What are the pros and cons for NRI investing in india in their childs name?
Key Considerations for NRIs Investing in Their Child's Name
NRIs have the option to invest either in their own name or invest directly in the name of their child for their future. In this article, we’ll explore the advantages and disadvantages of both investment options. NRI investment in India in property is a common choice, but NRIs also explore various other investment options in India.
Opening a child's bank account is not necessary for making investments; however, there are some advantages to doing so:
a) It has been observed that parents don't generally stick to their investment plans and use them for various purposes if investments are in their names. However, they hesitate to deviate in case of investments made in a child's name. This is a form of tax-free investment that might appeal to many parents.
b) There is a tax advantage, since till the child turns 18, all the income from the investments is clubbed in the hands of the parent who is earning more, with the exemption of INR 1500 per child. However, when the child turns 18, all the gains or incomes are taxable in the hands of the child. It's important to keep in mind the tax on investment in India that could apply to the child when they gain control of the investments.
c) Gifts and cash etc. received from relatives on various occasions are another reason why parents prefer opening a child's bank account.
SSY- Sukanya Samridhi Yojana, is a preference that is not obtainable to NRIs (staying outside India). If an NRI opens an SSY account for a girl child while being a resident, as soon as the girl becomes a non-resident, the account will be contemplated closed, and no interest will be accumulated For opening an SSY account, the girl's child should be an Indian citizen residing in India, or her parents should be Indian residents, and the girl should have Indian citizenship. This highlights one of the investment opportunities in India that is not accessible to NRIs.
Also, it is important to consider that your child will become the owner of investments as soon as he/she turns 18. What if they squander the money? Hence, invest in their name only when you are comfortable, and you have a surplus corpus for your retirement as well. As an NRI, you may want to explore property investment for NRI, but make sure you are fully aware of the RBI guidelines for NRI investment in real estate before diving into any major investments.
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Key Considerations for NRIs Investing in Their Child's Name
NRIs have the option to invest either in their own name or invest directly in the name of their child for their future. In this article, we’ll explore the advantages and disadvantages of both investment options. NRI investment in India in property is a common choice, but NRIs also explore various other investment options in India.
Opening a child's bank account is not necessary for making investments; however, there are some advantages to doing so:
a) It has been observed that parents don't generally stick to their investment plans and use them for various purposes if investments are in their names. However, they hesitate to deviate in case of investments made in a child's name. This is a form of tax-free investment that might appeal to many parents.
b) There is a tax advantage, since till the child turns 18, all the income from the investments is clubbed in the hands of the parent who is earning more, with the exemption of INR 1500 per child. However, when the child turns 18, all the gains or incomes are taxable in the hands of the child. It's important to keep in mind the tax on investment in India that could apply to the child when they gain control of the investments.
c) Gifts and cash etc. received from relatives on various occasions are another reason why parents prefer opening a child's bank account.
SSY- Sukanya Samridhi Yojana, is a preference that is not obtainable to NRIs (staying outside India). If an NRI opens an SSY account for a girl child while being a resident, as soon as the girl becomes a non-resident, the account will be contemplated closed, and no interest will be accumulated For opening an SSY account, the girl's child should be an Indian citizen residing in India, or her parents should be Indian residents, and the girl should have Indian citizenship. This highlights one of the investment opportunities in India that is not accessible to NRIs.
Also, it is important to consider that your child will become the owner of investments as soon as he/she turns 18. What if they squander the money? Hence, invest in their name only when you are comfortable, and you have a surplus corpus for your retirement as well. As an NRI, you may want to explore property investment for NRI, but make sure you are fully aware of the RBI guidelines for NRI investment in real estate before diving into any major investments.
Also Read: How can immovable property be acquired outside India by a resident?