Financial Planning in India: A Guide for International Investors and NRIs

India occupies a distinctive position in international financial planning. With one of the world's largest and fastest-growing economies, a sophisticated regulatory framework for non-residents, and a diaspora of tens of millions of Indian-origin individuals spread across the UK, UAE, Singapore, and North America, the financial flows between India and the rest of the world are enormous. This guide is written for two overlapping audiences: internationally mobile individuals — including British nationals and others — who hold assets in India or are considering it as a base, and Indian-origin professionals now living and working in the UK, UAE, or elsewhere who need to manage their Indian financial affairs from abroad.

Indian Tax Residency: The Basics

India taxes individuals based on their residential status, which is determined by days of physical presence:

• Resident and Ordinarily Resident (ROR): present in India for 182 days or more in a financial year, or present for 60 days or more in the current year and 365 days or more in aggregate in the four preceding years. ROR individuals are taxed in India on worldwide income.
• Resident but Not Ordinarily Resident (RNOR): a transitional category for those who have been non-resident for nine of the preceding ten years, or present for fewer than 729 days in aggregate in the preceding seven years. RNOR individuals are taxed on India-source income and income received in India but not on foreign income not derived from a business or profession in India.
• Non-Resident: anyone below the above thresholds. NRIs are taxed in India only on income earned or received in India.

Indian income tax rates are progressive, ranging from nil to 30% (plus a surcharge for higher incomes and a 4% health and education cess). The rates apply whether an individual files under the old regime (with deductions) or the new concessional regime (lower rates, fewer deductions), and the more beneficial option should be assessed annually.

The NRI Account Framework

India operates a structured system of accounts for non-residents, designed to segregate foreign and domestic funds and regulate capital flows:

NRE Account (Non-Resident External)

• Denominated in Indian rupees but opened with foreign currency remittances.
• Interest earned is tax-free in India.
• The balance — both principal and interest — is fully repatriable (can be sent abroad without restriction).
• Joint holding is permitted only with another NRI.
• Suitable for: parking remittances from abroad, paying Indian expenses, and holding funds you may wish to bring back offshore.

NRO Account (Non-Resident Ordinary)

• Denominated in Indian rupees.
• Receives India-source income: rent from Indian property, dividends from Indian shares, pension from an Indian employer, or other locally generated income.
• Interest is taxable in India (typically at 30% for NRIs, subject to DTT relief).
• Repatriation is permitted up to USD 1 million per financial year (after payment of taxes and submission of Form 15CA/15CB with CA certification).
• Suitable for: receiving and managing India-source income, paying Indian bills, maintaining Indian financial commitments.

FCNR Account (Foreign Currency Non-Resident)

• Held in a foreign currency (USD, GBP, EUR, or others) at an Indian bank.
• Interest is tax-free in India.
• Fully repatriable.
• Useful for those who want Indian bank deposit rates without currency conversion risk.

Choosing which account type to use — and understanding that funds cannot move freely between NRE and NRO without tax implications — is one of the first practical steps for any NRI managing Indian finances.

FEMA: Foreign Exchange Management Act

FEMA, administered by the Reserve Bank of India, governs all foreign exchange transactions involving India. Key points for international investors:

• Capital account transactions (buying or selling assets) are regulated and require either RBI permission or fall within defined permitted categories.
• NRIs can invest in Indian equities, mutual funds, bonds, and direct property under the Portfolio Investment Scheme (PIS) and other routes, subject to sectoral caps.
• Repatriation of sale proceeds from Indian assets — including property — flows through the NRO account route, subject to the USD 1 million per year cap and applicable tax clearance requirements.
• Gifts and inheritances: an NRI receiving a gift or inheritance of Indian assets is generally permitted to hold or repatriate those assets under FEMA, but the rules are complex and depend on the nature of the asset and the relationship of the parties.

Violation of FEMA — even inadvertent violation — can result in significant penalties. When selling Indian assets or moving funds out of India, engaging a qualified chartered accountant in India alongside your international adviser is strongly recommended.

Indian Property for Non-Residents

NRIs and Persons of Indian Origin (PIOs) are permitted to purchase residential and commercial property in India freely, without limit on the number of properties. The key restrictions are:

• Agricultural land, plantation property, and farmhouses cannot be purchased by NRIs (they may be inherited, but not purchased).
• Purchase funding can come from NRE/NRO account balances or by direct remittance from abroad; Indian rupee loans from Indian banks are also available to NRIs for property purchase.
• Rental income from Indian property must flow through the NRO account and is subject to Indian income tax (with TDS — tax deducted at source — typically applied by tenants at 31.2% for NRIs).
• Sale proceeds flow through the NRO account with capital gains tax applicable (long-term CGT at 12.5% for property held more than 24 months, short-term at applicable income tax rates, as of 2026).

India's property markets — particularly in Mumbai, Delhi NCR, Bengaluru, and Hyderabad — have seen significant price appreciation over the medium term, and the NRI segment is an important buyer group in premium residential and commercial real estate.

UK-India Double Taxation Treaty

The UK-India DTT, though in force for several decades, is considered relatively limited compared to more modern treaties. Key provisions:

• Dividends: taxed primarily in the source country, with a withholding rate applicable; UK residents receiving Indian dividends may face Indian withholding tax with a credit available in the UK.
• Interest and royalties: similar source-country treatment with treaty rates.
• Pensions: government service pensions are generally taxable only in the source country; private pensions are generally taxable in the country of residence.
• Salaries and employment income: taxed in the country where duties are performed, with provisions for short-term assignments.

Given the limited scope of the treaty, double taxation on certain categories of income can arise, and the treaty tie-breaker provisions for residency are not always straightforward. Professional advice — from advisers familiar with both UK and Indian tax law — is essential before making cross-border financial decisions.

Mutual Funds and Equity Investments in India

NRIs can invest in Indian mutual funds, subject to certain restrictions. Most major Indian fund houses accept NRI investments from the UK, UAE, and other jurisdictions, though US and Canadian residents face restrictions due to FATCA and other local regulatory requirements.

Indian equity markets (BSE Sensex and NSE Nifty) have delivered strong long-term returns measured in local currency terms over recent decades, though with periods of significant volatility. INR depreciation against GBP over the long term is a factor that affects total returns measured in sterling.

The Liberalised Remittance Scheme (LRS) permits Indian residents (not NRIs) to remit up to USD 250,000 per year abroad for investment, education, maintenance, and other permitted purposes. For NRIs looking to move funds in the other direction — into India — there is generally no limit, though documentation and source-of-funds requirements apply.

Estate Planning and Indian Succession Law

India has complex succession laws that differ by religion and personal law:

• Hindu Succession Act applies to Hindus, Sikhs, Jains, and Buddhists.
• Indian Succession Act applies to Christians, Parsis, and others.
• Muslim Personal Law applies for Muslims and is governed by Sharia principles.

A valid Indian will — drawn up in India and registered where advisable — is an important document for anyone with significant Indian assets. The interaction between an Indian will and a UK will requires careful drafting to avoid conflict or unintended revocation. Intestacy in India can be protracted and complicated, particularly where assets span multiple states.

Compliance Caveats

Indian tax and FEMA regulations are subject to change, and the rules have been amended frequently in recent years. This guide reflects the general position as of 2026; tax rates, thresholds, and repatriation limits should be verified before relying on them for planning purposes. This guide is for information purposes only and does not constitute personal financial or tax advice. Investments can fall as well as rise in value.

How Global Investments Can Help

Global Investments has experience working with internationally mobile clients who have Indian connections — including UK-resident Indian-origin professionals, British nationals who have worked in India, and investors with Indian property portfolios. Our services in this area include:

• Cross-border tax planning — understanding the UK-India DTT, structuring income flows efficiently, and ensuring Indian TDS credits are properly claimed in UK tax returns.
• UK pension advice for Indian-origin clients who have built up pension rights in the UK and are considering returning to India or retiring in a third country.
• NRE/NRO account guidance and coordination with Indian banking and legal professionals.
• International investment portfolios accessible from India, structured to complement (not duplicate) Indian domestic investments.
• Estate planning — working alongside Indian legal counsel on wills, succession structures, and cross-border inheritance.

Contact our team for an initial discussion about your situation.