Things to know as an NRI before investing in mutual funds in India

A large number of Indians migrate to other nations in search of better employment opportunities. It’s interesting to note that they have a strong desire to return home one day. The vast majority of these Non-Resident Indians have family members living in India. In such circumstances investing in India is a wise decision. NRI Investment in mutual funds is also a popular way of wealth creation. There are several Investment Plans For NRI that help in generating a secured income. Let us understand each aspect pertaining to benefits and investment plans for NRI in India in detail.

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Is it possible for non-resident Indians to invest in mutual funds in India?
NRIs are permitted to invest in mutual funds in India, as long as they adhere to the rules and regulations of the Foreign Exchange Management Act (FEMA). The investment plans for NRIs are also crafted in compliance with all the norms stipulated by the governments of the respective countries.

However, several asset management companies (AMCs) in Canada and the United States of America do not welcome mutual fund applications from non-resident Indians (NRIs).

You may want to begin with one of three types of mutual funds, depending on your investment objectives and risk tolerance: equity funds, debt funds, or hybrid funds. Additionally, you have a multitude of choices and can select the mutual funds that are best appropriate for your financial objectives and risk tolerance. Whatever might be your objective, there are ample Investment Plans for NRI.

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What are the advantages of mutual fund investments for Non-Resident Indians (NRIs)?

India, as one of the world’s key emerging markets, attracts a slew of foreign investors, numbering in the thousands. A few of the benefits that Non-Resident Indians might reap by investing in an investment plan for NRI are listed below.

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It is simple to handle funds online from any location:
Because of the facility to invest online, it is substantially easier to follow and manage your mutual funds from any country than it was previously. A multitude of investment plans for NRIs are available for online buying, redemption, and transfer, and investors can even establish automatic transfers and withdrawals from their accounts.

As an NRI investing in mutual funds in India, there is no necessity to provide cheques or demand draft, submit physical paperwork, or even be physically present in the country!

You will get consolidated account statements (CAS) on a routine basis via email.
Additionally, mutual fund distribution companies and asset management companies make their portfolio holdings available online to keep investors informed.

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Possibility of more income via rupee appreciation
If the rupee appreciates relative to the currency of the resident country, investors will see an increase in their earnings. When a non-resident Indian (NRI) from the United Kingdom invests 2,000 pounds in an Indian mutual fund at a rupee-to-pound exchange rate of Rs 100, the investor stands to win if the value of the rupee rises with the pound over time. NRIs can also take advantage of the same benefits by investing in Indian mutual funds in their home country as well.

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What is the taxation procedure in the investment plan for NRI?
When it comes to investing in India, NRIs are frequently apprehensive about the possibility of paying double taxes. That is definitely not the case if India and your country of residence have signed a treaty against double taxation (DTAA).

Gains on mutual funds that invest in stocks are taxed differently depending on how long they’ve been held. Investment income on short-term equity-based fund investments is taxed at a rate of 15%.

Long-Term Capital Gains (LTCG) exceeding Rs 1 lakh annually, on the contrary, are taxed at 10% without the advantage of indexation.

Investment income on debt-oriented funds are taxed in the year they are earned, depending on your tax rate. If you hold the fund for a tenure of more than 3 years, you will be subject to a 20% indexation tax on long-term capital gains. On the contrary, unlisted mutual funds entail a 10% rate without indexation.

Simplifysors is amongst the top mutual fund distributor that provides the best mutual fund investment plans for NRI.