Can NRI invest in Mutual Funds? & how?
How can NRI shortlist Mutual Funds?
Can NRI repatriate redemption?
What are the tax applicability for NRI?
Can NRI invest in Mutual Funds? & how?
Yes, NRI can invest in Mutual funds, except for NRI from USA/Canada (with conditions).Due to different regulatory requirements in USA/Canada, NRI can only invest in Mutual Funds which comply to USA/Canada regulations.
Account opening/ Documentation for an NRI: To invest in Mutual Funds, investor must first complete the KYC (know your client) documentation, as per SEBI guideline, which involves copy & details of;
a) An overseas address proof
b) Pan card proof. NRI who are part of “Merchant Navy”,needs to submit a copy of CDC also.
How can NRI shortlist Mutual Funds?
Shortlisting a fund for NRI is very similar to a resident, especially if NRI is not from USA/Canada. Else the basket of fund is limited, and one has to cherry pick funds, from what is available.
It’s always recommended to consult (speak/video-chat) with an advisor to shortlist funds,based on your preference, risk, charges & various other parameters. Regular reviews with your advisors, will give you the extra comfort & confidence, due to ever changing equity market.
Can NRI repatriate redemption?
If the investment is made from NRE Account, and during the redemption phase the investor is still an NRI, then one can take the credit back to the NRE account. Redemption proceeds (after deduction of taxes) are paid in rupees by cheque to the account number provided. Some banks also offer direct credit of redemption proceeds to the NRE/NRO account. Investments made via NRO can’t be redeemed in NRE account.
The investments carry the right of repatriation of capital invested, and capital appreciation only till the investor remains an NRI.
What are the tax applicability for NRI?
TDS is deducted at source on the redemption proceeds for any short-term gain. A TDS certificate is also issued digitally, for every redemption made by the respective Mutual Fund Company. Short-term Investments in Debt Fund are taxed as per slab rates, whereas in Equity funds its at flat 15% p.a. currently. The definition of a short-term fund is holding it for less than 3 years for debt fund, and 1 year for equity and balanced funds.
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Disclaimer: Investment in securities, including mutual funds is subject to market risks, including the potential loss of principle and fluctuation in value. Past performance does not guarantee future results. You should consider the Investment objectives, risks, charges and expenses of investment securities carefully before investing. Read the prospectus carefully before investing.
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