Investments - LIBERALISED REMITTANCE SCHEMES FOR RESIDENTS

Reserve Bank of India’s liberalised remittance scheme now allows Resident Indians to draw up to $100,000, towards investments, purchases and spending in a foreign country per year. The scheme opens up a range of investment options for Indian residents who have children abroad, as they can purchase property and other assets at places where their children are resident.

• Eligibility
  
• Only resident Indians are eligible for this scheme. "Resident" means any Indian passport-holder living in India.
  
• Transactions Allowed
  
• Both capital account and current account transactions are allowed under this scheme. Generally speaking Capital account transactions create long term assets and liability while Current account transactions create short term assets and liability.
  
• The capital account transactions that can be made under this scheme range from buying stocks in overseas markets to acquiring property and trading in stock/commodity futures overseas.
  
• Current account transactions are also allowed within this $100,000 limit. For instance - gifts and donations abroad. Also residents can open account in foreign countries and transfer this $100,000 to that account.
  
• Certain purposes such as medical treatment, education expenses, travel and business transactions have separate limit over and above this general purpose limit of $100,000.
  
• How one draws funds
  
• The individual should, in the first place, have a sufficient bank balance in Indian rupees in his or her local bank account. The drawal of foreign exchange will be effected from this account and the transfer made abroad.
  
• An application to the authorised dealer (banks) will have to be made by the individual stating the purpose for which the drawal is being made.
  
• The individual will have to declare the income earned from such investments in his income-tax returns.
  
• He may also have to file a tax return in the country where the assets are held, if the local laws so require. He will be eligible for any tax benefits if there is a Double Tax Avoidance Agreement with that country.