NRIs – Frequently Asked Questions

NRIs can invest in mutual funds in India subject to the adherence to the Foreign Exchange Management Act (FEMA). You may also get in touch with your bankers for clarifications. A mutual fund in your home country can give you a diversified portfolio with the desired mix of debt and equity securities. Even if you are risk-averse and desire fixed income investment options, the Indian debt market can give higher interest rates. You may start with equity funds, debt funds, or hybrid funds.
With the option of investing online, it is much easier to track and manage your mutual funds from wherever you are. Investors can buy, redeem, and switch as well as opt for systematic transfer or withdrawals online. There is no need for issuing cheques, DDs, submitting physical forms, or be physically present in India to manage all the process. You will receive regular account statements (CAS) through emails. Asset management companies (AMCs) also post portfolio disclosures online to keep their investors informed.
Asset management companies in India are not allowed to accept investments in foreign currencies. Hence, the first step to investing in the Indian mutual funds is to open NRO account, NRE account or a Foreign Currency Non-Resident (FCNR) account with an Indian bank. You can invest by any of the below methods. a. Self/Direct One can make transactions, debiting or crediting through regular banking channels. Your application with the required KYC details must indicate that the investment is on a repatriable or non-repatriable basis. KYC documents include the latest photograph, attested copies of PAN card, passport, residence proof (outside India), and bank statement. The bank may require an in-person verification, which you can comply by visiting the Indian Embassy in your resident country. b. Via Power of Attorney Another method is to have someone else invest on your behalf. Mutual fund companies allow power of attorney (PoA) holders to invest on your behalf and make decisions on your investments. However, signatures of both the NRI investor and PoA should be present on the KYC documents to invest.
a. KYC for NRIs To complete the KYC process, you are required to submit a copy of your passport – relevant pages with name, date of birth, photo, and address. Providing the current residential proof is a must, whether temporary or permanent. Some fund houses may insist on in-person verification. b. FIRC (Remittance Certificate) If you have made the payment via a cheque or a draft, then you must attach a foreign inward remittance certificate (FIRC). In case that is not possible, then a letter from the bank would also be accepted. This confirms the source of funds. c. Redemption The AMC will credit the corpus (investment + gains) you get when you redeem your fund units to your account after deducting applicable taxes if any. They can also write a cheque for the same. Some banks allow crediting the redemption amount directly to the NRO/NRE account. If you have opted for non-repatriable investment, then they can credit the proceeds only to an NRO account.
NRI investors often worry that they will have to pay double tax when they invest in India. Well, that is certainly not the case if India has signed the Double Taxation Avoidance Treaty (DTAA) with the country of your residence. The gains from equity mutual funds are taxable based on the holding period. Short-term capital gains attract tax at the rate of 15%. However, Long-Term Capital Gains (LTCG), exceeding Rs 1 lakh a year, are taxable at the rate of 10%. In the case of debt funds, short-term capital gains are taxable at the rate of 30%. Holding the fund for more than three years will result in a 20% tax on the gains with indexation benefit. LTCG on non-listed funds will be taxed at the rate of 10% without indexation. These rates and laws are subject to change, for further clarifications and updates please contact your tax advisor. If you need any help please contact us.
a. SBI Mutual Fund

b. Birla Sun Life Mutual Fund

c. ICICI Prudential Mutual Fund

d. UTI Mutual Fund e. HDFC Mutual Fund

f. Sundaram Mutual Fund

g. PGIM India Mutual Fund

h. PPFAS Mutual Fund

i. L&T Mutual Fund
a. Your investment carries the right of repatriation of the amount invested and amount earned, only until you remain an NRI.

b. Submitting proof of residence in the current country is mandatory. Hence, you must also attach an attested proof along with the application.

c. The compliance requirement in the United States of America and Canada are more stringent as compared to other nations. According to FATCA guidelines, all financial institutions must share the details of financial transactions involving a US person with the US Government.

d. Are you a resident of any of the 90 countries that have signed Common Reporting Standard? CRS is a global reporting system to combat tax evasion. In short, NRIs can choose to invest in his/her home country. The process may have some initial hassles. However, in the long run, the return on investment would be worth it. Currently, only eight fund houses accept mutual fund investment from NRIs residing in the US and Canada. So, there is certainly no reason for you to be left out of investing in one of the fastest-growing economies.