One of my blog readers recently shared a thoughtful query, which deserved a detailed response, as it reflects the situation of many Non-Resident Indians (NRIs) today. Here’s what he wrote:
“I’m a 50-year-old NRI, living outside India for the past 15 years. I have no plans to return. My Indian portfolio includes some fixed deposits from rental income, and I recently inherited mutual funds and property after my father’s passing. Now, I wish to sell the property, but I’m concerned about tax implications. I’ve consulted a few CAs, but I need a financial planner’s perspective: Should I repatriate everything and invest in my country of residence, or should I continue holding assets in India? How do I structure this to suit my future?”
A very valid question — and a complex one too. Because it’s not just about taxation or paperwork. It’s about what’s right for your future, both financially and emotionally. This query required a detailed discussion on his requirements, plans, current financials, and other goals, but still, I replied to let him understand the perspective he was looking for.
The First Step: Clarity on What You Own
For Readers’ sake, I am summarizing the case in 3 steps. The first part of planning is taking stock. The reader owns:
- Inherited real estate and mutual funds.
- A stream of rental income, currently parked in fixed deposits.
- No intention to return to India.
The goal is to simplify, organize, and decide in a way that makes managing assets across borders easier and more efficient.
Tax on Inherited Property: What You Must Know
When you inherit property in India, there is no inheritance tax. But the tax does come into play when you sell the asset.
The long-term capital gain (LTCG) is calculated based on the original cost of acquisition by your parents and will be taxed at a flat 12.5% on the gain amount. However, since in your case the property was bought quite a long time back (before July 2024) so you may find out the taxation by adjusting the index cost of acquisition and paying 20% post-indexation. Remember, if the property was held for more than two years, it qualifies as a long-term asset.
As an NRI, the buyer is required to deduct TDS at 20%/ 12.5%, as the case may be, at the time of payment. This means, even before you figure out your actual liability, the tax is already deducted. To correct or recover excess TDS, you must file an Income Tax Return (ITR) in India. Yes, you may also save tax by investing in capital gain bonds, or even by buying one Residential property, but that decision also needs further contemplation.
The same applies to mutual funds, with some nuance. Equity-oriented funds attract 12.5% LTCG tax beyond ₹1.25 lakh if held for more than one year. Debt funds, due to recent changes, are now taxed as per slab rates if bought after April 1, 2023, meaning no indexation benefits. For NRIs, TDS applies on capital gains as well, regardless of tax liability.
So, Should You Keep Money in India or Take It Abroad?
That’s the heart of the question. And the answer lies in your needs, goals, and future cash flow requirements.
Some NRIs prefer to keep funds in India — they’re comfortable with Indian financial products, see better interest rates, and believe in the Indian growth story. Others find it easier to consolidate everything in their country of residence — to reduce complexity, currency risk, and paperwork.
Both paths are valid. But let’s simplify your thought process.
Money should be invested where the goals are – If you have to fund your kid’s education abroad, pay off the mortgage over there, buy some property or vehicle…then it is wise to take money back there and make your life easy. On the other side, if the routine goals have been taken care of through your savings and investments, and this inheritance will help in supplementing the investments then you may think of country diversification, by staying invested in india and spread across the investments in different asset classes to take advantage of India’s growth story.
Keeping Your Funds in India: How to do it and Investment Options
Since you want money to be easily repatriable, you will have to shift the money to your NRE account by submitting 15 CA and CB form to your banker. NRE money can be easily repatriated with no limits attached. Once done, you have multiple options available to invest in India.
- NRE Fixed Deposits: These are fully repatriable and offer tax-free interest income in India.
- Indian Mutual Funds: If structured well through NRE accounts, they can offer decent returns. But be mindful of taxation and TDS handling.
- PMS/AIF may offer you some different strategies suiting your high-return craving with high risk
- Direct stocks can also be explored through a PINS account, if you can do your Research better.
- May also invest in Real estate, excluding agricultural land. But this route requires a different management, and for that, you may be required to be present in India. Financial Investments can be managed through a financial planner sitting outside India, but not real estate.
This route may work if your retirement is still years away, and you don’t have any need to generate monthly income, and you want to stay invested in high-growth opportunities — but it also means staying on top of tax rules, compliance, and possible currency fluctuations.
All the above options are possible when you have bank accounts in India, but if you want to take everything back to your residence country and are still interested in investing in India, then you may like to explore Investments through Gift City. Gift City is evolving with many Inbound and outbound investment options for NRIs and Foreign nationals with the convenience of investing and redeeming in USDs and directly through their foreign bank accounts.
Taking the Money Abroad: When That’s Wiser
If you’ve decided that India is no longer part of your future living plan, it might be prudent to repatriate the funds and consolidate your portfolio in your resident country.
Using a CA and the Form 15CA/CB process, you can legally and efficiently transfer money abroad (up to $1 million per year from NRO account). Once repatriated, the money can be invested according to your local taxation and investment rules, aligning better with your life goals, like retirement income, estate planning, and currency stability.
This is especially useful when you prefer simplicity, want to avoid cross-border tax friction, or wish to eventually pass assets to heirs living outside India.
Is There a Balanced Approach? Yes. And It’s Often Best.
In most real-world scenarios, a hybrid model works well. You don’t need to repatriate everything at once. Nor must you keep all assets in India. Here’s how this might look:
- Sell and repatriate part of the funds — enough to build your local investment portfolio or meet near-term goals.
- Keep a portion in repatriable, high-quality Indian assets — to benefit from India’s growth and better rates, while ensuring ease of exit.
This gives you diversification across geographies and currencies, and spreads your risk while offering flexibility.
Final Thoughts: Think Beyond Returns
Too often, the decision to stay invested or repatriate is driven only by tax or return expectations. But financial planning is more than numbers. It’s about control, clarity, and peace of mind.
Ask yourself:
- Where will I need this money in the next 10–15 years?
- How comfortable am I managing Indian compliance from abroad?
- Am I thinking short-term or trying to build a legacy?
If there’s any uncertainty, speak with a financial planner who understands both Indian and NRI investment dynamics. Because what you need is not just advice, but a plan that aligns your Indian inheritance with your global life.
