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What are the inflation adjusted returns for investments in the indian market? What are the tax implications?

nish93 4y ago
Indian indices have given 14-17% CAGR in the last 5 years. Inflation is around 6-7% (hard to cross verify since there's also a lag here). On tax, India and US (along with 80+ other countries) have a Double Tax Avoidance Agreement, so you dont get taxed twice. Local rules vary in terms of tax declarations though. E.g. In US, IRS mandates all foreign income to be declared. So you file capital gains taxes in India (online) and declare those in US while filing taxes here. We help with all the reporting here. More details in the article here - https://www.goinri.com/blog/tax-implications-for-nris https://www.goinri.com/blog/tax-implications-for-nris
- deleted 4y ago
  [deleted]
super256 4y ago
Inflation adjusted NIFTY for 31. March 2023: https://www.tradingview.com/chart/NIFTY/p30N39p6-NIFTY-Inflation-Adjusted-31-03-2023/ https://www.tradingview.com/chart/NIFTY/p30N39p6-NIFTY-Infla...
kshacker 4y ago
Looking at last 5 years is not correct (responding to sibling comment for this para). It is very short term and does not cover the time periods when India does not grow. Back of the envelope calculation shows a 10 X growth over past 20 years which averages to about 12% returns. Give back 5% in rupee depreciation and we are talking about 7% in USD terms. But it comes at additional cost. Accounting costs. You need to file taxes in India and you need to claim its credit in US. Extra paperwork both sides. Foreign tax credit is not 100%, it is close enough, but you lose small change claiming it back. Then there is lag in selling something and being able to use that money in USD. You need to fill forms, get CA certificates and work with banks to get money back, takes time and takes money to get that done. Maybe the incidental costs are 0.1%, maybe they are 1% if you start counting the time you spend. Also we can not compare returns directly against Indian equities. I will need to look it up but I believe some stocks are locked to the maximum for foreigners (maybe at 50%) so you can not buy any more unless a foreigner sells ... although the number of such stocks may be limited, if you can not buy and sell like an Indian, your returns can not be comparable. They may incidentally come out better, or they may incidentally come out worse. In my personal experience working with 3 advisors (all companies managing thousands of crores = close to a billion dollars //* should cross check *// of total client funds), my returns never matched their benchmarks, and there was always some explanation, but never a match to their company wide returns for all clients.
- nish93 4y ago
  Over the last 20 years, NIFTY has had a CAGR of 15%. Currency depreciation was 3% every year. So a net gain of 12%. Compared to this, S&P500 CAGR was 7%. We are not talking about stock picking here, since that is anyway individual investor dependent. Plus not all stocks have a foreign counterpart. So funds end up becoming a better diversified alternative. We make the accounting experience simple and online as well but I'd definitely want to know more about your experience, if you are open to chat, feel free to fill the form on the website and we'll reach out

Indian indices have given 14-17% CAGR in the last 5 years. Inflation is around 6-7% (hard to cross verify since there's also a lag here). On tax, India and US (along with 80+ other countries) have a Double Tax Avoidance Agreement, so you dont get taxed twice. Local rules vary in terms of tax declarations though. E.g. In US, IRS mandates all foreign income to be declared. So you file capital gains taxes in India (online) and declare those in US while filing taxes here. We help with all the reporting here. More details in the article here - https://www.goinri.com/blog/tax-implications-for-nris https://www.goinri.com/blog/tax-implications-for-nris

deleted 4y ago
[deleted]

super256 4y ago

Inflation adjusted NIFTY for 31. March 2023: https://www.tradingview.com/chart/NIFTY/p30N39p6-NIFTY-Inflation-Adjusted-31-03-2023/ https://www.tradingview.com/chart/NIFTY/p30N39p6-NIFTY-Infla...

kshacker 4y ago

Looking at last 5 years is not correct (responding to sibling comment for this para). It is very short term and does not cover the time periods when India does not grow. Back of the envelope calculation shows a 10 X growth over past 20 years which averages to about 12% returns. Give back 5% in rupee depreciation and we are talking about 7% in USD terms. But it comes at additional cost. Accounting costs. You need to file taxes in India and you need to claim its credit in US. Extra paperwork both sides. Foreign tax credit is not 100%, it is close enough, but you lose small change claiming it back. Then there is lag in selling something and being able to use that money in USD. You need to fill forms, get CA certificates and work with banks to get money back, takes time and takes money to get that done. Maybe the incidental costs are 0.1%, maybe they are 1% if you start counting the time you spend. Also we can not compare returns directly against Indian equities. I will need to look it up but I believe some stocks are locked to the maximum for foreigners (maybe at 50%) so you can not buy any more unless a foreigner sells ... although the number of such stocks may be limited, if you can not buy and sell like an Indian, your returns can not be comparable. They may incidentally come out better, or they may incidentally come out worse. In my personal experience working with 3 advisors (all companies managing thousands of crores = close to a billion dollars //* should cross check *// of total client funds), my returns never matched their benchmarks, and there was always some explanation, but never a match to their company wide returns for all clients.

nish93 4y ago
Over the last 20 years, NIFTY has had a CAGR of 15%. Currency depreciation was 3% every year. So a net gain of 12%. Compared to this, S&P500 CAGR was 7%. We are not talking about stock picking here, since that is anyway individual investor dependent. Plus not all stocks have a foreign counterpart. So funds end up becoming a better diversified alternative. We make the accounting experience simple and online as well but I'd definitely want to know more about your experience, if you are open to chat, feel free to fill the form on the website and we'll reach out