Why a Non-Resident (NRI or Foreigner) should Invest in India? How investing in India would benefit an NRI or a Foreigner?
Why India? Any person who wishes to invest his/her hard-earned money would think about this before making a move toward India. In this article you will find enough of reasons why it would be beneficial for an NRI or foreigner to invest in India. Let' s look in to some figures that are attractive enough for any person be it Indian resident or Non resident Indian (NRI) or person of foreign origin including foreign companies to invest in India and which gives a clear picture of the benefits of investing in India.
Content
- Fastest Growing Economy
- Largest Youth Population
- Ease of Doing Business
- Hike in Company and LLP Incorporation
- Benefits of Investing in India for NRIs and Foreign Nationals
- What does Non-Resident Mean for the Income Tax purpose?
- Determination of the Non-Residential status under Income Tax laws
- Taxable Income
- Exemptions available on Income to the NRI and and Foreign nationals including foreign companies
- Income Not Chargeable to Tax
- Income under the head Profit and gains from business or profession (Presumptive Income for Non-Residents- NRIs and Foreign Nationals)
- Other Benefits available to NRIs and Foreigners for Investing in India
Fastest Growing Economy
- As per the Department of Promotion of Industry and Internal Trade, Government of India, India has crossed the $70 billion mark in FY 2019-20 and recorded total FDI inflow of $73.45 billion for the first time.
- Not only this but the Government of India has announced a special economic and comprehensive package of more than $270 billion which is equal to 10% of India' s total GDP under the Atmanirbhar Bharat Abhiyan (Self-reliant India).
Largest Youth Population
- The second most important reason is that India is home to the world' s largest youth population.
- India has its largest adolescent and youth population. Not only the population wise but infrastructure wise as well, India is about to take a first-of-its-kind initiative to provide world-class infrastructure across the country. The world bank has estimated that almost 42% of the population of India would be urbanized by the end of 2030.
Ease of Doing Business
- If we talk about 'Ease of Doing Business' policies, India is now at 79 position upwards the charts, jumping directly from 142nd to 63rd in just 5 years in 'World Bank' s Ease of Doing Business Ranking 2020′.
- To take a step ahead, the Finance Minister announced that now an NRI or a Foreigner, apart from starting Private Limited Company and Limited Liability Partnership, can start 'One Person Company' in India which earlier was not the case.
Hike in Company and LLP Incorporation
- Recently, the Ministry of Corporate Affairs declared the hike in the Company Incorporation and LLP Incorporation in India.
- According to one report, in the last financial year there has been rise in the company incorporation by 27% and in LLP incorporation 17% in India.
Here, we talked about figures, but are there any factual benefits to the foreigners and NRIs wishing to invest in India? Are there any monetary benefits of Investing in India - From an NRI or Foreigner's perspective?
The answer to this is yes. India has special provisions in the Income Tax laws for the NRIs and Foreigners wishing to invest in India, that are rather beneficial to the Non-residents. The income tax rules and benefits allowed to Non-Residents (NRIs and Foreigners) are widely different from those applicable to resident Indians.
Benefits of Investing in India for NRIs and Foreign Nationals
What does Non-Resident Mean for the Income Tax purpose?
Non-Resident means a person who is not a resident in India. That includes, Non-Resident Indians (NRI), Foreign Individuals, Foreign Companies, Place of effective management (POEM) situated outside India.
Determination of the Non-Residential status under Income Tax laws
As per the Income Tax Laws, an individual residing outside the country is defined as a Non-Resident under the Income Tax laws if his stay does not exceed 181 days in a particular Financial Year.
The current Income Tax Laws state that an Indian citizen who stays abroad for the employment or carrying on business for an indefinite period is also considered as Non-Resident.
Taxable Income
As per the Income Tax laws in India, where a resident person is liable to pay tax on his global income, a Non-Resident shall be liable to pay taxes in India in respect of the following incomes only:
- Income received or is deemed to be received in India in such year or
- Income accrues or arises or is deemed to accrue or arise to him in India during such year.
Exemptions available on Income to the NRI and and Foreign nationals including foreign companies
Other Benefits available to NRIs and Foreigners for Investing in India
- It is not necessary for NRI furnish Return of Income when total income include only Interest income LTCG or both and / or TDS has already been deducted.
- NRI who becomes Resident, may file a declaration in writing requesting assessing officer for continuing benefits until transfer or conversion into money of such assets.
- The rate of tax for an income of an overseas financial corporation from units purchased in foreign currency or LTCG arising there from shall be 10% only.
- The income of a Resident employee of an Indian company or its subsidiary company engaged in specified knowledge based industry or service would be taxed at 10%.
- Also, royalty of patent developed and registered in India shall be taxable at 10% only.
Source: Income Tax India
India is proving to be the key for global business, not only because of the largest youth population or lower tax rates etc but, there are numerous other benefits such as ease of doing business, encouragement to the start-ups, facilities provided to the foreigners and also, no actual physical presence required to start one' s own business in India. India is also expecting more development and attracting more foreign individual by introducing 'Make in India' project.
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