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Report Dated January 16, 2017 6:40 PM
Equity Linked Savings Scheme (ELSS) is the most preferred tax-saving option for most tax payers because of the shortest mandatory lock-in period and its potential to offer superior returns. Even for Non-Resident Indians (NRIs), it works out as the best option, say investment experts.
Unlike ordinary resident Indian tax payers, NRIs have some limitations when it comes to investing to claim tax deductions under Section 80C of the Income Tax Act.
NRIs cannot open a new PPF account or make a new investment in NSC. NRIs can continue with their old investments in NSC and continue to invest in their old PPF account if it was opened before they acquired NRI status.
That means the other investment option available for NRIs is five-year tax-saving fixed deposits from banks. Tax-saving fixed deposits offer around 7.0-7.5 per cent per annum. The interest earned is taxed at the income tax slab applicable to the person. A person in the highest tax slab will have to part with a little over 30 per cent from the paltry interest they get from these deposits.
NRIs are free to buy Unit Linked Insurance Plans (ULIPs) or traditional life insurance policies and claim tax breaks under Section 80C. However, these are not pure investment products. They are essentially insurance products with saving or investment elements in them. That is why investment experts do not recommend investing in these products to save taxes.
That brings us to ELSS. As said before ELSS has some extra advantages over other tax-saving investments permitted under Section 80C. The returns from ELSS are tax-free and sufficient enough to beat inflation.
ELSSs have a lock-in period of three years and returns earned are tax-free as gains from equity mutual fund investments held over a year are exempted from taxes as per the current provisions. Since ELSSs invest in stocks, they also have the potential to offer superior returns than other asset classes over a period of time. ELSS category has returned 19.23 per cent in the last three years and 17.24 per cent in five years.
Most of the fund houses allow you to fulfill the KYC requirements online. In-person Verification (IPV) requirement can be fulfilled through a video call and you can send in the hard copy of the required documents through courier. Once you have completed the KYC process, you can log in to the AMC website for making the investment. Alternatively, you can take the help of your mutual fund distributor to complete the KYC process and for the investment in ELSS.
It might be slightly difficult for NRIs from the US and Canada to invest in MF schemes as some fund houses have stopped accepting payments due to FATCA and US Securities Exchange Commission regulations. But there are AMCS like UTI AMC, PPFAS Mutual Funds, Sundaram AMC, DHFL Pramerica AMC, among others who have started accepting investments from NRIs from the USA and Canada.
Report Dated January 12, 2017 5:12 PM
In its first report after November’s demonetisation, the World Bank said, “Indian growth is estimated to have decelerated to a still robust 7 per cent (in fiscal 2017 ending on March 31, 2017), with continued tailwinds from low oil prices and solid agricultural output partly offset by challenges associated with the withdrawal of a large volume of currency in circulation and subsequent replacement with new notes.”
Notably, India maintains the distinction of being the fastest growing emerging market economies of the world, bypassing China.
“India is expected to regain its momentum, with growth rising to 7.6 per cent in Fiscal Year (FY) 2018 and strengthening to 7.8 per cent in FY 2019-20,” the Bank said, adding that various reform initiatives are expected to unlock domestic supply bottlenecks and raise productivity.
Infrastructure spending should improve the business climate and attract investment in the near-term, it added.
“The ‘Make in India’ campaign may support India’s manufacturing sector, backed by domestic demand and further regulatory reforms. Moderate inflation and a civil service pay hike should support real incomes and consumption, assisted by bumper harvests after favourable monsoon rains,” the Bank said in its latest report Global Economic Prospects.
Report Dated January 12, 2017 4:07 PM
Prime Minister Narendra Modi wanted non-residents to pour in dollars to build the nation, but NRIs have taken back a net $17 billion from Indian banks in October and November, pulling the rupee to its historic low levels in the process. Bankers said the development reflects FCNR-B (foreign currency non-resident – bank) redemptions in these months. Such massive dollar outflows – about Rs.1.16 lakh crore in rupee terms were not even seen after Lehman collapse in 2008.
“There are a combination of factors responsible for the outflow. First, the FCNR-B deposits had to move out on redemption which was spread over 2-3 months,” said Madan Sabnavis, chief economist at CARE Ratings. “Second, expectations of (US) Fed rate hike would have brought about exogenous withdrawals,” he said. NRIs withdrew a net $11.412 billion of FCNR-B (foreign currency nonresident bank) deposits in November alone, the highest in a single month. Foreign institutional investors, too, offloaded a net $5.5 billion from equities markets in November after the government delegalised Rs.500 and Rs.1,000 banknotes, putting the Reserve Bank of India’s exchange rate management skills on test.
Report Dated January 11, 2017 5:46 PM
Most fund houses in India don’t allow NRIs from US and Canada because of the cumbersome compliance requirements under FATCA or Foreign Account Tax Compliance Act.
Under FATCA, it is compulsory for all financial institutions to share the details of transactions involving US citizens, including NRIs with the US Government. FATCA ensures that there is no deliberate tax evasion by US citizens on income generated overseas. India signed the Inter-Governmental Agreement (IGA) with the USA on July 9, 2015, for improving International Tax Compliance and implementing FATCA. The documentation is standard for all investors, whether they are NRIs or RIs. The KYC, Additional KYC and FATCA details are mandatory for all the mutual fund investors.
Some of these fund houses have certain conditions on which they allow investors based in USA and Canada to put money in their schemes. For example, ICICI Prudential AMC, Birla Sun Life Mutual Fund and SBI Mutual Fund allow investments only through offline transaction with additional declaration signed by the client. Similarly, L&T Mutual Fund doesn’t allow US and Canada based clients to invest in close-ended funds.
NRIs are allowed to invest in mutual funds in India on a repatriable or non-repatriable basis subject to regulations prescribed under the Foreign Exchange Management Act (FEMA). For general NRIs (not from USA and Canada) the process of investing in Indian mutual funds is as simple as it is for the Indian investors. They just need to comply by certain norms set by the country they are based in.
If an investor has investments in India and moves to USA or Canada as an NRI, the investments can be stopped by the AMC. “When the investor moves to either USA or Canada, the fund house will stop taking further investments if the particular fund house doesn’t allow investments from USA and Canada. If the fund house accepts such investments, then you just have to update the needed documents,” says Sneha Kalsekar, Financial Planner, My Financial Advisor.
Report Dated January 10, 2017 5:55 PM
A UAE-based doctor turned millionaire is set to invest about Rs.100 crore in bringing essential diagnostic services to the hinterlands of Kurnool.
Nawab Shafi Ul-Mulk, who also claims descent from the royal family of Kurnool, aims to bring affordable cancer diagnostic services including CT, PET and MRI to the district, leveraging the scale, size and cost of the mini cyclotron, and success of tele-medicine in the developed world.
Cyclotrons are particle accelerators crucial in most radiological imaging techniques. Their large size and high cost inhibits investment required to make crucial diagnostic services available to the masses, opines Dr. Mulk.
“A mini-cyclotron costs just ten percent of a cyclotron and is the size of a refrigerator. At our mini-oncology centres, the patient’s results will be read and interpreted in 30 minutes”.
The oncology centres proposed will contain diagnostic facilities and staff operating, but the medical support will be extended by doctors off-shore who will read the images.
His company, the Global Hawk Imaging and Diagnostics, healthcare arm of a larger conglomerate Mulk Holdings, has already tasted success with telemedicine in the UAE.