NRI Investment in Indian Mutual Funds – Key Points
- Eligibility
- NRIs and Persons of Indian Origin (PIOs) are allowed to invest under FEMA (Foreign Exchange Management Act) guidelines.
- Investments must be made in Indian Rupees (INR).
- Account Requirement
- You must invest through either:
- NRE Account – Repatriable (can transfer money abroad)
- NRO Account – Non-repatriable (earnings stay in India)
Choose NRE if you want to repatriate your gains abroad.
- Documentation Required
| Document | Purpose |
| PAN Card | Mandatory for all investors |
| Overseas address proof | Required for KYC |
| Passport + Visa Copy | Identity and NRI status |
| FATCA Declaration | Mandatory under US tax laws (if applicable) |
- Mode of Investment
- SIP (Systematic Investment Plan)
- Lump Sum
Through:
- Online platforms
- Registered distributors
- Indian banks offering mutual fund services
- Taxation for NRIs
| Type of Fund | Capital Gains Holding | Tax Rate* |
| Equity Funds | Short-term (<1 yr) | 15% |
| Long-term (>1 yr) | 12.5% (above ₹1.25 lakh gains/year) | |
| Debt Funds | Short-term (<3 yrs) | As per income tax slab |
| Long-term (>3 yrs) | 20% with indexation |
*TDS (Tax Deducted at Source) is applicable on gains before payout.
Special Note for NRIs in US/Canada:
- Few Indian AMCs allow investments from US/Canada-based NRIs due to FATCA compliance complexity.
- AMCs like SBI MF, L&T MF, UTI MF, ICICI Pru MF often allow it with extra paperwork.
Summary:
- NRIs can invest in Indian mutual funds.
- Need NRE/NRO account.
- Must complete KYC & FATCA.
- Can repatriate funds from NRE.
- Subject to TDS & capital gains tax.
