There are some things to keep in mind while investing on behalf of your children when you both are NRIs
01-Feb-2023 •Ashish Menon
My kids are holding OCI cards. I have opened NRE and NRO accounts for my kids (6-year and 10-year old sons), and also got a PAN card for them. Is it possible to do mutual fund SIP (direct) on their name with their PAN and NRE/ NRO accounts? Please advise as I need to do SIPs on their names for the future education needs. - Anonymous
Investing in mutual funds as an NRI and on behalf of a minor child has their own set of challenges. Let's take a look at what to keep in mind when both of those situations are combined, i.e., investing in mutual funds on behalf of a minor child who is an NRI.
Investing on behalf of a minor
This is rather straightforward.
Investing as an NRI
Now if you are an NRI investor, then you are required to
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NRI investing on behalf on a minor
Hence if you are an NRI investing on behalf of a minor, then you can
Note that the process may differ from one AMC to another as not all of them accept investments from NRIs due to the additional compliance requirements.
Tax implications
There is no difference in applicability of taxes on gains except for TDS being applicable on capital gains as follows -
When the minor attains majority, they will have to submit an application to change status from minor to major. You will have to provide PAN, complete the KYC process, update bank account details and make a fresh mandate for SIP, STP, SWP as they are automatically stopped when the minor attains majority. You will also have to provide information regarding your tax status.
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