Mutual Funds for NRIs:
KYC, Investing and Tax

Get NRI KYC and FATCA right first, invest through an NRE account if you want the proceeds to be repatriable, and expect tax to be deducted at source whenever you redeem.

KYC and FATCA

• PAN card, passport and overseas address proof.
• KYC status updated to non-resident. A resident KYC left in place after moving abroad is a common reason transactions are rejected.
• FATCA and CRS declarations giving your country of tax residence.

NRE or NRO

Invest from an NRE account for repatriable holdings, and from NRO for money earned in India. Redemption proceeds go back to the account the investment came from. See NRE vs NRO.

US and Canada residents

Because of FATCA reporting, only some fund houses accept investors resident in the US or Canada, and several accept only physical applications. We check which fund houses are open to you before building the plan.

Tax when you redeem

The fund house deducts tax at source on capital gains when an NRI redeems. Under the rules that took effect on 23 July 2024, equity-oriented funds held for more than 12 months are taxed at 12.5 percent on long-term gains above ₹1.25 lakh a year, and at 20 percent if held for 12 months or less. Gains on debt funds bought on or after 1 April 2023 are taxed at your slab rate, which for TDS purposes on NRIs means the highest rate. Rates can change in any budget, so we confirm the position before you redeem.

Treaty relief

If your country of residence has a tax treaty with India, you may be able to reduce Indian tax or claim credit abroad. This usually needs a tax residency certificate and Form 10F, and sometimes an Indian tax return to claim a refund of excess TDS.

Taking the money abroad

Proceeds credited to an NRE account can be repatriated freely. Proceeds credited to NRO fall within the USD 1 million a year limit, with Forms 15CA and 15CB.