Investment on Repatriation Basis
An investor can invest on a repatriation basis if he is a non-resident. The investment proceeds would be considered once the tax and consideration are paid. The investment proceeds would be subject to taxation and other filing requirements. Similarly, if an investor does not wish to repatriate the investment proceeds, then he can invest in India but he would not be able to repatriate the proceeds.
Generally, an investor who makes an investment on a repatriation basis must follow the same tax rules as the investor who invests on a non-repatriation basis. However, there are exceptions to this rule. An investor should invest in a company that has a domestic market. Non-repatriation investments can be classified as either domestic or foreign. Depending on the company, the investor should consult with his tax advisor and seek legal advice before investing on a repatriation basis.
An investor can invest on a repatriation basis if they have sufficient funds for the transaction. Unlike investments made on a non-repatriation basis, the investor cannot repatriate the sale proceeds of the investment outside India without RBI’s approval. A non-repatriation basis investment is considered domestic and allows the investor to take dividends and interest payments from it, but not the principal amount.
FDI rules are stricter than those for NRIs. A foreign investor may invest up to 10% of his total assets in an Indian company. This limit is subject to sectoral restrictions and stricter valuation/pricing norms. NRIs who invest on a repatriation basis should not invest more than 10% of the total value of his shares. However, if the investment amount is greater than this limit, the investor can invest up to 10% of the paid-up value of the shares of an Indian company through a recognised stock exchange.
If an investor wants to invest on a repatriation basis, the NRE bank account is ideal. NRE bank accounts allow NRIs to transfer the funds to their country of residence, and do not charge brokerage on direct mutual funds or shares. NRIs can invest in Indian companies on a non-repatriation basis or repatriation basis. However, if a resident Indian does not wish to repatriate the funds he invested in India, he can open a FCNR account.
An investor can also opt to take the investment proceeds home after the completion of the transaction. However, this is not legal for all investments. Investments can be repatriated on a repatriation basis if the foreign country allows it. Repatriation also allows foreign investors to bring home their foreign assets and currency. There are certain conditions governing repatriation. It’s best to learn more about the rules and regulations governing repatriation.
The transfer of capital instruments by way of sale does not require the filing of Form FC-TRS. However, the investment must be reported to the authorized dealer bank within 60 days after the transfer of capital instruments or receipt of funds. An investment on repatriation basis can only be made if the sale proceeds are eligible to be repatriated outside the country. If the investor cannot obtain repatriation approval within this time period, the transaction may be deemed to be on a non-repatriation basis.