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10 Best NRI Investment Options in India 2020 – High Return Plans

NRIs are looking for Investment Options in India but the problem is that NRIs tend to succumb to marketing gimmicks by sellers (mostly bankers) and end up buying products that they don’t need.

It’s important that NRIs first should look at their goal & risk profile – then only hit search for NRI investment options in India.

NRI Investment Options in India

Investment Plans for NRIs in India

The population of Non-Resident Indians (NRIs) is huge. It is estimated that there are 16 million Indians living outside India as per a UN survey.

But as an NRI, you cannot participate in all investment options to diversify. But there are some investment options available that you can consider. Let us look at these –

High Return – Investment Plans For NRIs in India

Direct Equity

An NRI can invest in the Indian stock market. To do this, he needs to open a Portfolio Investment Scheme – commonly know as a PIS Account. This can be linked to a demat account which can be opened with any registered stockbroker in India.

Returns in the Indian stock market are high over long-term but not without volatality. Equity investments have the ability to beat inflation and make your wealth grow.

Risk is also higher compared to FDs and PPF in any stock market related instrument. You should only make informed decisions.

If the investment is sold within 1 year of purchase, tax is 15%. If the investment is sold after a year, there is 10% tax.

NRIs can open trading account but they can’t do day trading in stocks – they can only sell the stocks that are already delivered to them.

LIST – Mutual Funds for NRI – Complete Guide

Mutual Funds

NRIs except USA and Canada can invest in Indian Mutual Funds. NRIs from US and Canada have certain restrictions and can buy only a select few Mutual Fund schemes. (even other fund houses request for additional information at the time of purchase & in few case even at the time of redemption)

Depending on risk profile, an NRI can invest in equity funds, balanced funds, debt funds, liquid funds and MIPs.

The gains on sale of non-equity funds within 3 years of holding will be considered as short-term capital gains. It will be taxed at 30%.

Gains on sale of non-equity funds after 3 years are long term gains. They will be taxed at 20% after indexation.

Taxation of Mutual Fund for NRIs more or less the same as Resident Indian but for NRIs Tax is Deducted at source (TDS) by Mutual Fund Companies. Check Detailed Post on TDS for NRI & how to get refund

Good Indian mutual funds give returns that can beat inflation in long term. They are managed by professionals so they are less risky in comparison to direct stocks.

There are various options for investing in Mutual Funds. You can use SIPs for regular investments and SWPs for regular withdrawals.

Equity linked savings scheme or ELSS have become one of the most favored tax saving instruments for all including NRIs if they have some income in India.

Read – NRI Mutual Fund Taxation In India – How it’s different

Investment Options for NRIs

Real Estate

NRIs can invest in residential real estate and commercial real estate. They can avail of loans in India to buy property. NRIs are not allowed to invest in farms, agricultural land, and plantations.

If you invest carefully in reputed properties, it can appreciate quite a bit.

But it might be tough to stay updated from far away and it is difficult to manage if there are some documentation or any processes  to be done

Sale of house property after 2 years of purchase is considered a long-term capital gain, and a TDS of 20% is applicable.

Sale of house property within 2 years of purchase is considered as short term gains and a TDS of 30% is applicable.  buyer shall deduct TDS at 20%.

You are allowed to claim capital gains exemption by investing in a house property in India as per Section 54 or investing in Capital Gains Bonds as per Section 54EC.

You can also deposit your gains in a PSU bank or other banks as per the Capital Gains Account Scheme, 1988. Claim this as an exemption while filing returns and you will get a refund.

Till a few years back property was one of the favorite Investment Options in India by NRIs but now they have seriously started considering financial investments like Mutual Funds.

Check – Planning for Retirement in India

NPS

NRIs can open National Pension Scheme accounts. Now there is an option of opening an eNPS account as well if you have the PAN card or Aadhaar card. NRE or NRO accounts can be used.

If you are an NRI between the ages of 18 and 60 years, you are allowed to open an NPS account with a bank in India called the Point of Presence. You can choose the asset classes in which your funds should be distributed. If you do not choose, automatic distribution across asset classes as per age will be done.

For an investor below the age of 60 –

  • A minimum of 80% of the total investment will have to be annuitized and withdrawal is limited to a maximum of 20%
  • If the total corpus is less than Rs. 1,00,000, the entire sum can be withdrawn

The annuities and the maturity account are taxable.

For an investor who is 60 years or above-

  • A minimum of 40% of the total investment will have to be annuitized and withdrawal is limited to a maximum of 60%
  • If the total corpus is less than Rs. 2,00,000, the entire sum can be withdrawn

The pension/annuity will be paid in INR. It is best to open an NPS account with the same bank where the NRE/NRO account it.

It may not be the best bet considering the withdrawal rules, illiquidity and taxation if there are better alternatives. A small amount can be invested in it is required only if the NRI is sure to settle in India post-retirement. You can read our detailed post on NPS for NRI

PMS 

PMS or Portfolio Management Services are complex and risky. For 90% of the investors, Mutual Fund is a good way to participate in equity markets. But US-based NRIs due to tax issues when they invest in Mutual Funds can consider PMS as one of the investment options in India (but after doing due diligence). Don’t only look at the returns – also check risk & cost involved.

ULIP

ULIPs or other insurance products are sold to NRIs by bankers to maximize their earnings in the short term as these products have heavy upfront commissions. We normally not suggest mixing insurance & investments but even if you are offered such products – do detailed research before signing dotted lines.

5 Best Investment Options for NRIs – we did a survey with our readers & asked them their preferred investments in India. Check this Video

Low Risk – Investment Options in India

Bank Account

I don’t want to count the bank account as an investment but as you need an account for the rest of the investments I am adding it here. There are two types of popular accounts that NRIs use:

  • NRE (Non Resident External Account) – this is preferred by most of the NRIs as repatriation of money is easy. They transfer there foreign currency in India and use this account for investments. Interest is tax free.
  • NRO (Non Resident Ordinary Account) – for your income in India like rental this is a good option. Repatriation of money is also possible but with additional documentation & process. Interest is taxable.

Note – it’s illegal for an NRI to hold Resident Indian Savings bank account – if you have one, you should immediately convert that to NRO account.

Fixed Deposit in NRO Accounts

NRIs can invest in Indian currency FDs in NRO.

The interest rate is good. The risk is low.

Interest on NRO account is taxable and the tax is computed at 30% of the interest earned. It is deducted at source.

It might be subject to tax in the country you live in depending on certain conditions. If there is tax to be paid, a beneficial tax rate or a refund can be claimed depending on conditions of the Double Taxation Avoidance Agreement (DTAA) .

Fixed Deposit in NRE Account

As an NRI, you can have a Fixed Deposit in NRE account.

Interest is tax-free but you have to understand that it can be taxed in your resident country. Example: If you are resident in a no income tax country like UAE, Saudi Arabia, Oman, Qatar, Kuwait etc – there is no tax that you have to pay in India or these middle east countries. But what about if you are a resident of Singapore, UK or USA – you may have to pay tax in those countries depending on DTAA.

Risk is low. The interest rate ranges from 4.90% – 7.75%.

Here are some FD interest rates that indicate the range of interest paid by banks on non-resident accounts

Bank Duration Interest Rate
SBI – NRE Term Deposit 1 year- 2 years 6.70%
3 years- 5 years 6.80%
SBI – NRO Term Deposit 46 days-179 days 6.25%
3 years – 5 years 6.80%
HDFC –  NRE Term Deposit 1 year 17 days – 2 Years 7.30%
3 years 1day – 5 years 7.25%
HDFC NRO Term Deposit 46-60 days 6.25%
3 years 1 day – 5years 7.25%
ICICI – NRE Term Deposit 1 year -389 days 6.90%
3 years 1 day – 5years 7.25%
ICICI – NRO Term Deposit 46 days-60 days 6.00%
3 years 1 day – 5 years 7.25%

Check – NRE Vs NRO

FCNR Account

FDs can be opened for a period of 1 to 5 years.

It can be in any foreign currency.

Interest is exempt from tax until the person is an NRI or a Resident but Not Ordinarily Resident (RNOR). Another benefit is that you will not have any impact from foreign exchange fluctuations.

You can check our detailed post – FCNR Deposit

NSC

If you had invested in NSC when you had the status ‘Resident’ – you should withdraw that amount or you will get returns equal to Saving Bank.

PPF is a 15-year scheme, which can be extended indefinitely in blocks of 5 years. However, for a resident turned NRI, the extension is not allowed.

wiseNRI

PPF

If you opened your Public Provident Fund account when you were a resident Indian – you can contribute & continue that. If you are an NRI – you can’t open a new PPF account.

NCDs or Corporate FDs

NRIs can invest in Non Convertable Debentures or Company Fixed Deposits if the issuer is allowing them to participate. These will be taxable so one should consider is tax liability or compare their return with NRE FDs which are tax free.

Government Securities

Indian Government has now allowed NRI to invest in government securities and T-bills on a repatriable or non-repatriable basis.

Bonds

NRIs can also invest in various bonds if the issuer allows the same be it PSU bond or perpetual bonds. A few years back government also issued tax free bonds to NRIs.

Please share if you have come across any other investment options for NRIs in India.

NRI Investment Options in India

About the Author

Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice in 2009 & is among the first generation of financial planners in India. He also authored Bestseller book "Financial Life Planning".

  • sanjay says:

    can NRI from USA invest in Bonds, ETFs, Tax Free Bonds, Corporate FDs ? which MF can they invest and how?

  • Seetharama says:

    1. You have not mentioned about PMS services…..,most relevant.
    2. The implications of 10% LTCG tax on equity, and eq. MF may be briefly mentioned.
    3. House property sale: The need for the purchaser to deduct tax and deposit with IT – is important to mention, although you have commented on refund.
    4. Good advice included: advice on -ve associated with real estate investment.
    5. Add a separate section in web-site on taxation in India (and wherever possible, in foreign country of resistance, mainly USA and Canada).

  • Deepak says:

    Thank you for the periodic informative articles and updates. I believe there is a temporary relief for existing NRI PPF account holders. I presume they can now hold on till Maturity.

  • Mahdiya says:

    If I’m getting inheritance… the builders want to cut tds on source … my ca is saying I can avoid taxation if I buy property in India and sell it in a year .. is that true

    • Dear Mahdiya,
      There is no Inheritance Tax in India. Thus, when one receive property as “Inheritance”, no TDS will be deducted. On selling of ” Inheritance Property”, there are tax implications and also available option to avoid taxation.
      Your CA will be a better person to answer.

  • Rahul says:

    Hi Hemant,
    I wanted to check if an Investment is made in PMS of a a person who is currently Resident Indian but Status will change in 2 months time to NRI.
    He has moved abroad, but his status has not changed yet.
    How would the withdrawal be impacted with status changes say after 3 years – Is there a TDS?
    What are the tax implications and exit options.
    ​Would be grateful if you can throw some light on this.​

    • Hi Rahul,
      NRI cannot invest directly in PMS. They have to route through PIS accounts. That’s the biggest change.
      Legally – he cannot receive funds in resident account if he declares as nri.. Either NRO or nre
      Since we already know the status change is going to happen, it’s not a good idea open in the Resident Indian. You are not allowed to buy certain stocks as NRI so the client could end up with compliance issues.
      Better to wait for status change and then invest.
      Check our post on the impact of residential status change https://wisenri.com/nri-change-residential-status/

  • saravanan says:

    Hi Hemant,

    This article is really good, appreciate your effort.
    But you missed, what if already shares/MF/Bonds before becoming NRI.
    How it will be treated?

  • anish says:

    Which is the best option for a NRI to INVEST in INDIA

  • Manikandan says:

    what is the best investment plan for NRI

  • Soli says:

    Hello Hemant,
    Very clear and helpful information. Can a NRI have more than one NRO accounts in different banks? Thanks

  • Sri says:

    I am a Australian citizen, having an Overseas citizen of India card. Can I invest in FDs ? What will be the interest I can get ?

  • Nikhil says:

    I want to know about best saving plans for nri.

  • Manish mundra says:

    I want loan of rs 3 crore

  • T S Bhullar says:

    Hi Hemant.
    I enjoy NRI status since 2014 and have a NRE/NRO Account. I changed my job in June last year. Although living abroad, currently my salary is being deposited in India and am paying taxes in India. Can I invest in Post Office or other schemes from which NRI’s are normally not allowed to invest.
    Regards

  • Noor says:

    What is the investment plan explan me

  • gunvin says:

    is TDS deducted on NRO account refundable if i have just interest income in india and its below 2 lakhs?

  • Manoj says:

    I am nri and want to invest sip in India to get better returns

    • Anuj says:

      Hi Manoj,
      NRIs except from US and Canada can invest in mutual funds in india.NRIs from US and Canada have restrictions and can buy selected mutual funds

  • Philip says:

    How to convert Gold jewellery to cash. Can this be done through banks

  • Ganesh says:

    Very Informative blog. So many questions answered and nicely written. Bookmarking this page.

    I have a small question.

    Iam residing in Denmark for last 2-3 years and hold both NRE and NRO accounts. Recently all the interest earned in these accounts are shown in my Tax calculations in Denmark. Small question on this.

    I have an NRO Deposit account and the Interest earned is TDS @30% in India.
    1. Can I claim the TDS by filing Income tax returns ?
    2. In Denmark the Tax free Interest limit is Rs 20,000.
    So if I earn more than that they can tax as well and thier rate is 45%
    (Higher than India’s).
    So do I need pay the differences of the rates (45-30%) in Denmark ?

    3. Will the Income tax returns also get notified or since it is Indian
    Govt’s perogative to give money back they would not be notified.

    4. Just want to extend second point on Mutual funds as well. If the
    tax rate is higher then should the difference be paid ?

  • Amit says:

    Best investment option for NRI ?

  • Venkat says:

    Hi,

    Any reason why ULIP and ELSS are not mentioned here in the article?

  • Dheeraj says:

    Like to know if as an OCI holder can I invest in ELSS and mutual funds and I do have NRE and NRO already

  • Sanu says:

    The best option for NRI to invest to get maximum return?

  • Rashid says:

    I am NRI having an NRE account and Demet account I want to invest in share with the short term, which is the best?

  • NIKUNJ says:

    I m searching for a book that will give me knowledge about investment and NRI /NRO can make and tax liability against the same in India.

    • Shreya says:

      Hi Nikunj,
      For investment knowledge, you can refer – “The Intelligent Investor”
      and for NRI/ NRO & TAX liability updates- you can refer google.

  • Harshad Patel says:

    How much Insurance covered in NRE FD.
    Like in India for Indian citizen their bank deposit covered up to 5Lacs.

  • GS says:

    Hi. A very informative site indeed! Highly appreciable!

    A couple of quick questions which I seek clarity on..

    1. Can an NRI parent contribute into his ‘Resident Indian’ minor children’s PPF A/c and get exemption benefit u/s 80C on his own Indian income ?? (Note: The said accounts were started 10 years ago.)

    2. Can an NRI continue to hold his PPF A/c post-maturity, without further contribution/investment therein ??

    Regards & Thanks in advance!

    • Armaan says:

      Hi,
      1. In my view point, you will get exemption.

      2.In case, post maturity you leave the account unattended, it will be considered as “extended without contribution”.

  • Harshad says:

    How much Insurance covered in Bank FD for NRE?

  • pvr says:

    how money can nri to his parents in a year without tax

  • Amitkumar C Shah says:

    i am a regular follower of your newsletter.it is very useful.i have some more specific questions,like what should i have to do for the insurance policies /PLI which was opened when i was in India before becoming green card holder and about the HUF account, still i have not converted it to NRO.(now all the members are NRI)

    • Hi Amit,
      Thanks for appreciating… you can inform insurers about change in status (if you have sufficient insurance in USA – you can consider surrendering).. Talk to your banker regarding accounts…

  • Sandesh says:

    My son stays and earnS in us and he wants to invest in fed in Bajaj finance service. Guide me

  • Sudhir says:

    Hi, what is the best and safe MIS for NRE account holders specially in nationalised banks like SBI or Canara banks

    • Roy says:

      Hi Sudhir,
      In my opinion, these are few safe MIS options for NRI.
      For a very long time, the NRE RD of Indian banks has been preferred by NRIs for their safety and the higher rate of interest offered.
      PPF (If you have existing PPF account) and NPS for the post-retirement annuity.

  • Amit says:

    Best NRI investment options?

  • Collin says:

    I reside in usa on work basis and want to open an NRI account. Can you suggest me which bank will be good?

  • Angel says:

    which is the best investment option for NRI ?

  • Rishabh says:

    I am moving to Taiwan from USA, can I invest in India from Taiwan as well?

  • Anoop says:

    Maximum how many NRIs can be joint holder in NRE NRO or FCNR account?

  • Rao says:

    what is the retirement scheme for NRIs?

    • Anuj says:

      Hi Rao,

      As per my knowledge, if you wanna retire in India. You could go for some post office schemes like Senior Citizen Saving Scheme or Insurance Pension Plan.

  • Dharmesh says:

    Investment options for NRI?

    • Anuj says:

      Hi Dharmesh,

      As per my knowledge, you can opt. for Mutual Funds, PPF, NPS, NRE/FCNR FDs, Stocks, Debentures, Bonds based on your investment objective.

  • Lalit says:

    Can I have an investment in USD other than FCNR?

  • Imran says:

    My sister in law and her father has saving account in Allahabad bank..now her father is no more. she wants to make her mother joint account holder. can she make her frm outside india? because Allahabad bank is in canada too.

  • Tas Kaungampillil Abraham says:

    Hi,
    Can you please advice how can I join NPS

  • vimalkumar says:

    I opened the PPF account before 18 years in India, and operate 3 years, from the last 15 years I did not operate, I worked in UAE from last 15 years. can I continue that account?

  • Sunny says:

    Whst are the fixed income options for NRE?

  • Shelly says:

    As of date, which Indian bank offers best interest rate for NRE and Resident fund investments?

    • Amar says:

      Hi Shelly,

      As per my knowledge, there are no fixed criteria for the best return, its depend on the tenure of the Fd and the type of bank you select.

  • Krish says:

    I am a british national , relocated from india 18 years ago to england – i do not have a pan card or oci – i used to visit india on an evisa which is now expired. I have recently opened nre accounts with form 60 and my nre statements were used for kyc in absence of oci – can you advise if I can still invest with same set of documents as i used for nre accounts ?

  • Mohinder says:

    I want to know about investment in post office. i am a oci holder .Can i invest in post office?

  • Rishi says:

    Tax saving investment options?

  • Shagun says:

    Looking for child education fixed return investment in India , where can be best to invest ? Having long term perspective

  • Praveen says:

    Hi, there are lot of speculations that NRI can’t have/invest in “Bonds” and “Government Securities”. Is it possible now?

  • Murali says:

    Want to know tax implications if i sell my flat?

  • Praveen says:

    Can NRI invest in Bonds and Govt. Securities?

  • Chopra says:

    Can i know which rbi or sbi bonds allow to invest by nri?

  • Manoj says:

    What is the best investment option for NRI?

    • Samay says:

      Hi Manoj,

      It depends on the Time Horizon for which you want to make an investment.i.e for Long Term Debt you can go for Bonds, NPS, and for short term Debt Mutual Funds is there and you can opt. for equity Mutual Funds for Long Term Equity Investment

  • Beltton says:

    I want to know about the high rates of interest given lic?

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