5 Common Mistakes NRIs Make While Investing in India

Many Indians holding an NRI status tend to invest their money in India for their families still residing here or appreciating their earnings. It is also a source of income for India, which is the largest country receiving global remittance. But it often happens that people are unaware of the rules, and in the absence of expert advice, they tend to commit mistakes that can complicate things later on.Let’s look at some of the common mistakes that NRIs make while investing in India:

It is common for NRIs to keep going with their resident accounts as before, which is a huge mistake. It is necessary to change the status of your savings account and DEMAT account, KYC details, etc., if you want to keep using them.You must convert the savings account into an NRO (non-resident ordinary) account and DEMAT into an NRO DEMAT once you become an NRI. Also, you must update KYC, PAN, FATCA, and all other necessary documents as per your NRI status to avoid any mutual fund mistakes later on.

The Indian real estate sector witnessed a boon between 2000-2010. NRIs with high disposable income saw it as a perfect opportunity to invest in India's growing real estate marketing. However, in the last decade, the real estate growth graph has gone downward, or at best, flattened out.With low rental yields of just 2-3% and slumpy growth, real estate is no longer the "golden egg" that is once was. Besides, putting the property on rent or maintaining it while you're away is not easy. There are many more avenues now that are known to perform better and also come with better liquidity.

Everything including mutual funds, stocks, gold, and other properties is subjected to TDS (tax deducted at source) that may be slightly more in the case of NRIs. Unawareness about this aspect is common among NRIs who end up paying heavy taxes due to their ignorance. Moreover, NRIs often also end up paying double tax, oblivious to the DTAA (Double Tax Avoidance Agreement) that India has with many countries.

Many individuals prefer to take advice from relatives and other close acquaintances while making investment decisions that may create hurdles in the future. It is suggested to contact certified professionals who are well versed in the rules and regulations for both countries. They can guide you in the investment process so that there are no conflicts in the future.

You must review your investments made before going abroad since you may not be able to enjoy the privileges and keep them as before. For example, a PPF account is considered closed, NSCs are assumed encashed, and you are no longer eligible to hold savings or postal scheme investments once your status changes to NRI.You must be cautious of the above points to ensure that your hard-earned money is well-managed and invested appropriately. Taking help from a certified advisor ensures that you follow all the rules and regulations to avoid any troubles later on.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.