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Mutual Fund - FAQs for NRIs Research Team | Posted On Wednesday, April 08,2009, 03:52 PM

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Mutual Fund - FAQs for NRIs



Can NRIs invest in mutual funds?

Sure. Non-Resident Indian (NRI) referred to Indian citizens who stay abroad for employment, business, and vacation, can invest in mutual funds.

What is the maximum amount an NRI can invest in Indian mutual funds?

There's no maximum limit laid down by the government for NRIs to invest in Indian mutual funds.

Is NRI required to take RBI permission before investing in mutual funds?

No. As an individual an NRI is not required to take RBI permission for investing in mutual funds. NRI can invest through repatriable or non repatriable basis.

Can I buy Mutual Fund Units using my NRE PINS account?

No, you cannot purchase mutual fund units from the PINS account. You can only do so in the Non-Pins account.

Can an NRI invest in any mutual fund scheme?

There are several mutual fund schemes on offer. However, note that all schemes are registered in India and hence the jurisdiction is limited to India only. None of the funds are registered under the United States Securities Act 1993. Hence these funds are not for you if you're a resident of the United States.

What is POA? Why do an NRI need to submit it?

POA or Power of Attorney is one of the ways NRIs can invest in mutual funds in India. Through the POA, an NRI nominate Artha Money to subscribe or redeem units of mutual fund schemes on your behalf. Besides you also grant us the authority to make additional purchases as well as redemption as and when you request.

How safe is it for NRIs to sign the POA form?

Investing through Power of Attorney (POA) is one of the methods NRIs can adopt for investing in mutual funds and is completely safe.

Can I simply fax the Power of Attorney (POA) form to activate my mutual fund account to you?

No. You will have to courier the duly filled Power of Attorney (POA) form to us. We will have your account activated on receipt of the form and mail you a confirmation.

As an NRI in the USA will I be able to invest online in Indian mutual funds?

Non resident Indians residing in the United States are not permitted by US law to invest online in Indian mutual funds.

What kind of a bank account will I need to have to invest in Indian mutual funds?

You can use your SB/NRE/NRO accounts. However, do remember to activate your Internet banking before investing online.

Will the redemption/dividend amount be credited to the same account from which I made a mutual fund purchase?

Yes. The redemption/dividend amount will be credited to the same account which has been mentioned by you in the registration form.

Will NRIs also be able to avail of the pick-up facility in case of mutual funds?

No. The pick-up facility is available only to resident Indians.

What are the tax benefits for investing in mutual fund units?

Dividend income from mutual fund units will be exempt from income tax with effect from July 1, 1999. Further, investors can get rebate from tax under section 88 of Income Tax Act, 1961 by investing in Equity Linked Saving Schemes of mutual funds. Further benefits are also available under section 54EA and 54EB with regard to relief from long term capital gains tax in certain specified schemes.

Tax Rates and TDS Rates to NRIs / PIOs / FIIs?

  • Income from Units: of a mutual fund specified under section 10(23D) of the Income-tax Act, 1961 (the Act) is exempt in the hands of unit holders under section 10(35) of the Act. No income tax is deductible under section 194K and 196A of the Act on any income distribution by the Mutual Fund.
  • Capital Gains and TDS thereon

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