Tax planning involves strategic financial moves aimed at reducing tax liabilities while maximizing savings within established financial regulations.
Objectives of Tax Planning:

• Tax Minimization: Decrease taxable income through lawful means.
• Savings Maximization: Utilize deductions for increased savings.
• Compliance Assurance: Adhere to financial laws while optimizing savings.

Strategies for Tax Planning:

• Section 80C Investments: Utilizing deductions under Section 80C for investments like PPF, ELSS, etc.
• Tax-Saving FDs: Investing in Tax-Saving Fixed Deposits under Section 80C for tax benefits.
• National Pension System (NPS): Availing tax benefits under Section 80CCD for contributions to NPS.

Basic Architecture

Non-Resident Indians can invest in following instruments in India:

• Equities: NRIs can invest in directly in Indian equities through Portfolio Investment Scheme (PIS) route provided by Reserve Bank of India. It is covered in detail later.
• Mutual Funds: Investment is allowed in all categories of Mutual Funds for NRIs like Equity, Balanced, Bond, Liquid Fund, etc. Unlike direct equities, investment in Mutual Funds does not require PIS permission from RBI. Lately, there have been some limitations for US and Canada based NRIs to invest in MFs as US government has mandated detailed reporting of transactions by Fund Houses under FATCA / CRS rules. Only few fund houses are accepting investments from US and Canada based investors.
• Government Securities: NRIs are allowed to invest in government securities on NRE or NRO basis. Interest on NRE investments is tax exempt while interest on NRO investments is taxable.
• Fixed Deposits: NRIs can invest in fixed deposit of Banks or Non-Banking Financial Companies (NBFCs) in case terms of the issue so provide. Investment can be done on NRE or NRO basis. Interest on NRO deposits is taxable and will be subject to withholding tax (TDS) while interest on NRE deposits is tax exempt.
• Real Estate: NRIs can buy residential and commercial properties in India. However, agricultural land, farm land or plantations are not allowed to be purchased - they can accept it in inheritance or gift.
• National Pension Scheme: NPS is government-backed retirement savings plan which comes under EET tax structure (Exempt-Exempt-Tax). It implies that all contributions and accrued capital gains are tax exempt, while withdrawal is subject to tax. This scheme is very cost effective. You can subscribe to this scheme if you have retained your Indian citizenship and plan to spend retired life in India. Contribution to NPS can be from NRE or NRO account, however the pension has to be received in India and cannot be repatriated.

Investment decision by an NRI is critical as the income will be taxed in multiple countries based on his/her tax residency. Here, we have enumerated tax treatment as per Indian laws. However, you will also have to consider the tax impact on this income in your home country of residence + Double Tax Avoidance Agreement (DTAA) between both these countries. Also, if your taxable income in India exceeds the basic exemption limit, then you will have to file tax returns in India and pay balance taxes / claim refund as the case may be. We have covered taxation in detail little later.

Type of Accounts

NRI Investments

Refer to Tax Section for tax treatment on all the investments mentioned above

Portfolio Investment Scheme (PIS)

PIS is a permission from Reserve Bank of India (RBI) to NRIs for dealing in shares and convertible debentures. Practically, it is in the form a special bank account which is used for routing secondary market (broker) transactions. All transactions relating to purchase and sale of shares and convertible debentures of Indian companies on a recognized stock exchange should be routed through this account with a designated bank.

There is overall limit beyond which an NRI is not allowed to invest in equity share of each company. Through this account, RBI keeps a check on overall NRI holding in each company. When the limit approaches nearer, the company is placed under caution list and further buying is allowed only after the prior permission of RBI. Once the limit is breached, no further buying is allowed. If any purchase is made beyond limits, then such excess holding will have to be liquidated immediately.

The caution list of RBI can be accessed from following link:

https://www.rbi.org.in/advt/fiinri.html

Transaction Flow for Investing in Equity Shares

Transaction Flow for Investing in Equity Shares

What we can do for you

We will:

1. Engage bankers to open NRE / NRO savings and PIS bank accounts
2. Open a brokerage account for execution of trades
3. Open a demat account
4. Regularly monitor your Portfolio
5. Appoint tax consultant to take care of compliance

Our Partner for Banking Services:

Our Partner for Broking Services:

Documentation

To start with investment account, you need to open:

• NRE / NRO savings account with a bank in India
• NRE / NRO PIS account with a bank in India
• Demat account
• Brokerage account

Documents required:

• PAN Card
• Passport
• Visa - in case of Indian Passport
• Permanent Identity - in case of Foreign Passport
• Overseas Address Proof
  1. Drivers License
  2. Utility Bill
  3. Overseas Bank Statement
• Indian Address Proof (Mandatory for NRO account only)

All the copies need to be self-attested

For FATF non-compliant countries, all the above documents are to be attested by Notary Public. You can get list of FATF compliant countries in following

link: https://www.fatf-gafi.org/en/countries.html

Basic Architecture

Who can be an FPI ?

• Foreign Portfolio Investor (FPI) is a resident individual or entity in any country other than India. FPI is not a Non-Resident Indian (NRI) / Overseas Citizen of India (OCI) or a Resident Indian (RI).
• If the investor entity is non-individual, NRI / OCI / RI may be constituents if:
  1. RI (being non-individual) is an eligible fund manager and
  2. The entity is an eligible investment fund.
  1. The entity is an Alternative Investment Fund (AIF) set up in the International Financial Services Centre (IFSC).
  2. RI is a sponsor or manager of the entity
  3. Contribution of RI shall be:
     • In case of Category I or II AIF, lower of 2.5% of the corpus or US$ 0.75 million
     • In case of Category III AIF, lower of 5% of the corpus or US$ 1.5 million
• c. Investor is from a Country which:
  1. is a member of IOSCO
  2. have bilateral MOU with SEBI
  3. whose central bank is a member of BIS
  4. is not in the sanction list notified by UNSC and
  5. is not listed in public statement issued by FATF
• Investor has sufficient experience, good track record, is professionally competent, financially sound, generally good reputation of fairness and integrity

Classification

There are two categories of FPIs, classified as under:

Category I

• Government and Government related investors such as central banks, sovereign wealth funds, international or multilateral organizations or agencies, including entities controlled, or at least 75%, directly or indirectly, owned by such Government and Government related investors.
• Pension funds and university funds.
• Appropriately regulated entities such as insurance or reinsurance entities, banks, asset management companies, investment managers, investment advisors, portfolio managers, broker dealers and swap dealers.
• Entities from the Financial Action Task Force (FATF) member countries which are:
  • Appropriately regulated funds.
  • Unregulated funds whose investment manager is appropriately regulated and registered as a Category I FPI - provided that the investment manager undertakes the responsibility of all the acts of commission or omission of such unregulated fund.
  • University related endowments of such universities that have been in existence for more than five years.
• An entity:

Whose investment manager is from FATF member country and such an investment manager is registered as Category I FPI; or Which is at least 75% owned, directly or indirectly by another entity, eligible under sub-clause (b), (c) and (d) above, and such an eligible entity is from a FATF member country.

Category II

Includes all the investors not eligible under Category-I Foreign Portfolio Investor such as

• Appropriately regulated funds not eligible as Category-I foreign portfolio investor
• Endowments and foundations
• Charitable organisations
• Corporate bodies
• Family offices
• Individuals
• Appropriately regulated entities investing on behalf of their client, as per conditions specified by the Board from time to time
• Unregulated funds in the form of limited partnership and trusts

Omnibus Accounts

Appropriately regulated entities such as banks and merchant banks, asset management companies, investment managers, investment advisors, portfolio managers, insurance & reinsurance entities, broker dealers and swap dealers will be permitted to undertake investments on behalf of their clients as Category II FPIs in addition to undertaking proprietary investment by taking separate registrations as Category I FPI.

• Where such entities are undertaking investments on behalf of their clients, Category II FPI registration shall be granted subject to following conditions: Clients of FPI can only be individuals and family offices.
• Clients of FPI should also be eligible for registration as FPI and should not be dealing on behalf of third party.
• If the FPI is from a Financial Action Task Force member country, then the KYC including identification & verification of beneficial owner of the clients of such FPI should be done by the FPI as per requirements of the home jurisdiction of the FPI. FPIs from non-Financial Action Task Force member countries should perform KYC of their clients including identification & verification of beneficial owner as per Indian KYC requirements.
• FPI has to provide complete investor details of its clients (if any) on quarterly basis (end of calendar quarter) by end of the following month to DDP.
• Investments made by each such client, either directly as FPI and/or through its investor group shall be clubbed with the investments made by such clients (holding more than 50% in the FPI) through the above referenced appropriately regulated FPIs.

Asset Class for Investments

• Shares, Debentures and Warrants issued by a listed company or to be listed company
• Units of Mutual Funds - Equity and Bond Schemes
• Units of Collective Investment Schemes
• Derivatives
• Units of Real Estate Investment Trusts, Infrastructure Investment Trusts and Units of Category III AIF
• Indian Depository Receipts
• Debt Securities

In case of secondary market transactions:

• The securities transactions can be delivery-based only
• The dealing will be through registered stock broker only
• Securities should be in dematerialised form
• The equity shareholding by a single FPI, including its investor group, shall be below 10% of paid up equity capital of the investee company.

Offshore Derivative Instruments

Offshore derivative instruments can be issued if:

• The issuer is Category I FPI
• The instruments are issued to persons eligible for registration as Category I FPI
• Know Your Client norms are complied with
• In case of transfer, the above conditions should be met

Procedure to Open the Account

Appoint a Stock-Broker / Custodian who will assist you in:

• Applying for Unique Income Tax Code (called as PAN in India)
• Opening Rupee based bank account
• Opening a Demat account for custody of your securities
• Open a brokerage account for transacting

In about 3 to 4 weeks from the date of receipt of all the documents duly signed, the FPI will be able to bring in money & start investing.

Procedure to Process the Transaction

• The FPI can place buy / sell orders directly with the stock-broker OR route it through their Order Management System which may be provided by Custodian. The FPI can access the status of their orders & execution status through an online browser-based system application.
• Post Execution of trades, the settlement of securities as well as funds will be done by Custodian without any action needed from FPIs end.
• Custodian will deduct withholding tax and pay to the Government, wherever applicable, on each sale transaction during investment activity in India.
• Investments by FPIs are governed by overall limits which varies in case of each company and each asset class. Monitoring of such limits will be done by the Custodian.
• The Funds invested through this route are fully repatriable at any point of time.
• The tax returns in India can be managed by FPI appointed consultants. Alternatively, we can assist in appointing the tax consultants.

What we can do for you?

We will:

• Engage a Custodian for you to take care of documentation and custody of assets
• Engage a bankers to open and maintain Rupee denominated bank accounts
• Open a brokerage account for execution of trades
• Regularly monitor your Portfolio
• Engage a tax consultant to take care of compliance

Our Partner for Custody Services:

Our Partner for Broking Services:

For Regulatory Content: Visit www.sebi.gov.in

We make nomination for all the assets however, nominee doesn't become owner of the assets, they are mere trustees.

Initially, nominee gets the transfer of the asset in her name but eventually, is bound to transfer the assets in favour of the legal heirs. The nomination must be ratified by a Will.

Will is a document that expresses how your property is to be distributed upon death. A Will that clearly lays out your wish reduces conflict and speculation over what you "would have" wanted.

Normally, we thinkthat we are not going to die so earlyor we have a habit of deferring actions which are common reasons for not having a Will. The realization that Will isnecessary comes too late - such as when an unexpected death or disability occurs. To avoid the added stress on families during an already emotional time, it may be wise to prepare Will before-hand and revise it at regular intervals.

Having a Will is very important since through this document you decide:

• how your property and assets will be distributed.
• who will take care of your minor children
• who will wind up the affairs of your estate
• you can disinherit individuals who would otherwise stand to inherit
• make gifts and donations from your property

In the absence of Will, the law will decide how your assets will be distributed. And in that case, the process becomes lengthy and, in most cases, give rise to family conflicts.

In India, there are four succession laws applicable depending on the religion you follow:

• Hindu Succession Act - Hindus, Sikhs, Jains and Buddhist
• Muslim Personal Law (Shariat) Application Act - Muslims
• Special Marriage Act - Inter faith marriages
• Indian Succession Act - Parsi, Christian, Jews and Others

You can prepare a Will yourself. No legal services are required to prepare a Will.

Simple steps to write a Will:

• Select beneficiaries to your assets / property
• Pick a guardian for your kids
• Choose the executor for your will
• List down who gets what
• Realistically assess the distribution of assets done
• How to write a Will:
  • You can write Will on simple paper
  • Write down the distribution of assets amongst beneficiaries as detailed above
  • Put your signature on the Will
  • Two external witnesses should be present while preparing the Will who will also put their signature
  • A doctor certificate must be attached testifying sound health and sound mental condition
  • Notarising the Will is not required
  • Registration of the Will is not compulsory but is recommended
  • Store your Will where others can find it. Don't keep your original Will in a bank locker. Make sure that the executor knows about the Will.

Format of Will