Can NRI Invest in Post Office?

India is known to be an enticing destination for investment, not only by its citizens but also by NRIs and other foreign entities. Being a fast growing large economy, there is a huge opportunity to invest in India and earn very attractive returns particularly in long term avenues.

There are numerous popular alternatives available for people to invest their money such as bank deposits, post office, equities, mutual funds, real estate, portfolio management services, bonds, etc. Here, as we are talking about NRI investments in India, first of all, it's necessary to understand as to who is an NRI?

Who is an NRI?

Non Resident Indian (NRI) is an Indian citizen or Foreign National of Indian Origin resident outside India for purposes of employment, carrying on business or vocation in circumstances as would indicate an intention to stay outside India for an indefinite period.

• Above definition of NRI is as per Foreign Exchange Management Act 1999 (FEMA), India.
• If a person stays in India for less than 182 days during the preceding financial year, then also he is considered an NRI.
• It is required for NRI to open a savings bank account before starting investment in India.
• As far as NRI investment is concerned, many investment options come under the purview of Foreign Exchange Management Act 1999 (FEMA), as such investments are subject to foreign exchange rules and regulations

In India, investment in Post Offices is considered a good, safe and preferable alternative as it offers better rate of interest and ease of investing. Many investment options are offered by Post Offices in India where people can invest their money, as enumerated below :

• National Savings Certificates (NSC)
• Public Provident Fund (PPF)
• Kisan Vikas Patra(KVP)
• Monthly Income Schemes
• Recurring Deposit Schemes
• Time Deposits

Can NRI Invest in Post Office in India?

Non Resident Indian (NRI) is not allowed to invest in post office in India which means it is not possible for an NRI to invest in various post office instruments like NSC, PPF, MIS, etc. as Indian law does not allow for NRI investment in Indian Post Offices.

Know How NRI Can Invest in Post Office in India

NRIs cannot invest their monies in Indian Post Offices directly but still there is a way through which they can invest in post office instruments though indirectly.

 1  |  NRI investment in Post Office through his parent or other friend

NRI can investment his money through his parents (who are resident Indians). Such investment will be in the parents' name. NRI is also has an option to invest through his friend, who is a resident Indian, in friend's name.

It is necessary to understand here that the income generated through such post office investment, will be taxable for the person in whose name the investment has been made, since the post office schemes attract tax, except PPF.

 2  |  NRI investment in Post Office through Joint Holding

One more way available for NRI to invest in post office schemes is to invest jointly with his parents. In that case, his parent should be resident Indian and will be the primary applicant. NRI will be the second or joint applicant for the investment purpose.

Again income from investment would be taxable in the hands of his parent who is the primary applicant for the post office investment.

Other Investment Options for NRIs Apart From Post Office

As the NRI is not permitted to invest directly in post offices in India by Indian laws, there are a lot of other opportunities open for him for investment where he can not only invest with ease but can have better returns on his investment along with tax efficiency.

First and the most preferable option is to invest in NRE Fixed Deposits. Here, NRE is an abbreviation for Non-Resident (External) Rupee. This type of investment offers the benefits of ease of deposit and repatriation of funds from the account. It is true that the rate of interest offered on NRE FDs would be slightly lower than that of post office time deposit schemes but the major benefit here is that such type of investment will be more tax efficient as the income generated in NRE FDs is not taxable.

Secondly, NRIs may consider the option to park their funds in real estate in India. Through it will be a comparatively a long term investment but will surely give better returns in the long term. NRIs must need to take care of the tax liability on such kind of investment.

Third Avenue available to NRIs for parking their monies is Mutual Funds. NRIs are allowed to invest in mutual funds irrespective of the type of Mutual fund without any restrictions. Indian mutual funds offer very attractive returns and the NRIs can have a handsome gain on their investments in mutual funds over a period of time.

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