For most of the Indians who have moved abroad searching for a better and brighter future, investing in Indian funds is one inevitable thing. Be it their dependent parents back home or their love for the country, investing has always been a part of their financial planning.
Following is a five-step guide for NRIs to invest in Mutual Funds
STEP 1: GET REGISTERED WITH AN NRE OR NRO ACCOUNT
Get started with opening an NRO or NRE account. NRE stands for Non-Resident Rupee and NRO stands for Non-Resident Ordinary Rupee account. While NRE account is exclusively for NRIs, NRO can be opened by PIO person if Indian Origin and an OCI Overseas citizen of India. The investments can be made on a repatriable or non-repatriable basis through NRE or NRO account respectively.
STEP 2: GETTING KYC DONE
One of the most important steps to start investing is completing the KYC. In order to be KYC compliant, you need to submit a copy of passport including all relevant pages that include name, photo, DOB, address.
It is mandatory to submit the current proof of address which may be permanent or temporary.
Sometimes, in-person verification can also be demanded depending upon the fund house you choose.
STEP 3: FOR USA AND CANADA BASED NRI
The rules are different for NRIs from USA and Canada; there are many fund houses which do not allow NRIs from the USA and Canada to invest in Indian Mutual Funds due to their complicated compliance requirements. These compliance requirements fall under the Foreign Account Tax Compliance Act or FATCA. There are some fund houses which allow investors from these two countries to invest in pre-defined conditions like Birla Sun Life Mutual Fund, ICICI Pru AMC, SBI Mutual Fund. These fund houses allow only offline transactions with a declaration signed additionally by the client.
STEP 4: MODE OF INVESTMENT
There are two ways in which you can invest: Self or through Power of Attorney. The attorney holder must also be KYC compliant.
The payment can be made by a cheque drawn on the NRE or NRO account. In order to confirm the source of funds, the remittance certificate may also be asked for. In case FIRC (Foreign Inward Remittance Certificate) is not possible, a bank letter will also serve the purpose of confirming the source of funds.
STEP 5: REDEMPTION
The investments and returns from investments can be redeemed by following the redemption procedure. Different found houses may have a different set of procedures with varying requirements.
The AMC will credit the whole amount (investment and gains) after tax deductions to your account. This can also be done by the means of a cheque.
TAXATION OF NRI INVESTMENTS
Most often it is assumed that NRIs are taxed doubly while investing in India. Please be assured, this is definitely not the case. Before making investments be informed regarding the signing of DTAA (Double Taxation Avoidance Treaty) between India and the respective country.
For instance, the USA is one such country with which India has signed DTAA. Hence investors from the USA can claim tax relief in the USA if already paid in India.
LIST OF FUND HOUSES ACCEPTING NRI INVESTMENTS
1. SBI Mutual Fund
2. ICICI PRU Mutual Fund
3. Birla Sun Life Mutual Fund
4. UTI Mutual Fund
5. HDFC Mutual Fund
6. Sundaram Mutual Fund
7. DFHL Pramerica Mutual Fund
8. PPFAS Mutual Fund
9. L&T Mutual Fund