Can NRIs invest in mutual funds in India online? Here’s a direct answer to the question on your mind: Yes, you can invest in mutual funds in India if you’re an NRI. Mutual funds for NRIs is almost as accessible as it is for resident Indians.*

1. What kind of bank account do NRIs need to invest in Mutual Funds in India?

All transactions between you and the mutual funds will be in Indian National Rupees (INR). You will have to pay the mutual funds in INR and whatever return you get, they’ll pass on to you in INR as well.

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You’ll need any one of the following types of bank account:

  • Non-resident External Rupee (NRE) Account
  • Non-resident Ordinary Rupee (NRO) Account
  • Foreign Currency Non-resident (FCNR) Account

Keep in mind, in the case of an NRO account, only the returns are repatriable. The principal amount is not.

If you are an NRI, you probably already have an NRE/NRO account. Great!

2. What Are the Requirements to Invest in India?

You’ll need to upload self-attested photocopies of:

  • A recent photograph of you
  • Your PAN card
  • Your passport (certified copy)
  • PIO/OCI card
  • A proof of your residence outside India and permanent address proof (could be of any foreign nation).
  • Bank statement (1 month’s) of the bank account you want to use for investing.

All of this is to make sure you are KYC compliant. An in-person verification would also have to be carried out. For NRIs, this can be done by us at Groww (an AMFI recognized distributor) over a video call too.

4. Is the Income Taxable for NRIs?

Income earned will be subject to tax laws of India.

+Short-Term Gains

Equity Mutual Funds: You’ll have to pay 15% as tax if the investment is redeemed before one year.

Debt Mutual Funds: the rate of tax depends on your income tax slab if the investment is redeemed before three years.

+Long Term Gains

Equity Mutual Funds: No tax needs to be paid if investments are redeemed after a year from the investment.

Debt Mutual Funds: If redeemed after three years from the date of investment, a tax rate of 20% is applicable on the gains with indexation benefit.

tax mutual funds

Taxes you’ll have to pay in the country you reside in will depend on the individual country laws. India has Double Tax Avoidance Agreements with 88 countries (USA and Canada also a part of this) of the world. This agreement aims to reduce taxing the same income twice.

For example, if you (NRI) are based in the USA makes short-term capital gains, you will have to pay 15% tax in India. The rate of tax for the same gains is 30% in the USA. However, you will have to pay only the difference in the tax rate in the USA. Thus, you are not taxed doubly.

UPDATE: The tax laws have changed after February 2018. Please click here to know about it. 

5. Why Should NRIs Invest in India?

IMF foresees India’s growth in 2018-2019 to be 7.7%. A report by the World Bank says something on similar lines. The Chinese official media indicated in an article that India could become the “factory of the world”.

India attracts highest FDI inflows since 2015, as opposed to its erstwhile rank of 15 just a few years back.

The world economy is not doing very well as a whole. The Indian economy in such cloudy times appears as a silver lining. Consistently rated as one of the world’s fastest-growing nations, India has attracted investments from all over the world. It is no surprise then that retail investors want a piece of the cake too.

In fact, you are probably reading this because an NRI friend of yours has shown interest or has already started investing in Indian mutual funds. No surprise then that more NRIs are investing in Indian mutual funds.

6. NRI from US/Canada

NRI from USA and Canada cannot invest in all mutual funds. Certain mutual funds need the investors to be physically in India while making the investments. This means that they cannot do a SIP.

Mutual Fund Houses like Reliance let NRI from US/Canada invest online also. Please, Whatsapp 9108800604 for more details.

*Franklin Templeton Mutual Fund does not accept investments from NRIs and PIOs.

*The options for NRI from US/Canada are fewer than Indian residents.

Currently, Groww does not support NRI investment.
However, you may refer to our site, Groww.in, if you want to gauge more knowledge about mutual funds

Happy investing!

Disclaimer: the views expressed here are those of the author. Mutual funds are subject to market risks. Please read the offer document before investing.