Can an NRI invest in mutual funds?

Can a Non Resident Indian (NRI) invest in Indian mutual funds. Is growth taxable? Are funds repatriable? Which Fund houses are accepting such investment?
- S M Ghai

Yes, NRIs can invest in Indian mutual funds. However, if you are an NRI based in the USA, you may have problems investing with most mutual funds. Due to a new US Act, called Foreign Account Tax Compliance Act (FATCA), most mutual funds do not entertain American NRIs. So check with the mutual fund company of your choice whether they entertain US NRIs.

Taxation is similar for Indian and NRI investors in equity schemes. Long-term capital gains tax on investments held over 12 months is zero and short-term capital gains tax is 15 per cent. Investments in debt schemes sold after three years qualify for long-term capital gains tax of 20 per cent with indexation. Short-term captial gains are added to the income and taxed as per the income tax slab applicable to the investor.;

To invest on a repatriable basis, NRI investor must have an NRE or FCNR Bank Account in India.

This article was originally published on November 02, 2015.