to invest in India, India offers particular income tax laws that are advantageous to non-residents. The income tax laws and advantages that Non-Resident Indians (NRIs and Foreigners) are entitled to differ significantly from those that Indian residents are entitled to.
The advantages of investing in India for foreigners and NRIs
What Does the Income Tax Term "Non-Resident" Mean?
A non-resident is someone who doesn't live in India. This covers non-resident Indians (NRI), foreign individuals and businesses, as well as POEMs located outside of India.
Tax laws' determination of a person's non-resident status
According to the Income Tax Laws, a person living outside the country is considered a non-resident if his stay does not exceed 181 days during a given Financial Year.
According to the existing income tax laws, an Indian person who remains overseas for an extended period of time to work or conduct business is also regarded as a non-resident.
Taxable Income
According to Indian income tax regulations, a non-resident is only required to pay taxes in India with respect to the following incomes when a resident is required to pay tax on his or her worldwide income.
During such a year, income for him accrues, arises, or is assumed to accrue or arise in India.
Exemptions available to NRIs, foreign nationals, and foreign businesses with respect to income
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Income Not Chargeable to Tax |
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No. |
Particulars |
Limit of Exemptions / Deduction / Computation of income |
Available to? |
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1. |
Interest on money standing to the credit in a Non-resident (External) account in India. |
Interest amount |
Person resident outside India (under FEMA Act) and person who has been permitted to maintain said account by RBI |
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2. |
Remuneration received by Foreign Diplomats/Consulate and their staff (Subject to conditions) |
Remuneration |
Individual (not being a citizen of India) |
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3. |
Remuneration received by a non-Indian citizen as employee of a foreign enterprise for services rendered by him during his stay in India, if: a) Foreign enterprise is not engaged in any trade or business in India b) His stay in India does not exceed in aggregate a period of 90 days in such previous year c) Such remuneration is not liable to be deducted from the income of employer chargeable under this Act |
Remuneration |
Individual – Salaried Employee (not being a citizen of India) |
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4. |
Salary received by a non-resident, for services rendered regarding his employment on a foreign ship if his total stay in India does not exceed 90 days in the previous year. |
Salary |
Non-resident Individual – Salaried Employee (not being a citizen of India) |
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5. |
Remuneration received by an Individual, who is not a citizen of India, as an employee of the Government of a foreign state during his stay in India regarding his training in any Government Office/Statutory Undertaking, etc. |
Remuneration |
Individual-Salaried Employee (not being a citizen of India) |
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6. |
Tax paid by Indian company, engaged in the business of operation of aircraft, who has acquired an aircraft or its engine on lease, under an approved (by Central Government) agreement entered after 31-3-2007, on lease rental/income |
Tax liability so borne by Indian Company |
Government of a foreign State or foreign enterprise (NR Person) |
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7. |
Income by way of royalty or fees for technical services rendered in India or abroad in projects connected with security of India pursuant to agreement with Central Government |
Royalty and fee for technical services |
Notified foreign company |
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8. |
Income by way of royalty or FTS for services rendered in or outside India to the National Technical Research Organization. |
Entire Income |
Non-resident or Foreign Company |
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9. |
Any income received in India in Indian currency by a foreign company on account of sale of crude oil or any other goods or rendering of services as may be notified by the Central Government, to any person in India under an approved and notified agreement or arrangement (Subject to certain conditions) |
Specified Income |
Foreign Company |
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10. |
Any income accruing or arising to a foreign company on account of storage of crude oil in a facility in India and sale of crude oil from there to any person resident in India (subject to certain conditions) |
Entire income |
Foreign company |
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11. |
Any income arising to a foreign company on account of sale of leftover stock of crude oil from the facility in India after expiry of the agreement referred to in 10(48A) or on termination of the said agreement (Subject to certain conditions) |
Entire Income |
Foreign Company |
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12. |
Any income which is chargeable to equalization levy under Chapter VIII of the Finance Act, 2016. |
Entire income |
Non-resident |
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Income under the head Profit and gains from business or profession (Presumptive Income for Non-Residents- NRIs and Foreign Nationals) |
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Section 44B- Income from shipping business shall be computed on presumptive basis (Subject to certain conditions). |
7.5% of specified sum shall be deemed to be the presumptive income |
Non-resident engaged in shipping business |
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Section 44BB- Income of a non-resident engaged in the business of providing services or facilities concerning, or supplying plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils shall be computed on presumptive basis (Subject to certain conditions). |
10% of the specified sum shall be deemed to be the presumptive income |
Non-resident engaged in activities connected with exploration of mineral oils |
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Section 44BBA- Income of a non-resident engaged in the business of operation of aircraft shall be computed on a presumptive basis (Subject to certain conditions). |
5% of the specified sum shall be deemed to be the presumptive income |
Non-resident engaged in the business of operating aircraft |
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Section 44BBB- Income of a foreign company engaged in the business of civil construction power turnkey or the business of erection of plant or Machinery or testing or commissioning there of, regarding projects shall be computed on presumptive basis (Subject to certain conditions). |
10% of the specified sum shall be deemed to be the presumptive income |
Foreign Company |
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Section 44C- Deduction for Head office Expenditure (Subject to certain conditions and limits) |
Deduction for head-office expenditure shall be limited to lower of following: a) 5% of adjusted total income* ; or b) Head office exp. as attributable to business or profession of taxpayer in India
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Non-resident |
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Section 44DA- Deduction of expenditure from royalty and FTS received under an agreement made after 31-03-2003 which is effectively connected to the PE of non-resident in India (Subject to certain conditions) |
Expenditure incurred wholly and exclusively for the business of PE or fixed place of profession in India shall be allowed as deduction. |
Non-resident |
Additional benefits of investing in India for foreigners and NRIs
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When the only source of income is interest income, LTCG, or both, and/or TDS has already been taken out, it is not necessary for NRIs to provide a Return of Income.
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NRIs who become residents may submit a written declaration to the assessing officer asking for continued benefits up until the transfer or conversion of their assets into cash.
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Only 10% of an overseas financial corporation's income derived from foreign currency-purchased units or long-term capital gains (LTCG) will be taxed.
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An Indian corporation or its subsidiary company that engages in a specific knowledge-based sector or service will impose a 10% tax on the resident employee's income.
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Additionally, just 10% of the royalties from patents generated and registered in India will be taxed.
Conclusion
India is proving to be the key for global business, not just because it has the most young people or lower tax rates, etc., but also because it is easy to do business there, encourages start-ups, offers facilities to foreigners, and doesn't require anyone to have a physical presence there to open a business. By launching the "Make in India" project, India is also hoping to grow and draw in more foreigners.
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