that our client has an opportunity to take part in business dealing with non resident. non resident want to invest in india Rs. 2 to 3cr. Now my question is that is it permissible for non resident to invest directly with resident person in india as partner in business.
Is there any mode invest that money of non resident in better way to earn higher income under legal boundary of Income Tax, FEMA or other act
10 March 2011
A non-resident Indian or a Person of Indian Origin resident outside India may invest by way of contribution to the capital of a firm or a proprietary concern in India, provided that -
a) the amount invested is received either by inward remittance through normal banking channels or out of an account maintained with an authorised dealer/authorised bank by the non-resident Indian or the person of Indian origin in accordance with the relevant Regulations;
b) the firm or the proprietary concern is not engaged in any agricultural/plantation activity or real estate business, i.e. dealing in land and immovable property with a view to earning profit or earning income therefrom;
c) the amount invested shall not be eligible for repatriation outside India;
Vide AP (Dir series) Circular No. 39 dated December 3,2003, it is provided that NRIs/PIOs can invest in sole Proprietorship concerns/ Partnership Firms also with Repatriation benefits but with prior approval of Secretariat of Industrial Assistance (SIA), Government of India and the RBI.
Persons other than NRIs/PIOs can invest in sole Proprietorship concerns/ Partnership Firms or any association of persons in India with repatriation rights but with prior approval of Reserve Bank.
d) the firm or the proprietary concern is not engaged in print media."
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