NRIs and Indian mutual funds: NRE, NRO, FATCA and the US–Canada question

Investing from abroad is straightforward once three things are in place: the right bank account, updated KYC, and a FATCA declaration.

Non-resident Indians (NRIs) and Overseas Citizens of India (OCIs) can invest in Indian mutual funds. The process is mostly online, but a few details decide whether your application goes through smoothly.

1. The bank account

• NRE account — money brought in from abroad. Investments and proceeds are repatriable.
• NRO account — income earned in India (rent, dividends, pension). Repatriation is subject to limits and paperwork.

Invest from the account that matches where the money came from. Once your residency changes, a resident savings account should not be used for fresh investments.

2. KYC

Your KYC must show your NRI status and overseas address. If you completed KYC while resident in India, it needs a modification. Passport copies and proof of overseas address are typically required.

3. FATCA and CRS

Every investor must declare their tax residency. For NRIs this declaration is checked carefully, and AMCs will not process an investment without it.

The US and Canada question

Because of reporting requirements in those countries, many AMCs do not accept investments from residents of the USA or Canada. Some do accept them, usually with an additional declaration and sometimes only through physical applications. The list changes from time to time, so ask us for the current position before choosing a scheme.

Tax at source

When an NRI redeems units, the AMC deducts tax at source on the capital gains. You may be able to claim credit in your country of residence under the applicable tax treaty. Please speak to a tax professional who understands both countries.