Gold Investments: A Guide For NRIs 

Gold is an excellent safe-haven asset and inflationary protection. Furthermore, it is inversely connected with the stock market, allowing you to diversify your portfolio and protect it from market fluctuations. According to financial experts, gold holdings should account for 5% to 10% of a portfolio(approximately). Let’s see how NRIs can invest in gold in the following ways.  

How may non-resident Indians invest in gold?  

Non-Resident Indians (NRIs) can buy actual gold in jewellery, bars, or coins. Investing in paper gold, such as Gold ETFs or gold funds, is a preferable alternative since it avoids purity difficulties and expenses and storage difficulties.  

NRIs can invest in gold ETFs or exchange-traded funds listed on Indian stock exchanges. It tracks the price of actual gold in the United States, with one Gold ETF unit equaling one gram of gold. On the other hand, NRIs must register a Demat and Trading Account to invest in Gold ETFs.  

Compared to Resident Indians, NRIs must go through a separate process to create a Demat and Trading Account. According to FEMA standards, NRIs must open a Portfolio Investment NRI Scheme (PINS) Account to invest in Gold ETFs. It enables NRIs to invest in both repatriable and non-repatriable Gold ETFs.  

Gold Mutual Funds are an option for NRIs who don’t want to participate in Gold ETFs. It is a fund of funds strategy managed by Asset Management Companies that invests in Gold ETF units (AMCs). Furthermore, NRIs do not need to register a Demat or Trading Account to invest in gold funds through AMCs.  

Gold Funds are more ideal for DIY (Do-It-Yourself) investors than Gold ETFs for first-time gold investors. Because Gold Funds are fund of funds schemes, they have a higher fee ratio than Gold ETFs. The expense ratios of the gold fund and the gold ETF are incurred.  

The Foreign Exchange Management Act (FEMA) of 1999 prohibits NRIs from purchasing Sovereign Gold Bonds (SGBs). It is government security issued by the Reserve Bank of India and valued in gold grams. If NRIs bought SGBs when they were residents of India, they could keep them until they reached their eight-year maturity date or redeem them early.  

NRIs can invest in E-Gold in the same way as Indian residents can. E-Gold was created in 2010 by the National Spot Exchange Ltd NSE -0.13 per cent, or NSEL, for consumers who desire to invest in gold in smaller values than actual gold. To invest in E-Gold in India, NRIs must register a Demat and Trading Account with an NSEL-approved depository participant. Furthermore, E-Gold units, like shares, may be exchanged on the stock exchange, and one E-Gold unit equals one gram of gold.  

NRIs should research the tax consequences of gold investments in India. For example, when NRIs buy and sell Gold ETFs on a stock market, there is no Tax Deducted at Source (TDS). They will, however, be required to self-assess when completing their income tax returns. TDS will be charged to NRIs who choose direct redemption from mutual fund firms. NRIs must pick the best gold investment depending on the simplicity they can invest and store it.  

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