Charting the Path: Future of NRI Investment in India

Way forward for NRI Investment in India

Despite residing abroad for employment purposes, India has emerged as an extremely attractive investment destination for Non-Resident Indians (NRIs). The country’s rapid industrialization has resulted in exponential market growth, positioning India to become one of the top three global economies within the next 10 to 15 years.

Projections indicate that India’s growth potential over the next decade could reach an impressive annual rate of 6%, making it a highly favourable market for NRIs seeking higher investment returns.

India is experiencing a positive influx of NRI investments, thanks to a wide range of investment opportunities available to NRIs. These options include traditional assets such as fixed deposits, real estate, equity, mutual funds, and gold.

However, with the accelerated advancements in technology and a thriving startup ecosystem, NRIs are increasingly diversifying their investment preferences towards non-traditional asset classes such as commercial real estate, managed farmland, portfolio management services (PMS), and private equity.

The NRI taxation landscape is expected to undergo certain amendments soon. Currently, NRIs are obligated to pay appropriate taxes as outlined in the Income Tax Act of 1961. While their foreign earnings remain untaxed in India, NRIs are liable to pay taxes on income generated within India.

To prevent the double taxation of income, India has entered into Double Taxation Avoidance Agreements (DTAA) with several countries. NRIs can leverage these agreements to avail relief from paying taxes on the same income in both India and their country of residence.

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