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Home >Money >Calculators >You can invest up to $125,000 overseas in a financial year

According to Dubai Land Department, Indians were the top international investors in the first quarter of 2014. Over the 12 months ended March 2014, buyers from India purchased properties in the U.S. worth an estimated $5.8 billion, which was about 6% of the total international sales, according to a US National Association of Realtors report. This is an indication of Indians’ interest in investing abroad, especially real estate.

Investing globally in any instrument diversifys an investor’s portfolio. Apart from investing in international mutual funds, you can invest directly also. Under the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India’s (RBI), Indian investors are allowed to invest abroad. The remittance limit went up from $25,000 per calendar year to $200,000 per financial year, but was reduced to $75,000 per financial year in 2013. This year, in July, it was raised to $125,000. According to the prevailing regulations, resident individuals may remit up to $125,000 per financial year for any permitted capital and current account transaction or a combination of both.

INVESTMENT OPTIONS

You can buy and hold immovable property, shares or fixed income instruments abroad without RBI’s prior approval. You can also invest in mutual funds, exchange-traded funds, venture funds, unrated debt securities and promissory notes and so on. But real estate remains popular.

The LRS restricts buying and selling of foreign currency convertible bonds issued by Indian companies, and foreign exchange trading. Margin trades are also not allowed. Geographically, you can’t invest in Bhutan, Nepal, Mauritius or Pakistan. You also can’t make remittances directly or indirectly to countries identified by the Financial Action Task Force as “non co-operative countries and territories".

INVESTING PROCESS

You will have to designate a branch of an authorized dealer bank through which all the remittances will be made. You need to have maintained the account for a minimum of one year prior to the remittance or, go through the appropriate process, if you are a new customer. You may have to provide bank statements for the previous year to show source of funds. Copies of the latest income tax assessment order or return may also be asked for. Besides these, you need to furnish an application-cum-declaration in the specified format regarding the purpose of the remittance and ownership of funds.

You will not be able to make any more remittances once you reach the limit of $125,000 in a financial year, even if the proceeds of the investments have been brought back into the country.

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