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NRIs can invest in mutual funds in India, right?

Are you a non-resident Indian (NRI) who wants to put your money into Indian mutual funds? Don’t look any further! As an NRI, can you invest in mutual funds? This blog post goes into great depth about that, as well as how to invest, pay taxes, and get your money back.

Mutual Funds Investment for NRIs in India

Yes, that’s the short answer. Foreign Institutional Investors and people who don’t live in India can invest in mutual funds thanks to the Foreign Exchange Management Act of 2000. The Reserve Bank of India (RBI) has set the rules for how people in India can buy in and get money out of mutual funds. As an NRI, you can invest in mutual funds as long as you follow certain rules.

What NRIs need to do to invest in mutual funds?

Indian citizens who are not citizens of the country can easily invest in mutual funds. Let’s check it out.

Making an account

If you are an NRI and want to invest in Indian mutual funds, you need to open an NRO or NRE account. Because fund houses don’t take foreign currency and savings accounts don’t let you keep your money, you’ll need to start one of the accounts above.

Investing (one of two ways)

With the direct way or through power of attorney, you can invest in mutual funds as an NRI.

• Direct method: This is the only way to buy directly in MFs in India. You might be asked to show proof of who you are and other things, like current photos, bank statements, proof that you live in other countries, copies of your PAN cards, and so on. Through the Indian government, you can also ask for and get an in-person verification.
• Power of Attorney: If you need to buy in MFs, you can use Power of Attorney to let someone else do the dealings for you. You might need to have both you and the Power of Attorney sign KYC forms for this.
  Doing the KYC

As an NRI, you need to go through the KYC process before you can buy in MFs. You might be asked to send a few things as proof of who you are, like a photo, proof of your present address, copies of your passports, and so on. It’s also possible that you will be asked to go through a proof process in person.

Note: If you’re in the US or Canada, you might have to send in extra paperwork. Some fund houses also don’t let NRIs invest in these countries. So, look for companies that also take funding from these countries.

Getting your cash back

All Indian mutual fund companies don’t have the same set rules for how to redeem their shares. So, before you spend your money, it would be smart to read the rules about redemption.

Every fund house does the same thing, which is to put your whole corpus, which includes the amount you paid and any gains, into your NRE or NRO bank account. After taxes are taken out, the amount paid will be done.

How mutual funds are taxed?

Gains from mutual funds need to be paid taxes on. The tax rate is based on how long the item was held and what kind of asset it was.

Taxes on funds that invest in stocks

• If you cash in your STCG within 12 months, you will be taxed at a rate of 15%.
• If you take out an LTCG after 12 months, you will be taxed at a rate of 10%, with no indexation for amounts over Rs 1 lakh.

Gains on debt funds

• When you cash in your debt fund units within three years, you will be taxed at your income tax slab rate on your STCG.
• LTCGs are taxed at a 20% rate after indexation, surcharges, and cess, if any, when the funds are returned after three years.
• You won’t have to worry about paying two sets of taxes on your gains if India and your country have signed a Double Taxation Avoidance Treaty Agreement (DTAA). When you cash out your stocks, however, TDS is taken out of your capital gains.

Conclusion:

If a mutual fund in India lets people from your country join, you can put your money there even though you are not a citizen of India. So, if you are an NRI, you should only invest in mutual funds after doing a lot of study.

The only reason for this blog is to teach, so don’t take it as personal advice. There are market risks with mutual funds, so read all documents linked to the scheme carefully. This is the brief information about the Mutual Funds Investment for NRIs in India in detail.

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