Everything NRIs Need To Know About Mutual Fund Investments in India.

 2020 may have been a challenging year for the Indian market, but the economy has started to revive in 2021. India is one of the largest and fastest-growing economies in the world, and one must fully leverage this opportunity to invest in the Indian markets for a diversified portfolio that provides high returns.

An Indian stock market is always a good option for NRIs to invest in. The Foreign Exchange Management Act (FEMA) allows Non-Resident Indians and Persons of Indian Origin (PIOs) to invest directly in the Indian stock market, however, investing through mutual funds is considered to be a safer and smarter option. NRIs and PIOs are allowed to invest in all kinds of mutual funds in India, except for NRIs based in the US and Canada who may not have the luxury to do so due to the dreary paperwork required by Foreign Account Tax Compliance Act (FATCA). 

 

If you are NRI planning to invest in mutual funds in India, here are some things you need to keep in mind.




Open an Account in India

NRIs cannot invest in mutual funds in India with foreign currency, and hence, they need to open either an NRE Savings Account/NRO Savings Account/Foreign Currency Non-Resident (FCNR) Account. If you plan on repatriating the earnings, then an NRE Savings Account is a good fit for you. Earnings from NRO Savings Account cannot be repatriated. 

 

SBM Bank India offers a range of NRE Savings Accounts, NRO Savings Accounts and FCNR Accounts with lucrative returns and a host of other benefits. From the finest privileges to wealth management and investment solutions such as mutual funds, SBM Bank India ensures that you have the finest experience while staying connected to your homeland, no matter where you are.

 

Finish your KYC

Once you have opened an account that suits your needs, you need to get KYC compliant to be able to start investing in mutual funds. To become KYC compliant, you need to submit a recent photo, copies of your PAN card and passport, proof of residence outside India, and your bank statement. You may even be required to visit the Indian embassy in your country of residence for in-person verification. This can be a tedious process, but once this step is completed, you are free to start transacting online. 

 

Tax rates

Tax rates for NRIs are the same as those for Indian investors. Short-term capital gains are taxed at 15% and long-term capital gains are taxed at 10%. However, the tax rates for NRIs differ when it comes to the redemption of mutual funds. NRIs are subjected to pay TDS while redeeming their investments. Sometimes, NRIs can also be subjected to double taxation. However, if your country of residence has signed the Double Taxation Avoidance Treaty (DTAA) with India, NRIs can redeem the TDS which they have already paid in India.

 

If you’re an NRI looking to invest in India, SBM Bank India has a wide spectrum of products across asset classes that will help you get your money’s worth. The bank has partnered with industry experts who help customers get the best pool of investment solutions. SBM Private Wealth follows a balanced approach and a time-proven investment strategy in the selection of asset classes, including mutual funds. They offer investment options across fund types ranging from equity, debt, hybrid, ELSS, and liquid funds, all customized to suit your risk appetite. SBM Bank India has partnered with Fisdom to help NRIs seamlessly invest in mutual funds and digital gold. So if you’re looking to build your wealth and get the best market returns with a hassle-free experience, SBM Bank is the way to go.

 

Conclusion

With the tax rules and the possibility of double taxation for NRIs in certain countries, mutual fund investments may seem challenging. However, the difficulties will soon be ironed out to make the experience seamless for NRIs to invest in mutual funds in India. The possibility of earning high returns makes up for the inconvenience, and with SBM Private Wealth’s range of investment offerings, especially mutual funds, one can rest assured and have a rewarding, secure, and extremely hassle-free experience.

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