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NRI investment in Mutual funds ! Best Reasons to invest in 2019-20

March 25, 2018 0 Comments nri

A complete and detailed guide for new NRI’s investor in mutual funds

So we will explain you step by step how NRI investment in mutual funds can be done in India.

Generally NRI’s investor who are new towards Mutual funds still ask this common question that whether they can invest in Mutual fund in India or not ?

1) Do NRI investment can be done in mutual funds in India?

The answer is “YES”. NRI’s can definitely do invest in mutual fund in India.

2)Is any Approval need to be taken from SEBI or RBI?

No, only the documentation is more compare to domestic investor and specially for US and Canadian NRI’s investor.

3) Do NRI can invest in every mutual funds available in India ?

No, there is few limitations in AMC‘s where NRI investment can be done.

4) Which type of banking account do NRI investors need?

There are 2 types or account NRE and NRO bank account used by NRI’s.These 2 types can be only used to invest.

The Non-Resident External Rupee (NRE) account freely repatriable, from which money earning in overseas can be freely transferred to the India and the Non-Resident Ordinary Rupee (NRO) account, is a non-repatriable rupee account.

So When you invest in india, it preferable to have repatriable bank account. So it’s advisable to have NRE account for mutual funds investment.

5) Documents required for NRI investment in mutual fund?

For an NRI’s investment applying for mutual fund is similar to the one followed by domestic investors.Two ways you can invest :-

a.Self/Direct

b. Via Power of Attorney

Self/Direct

If you are a 1st time investor in mutual fund then needs to do ‘KYC (Know your client)’. This is a onetime process required to invest in mutual funds. 

For KYC, you need to submit few given required documents:-

  1. Passport Copy
  2. If POI, the POI card (compulsory)
  3. Overseas Address Proof copy (Must be in English,if not need to translate by registered translator)
  4. Indian PAN card copy
  5. Two passport size photos
  6. Bank statement (The bank may require an in-person verification which you can comply by visiting the Indian Embassy in your resident country)
  7. Fully Filled KYC form

You need to fill the KYC form and need to deposit these required documents along with it and that to deposit in CAMS or KARVY office. If you are investing through financial advisor they can help you in form fill up and submission of documentation too. Even you can courier the documentation to financial advisor and they can deposit for you.

How much time to KYC registration takes?

KYC registration takes 3-5 days .Once it get done it will visible online in CAMS portal. You will get the alert about the registration via mail or SMS.

Where can i check my KYC Status?

You can check KYC status by entering your PAN in CAMS or KARVY online portal.Recently Online KYC is started by CAMS but it is only available for domestic investor but in coming days definitely it will extended to NRI’s investor too.

What is FATCA?

FATCA(Foreign Account Tax Compliance Act) need to submit these days and it’s done for all investors. However it’s mainly required for US investors. One has to provide information like Name, PAN number, Address, Place of birth, Country of birth, Nationality, Gross Income, Occupation, Country of residence, Tax ID number, and type.

Once the KYC get registered and FATCA is submitted, NRI can start investing in mutual funds.

Via Power of Attorney

Another easier but common 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 take other decisions pertaining to your investments. However, signatures of both the NRI investor and PoA should be present on the KYC documents to make the investment.

6)Which fund houses accept NRI investment in mutual funds?

  • Birla Sun Life Mutual Fund
  • SBI Mutual Fund
  • Sundaram Mutual Fund
  • ICICI Prudential Mutual Fund
  • UTI Mutual Fund
  • DHFL Pramerica Mutual Fund
  • HDFC Mutual Fund
  • L&T Mutual Fund
  • PPFAS Mutual Fund

NRI’s from US and Canada

The compliance requirement is the US 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.

Remittance Certificate

If you have made the payment via a cheque then you must attach a Foreign Inward Remittance Certificate (FIRC) with it or else need to submit a letter from the bank.

Redemption

Once you want to redeem ,the AMC will credit the corpus to your account after deducting required taxes. Some banks allow crediting the redemption amount directly to the NRO/NRE account

7) How are NRI investor in mutual fund taxed?

NRI investors worry about double taxation when they invest in India. But if India has signed DTAA (Double Taxation Avoidance Tready) with the country like US then you can take tax relief in US.

There are 2 types of gain Short term Capital and Long Term Capital Gain!

Mutual Fund Type Short Term Capital Gain Long Term Capital Gain
Equity Mutual Fund 15%(Less than 1 year) 10% (Till 1 lakh exempted per year)
Debt Fund 30%(Less than 3 years) 20% with indexation(Listed)10% without indexation(Non-Listed)
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