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Interest to Partner

satish (CA FINAL) (171 Points)

22 December 2007

Can a NRI Partner get interest on capital in partnership firm, what is the procedure

Urgent please

Satish

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CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 23 December 2007

An NRI/PIO can invest in the capital of a partnership firm or proprietary concern in India under clause 4 of the Foreign Exchange Management (Investment in Firm or Proprietary Concern in India) Regulations, 2000 on a non-repatriable basis. What needs to be kept in mind is that it is only the capital which is non-repatriable. The interest, remuneration or profit accruing to the partner/proprietor from such investment, being a current account transaction, is fully repatriable. If one desires repatriation of the interest, remuneration or profit, it is advisable to transfer the amount to the NRO or NRE account of the NRI partner, and not leave the amount lying to the credit of the partner’s current or capital account, as that may amount to reinvestment in capital of the firm.