NRI Guide

The short answer

Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) can invest in Indian mutual funds. You invest in rupees, usually from an Indian NRE, NRO or FCNR bank account, and you need KYC done as a non-resident.

For most countries the process is close to what a resident investor follows. If you live in the USA or Canada, there are extra rules: only some fund houses accept you, and your home-country tax reporting needs care. We cover both below.

Who can invest

You can invest on a repatriable basis (the money can go back abroad) or a non-repatriable basis (it stays in India). Which one depends on the bank account you pay from.

NRE, NRO and FCNR: which account does what

Indian mutual funds take investments in rupees, not in foreign currency. So your first step is the right Indian bank account.

Investments paid from an NRE account are repatriable. Investments paid from an NRO account are non-repatriable, beyond the NRO limit above. Your bank will confirm the current limits.

KYC from abroad

KYC (Know Your Customer) is a one-time identity check. You do not have to fly to India for it. You usually need:

• PAN card
• Passport, and OCI card if you have one
• Proof of your overseas address, and your Indian address if any
• A recent photograph and a cancelled cheque or statement of your NRE/NRO account
• A FATCA/CRS declaration: a short form stating your tax residence

The in-person check can often be done by video. Otherwise, copies can be attested abroad by an Indian embassy or consulate, a notary, or an overseas branch of an Indian bank. You can also appoint a family member in India as your Power of Attorney (PoA) to handle paperwork; the PoA document must carry both your signature and theirs. A PoA holder cannot make a nomination for you.

If you live in the USA or Canada

You can invest, but only with fund houses that accept US and Canada residents. Some ask for an extra declaration or accept only physical (offline) forms. The list changes, so we check each fund house's current rules before you invest.

Why the extra rules? FATCA (the US Foreign Account Tax Compliance Act) requires Indian financial firms to report accounts held by US persons to the Indian tax department, which shares the details with the US tax authority. Because of these reporting duties and overseas rules, many fund houses limit US and Canada investors.

US tax, in brief. For US tax purposes, Indian mutual funds usually fall under the PFIC (Passive Foreign Investment Company) rules. That usually means filing Form 8621 for each fund and can make the US tax on gains heavier. FBAR and Form 8938 reporting may also apply. Please speak with a US tax professional before investing; we will work alongside them.

Canada, in brief. Gains are generally taxable in Canada, with credit for tax paid in India. If the total cost of your foreign property goes above CAD 100,000 at any time in the year, Form T1135 is required.

Tax deducted in India when you redeem

When an NRI sells mutual fund units, the fund house deducts tax at source (TDS) before paying you. Rates below are for Tax Year 2026-27 under the Income-tax Act 2025 as amended by the Finance Act 2026, before surcharge and 4% cess:

Three things NRIs often miss:

• No basic exemption against gains. A resident can set unused basic exemption against capital gains. A non-resident cannot.
• Extra TDS comes back through an Indian tax return. If more tax was deducted than you owe, file an ITR in India to claim the refund.
• Dividends (IDCW) are taxed at 20% for non-residents, or a lower treaty rate if you submit a Tax Residency Certificate and Form 41 (TDS under section 393 of the Income-tax Act 2025).

Double tax treaties (DTAA). In many cases India still deducts tax when you redeem, and your home country gives you credit for that Indian tax. Treaty benefits depend on conditions and differ by country, so confirm with a tax professional where you live.

Taking money back abroad

Redemptions of NRE-funded investments can go back abroad freely. From an NRO account, current income can be sent abroad, and other balances up to USD 1 million a financial year (April to March). For these transfers you file Form 145 (earlier Form 15CA) and, where required, a CA's certificate in Form 146 (earlier Form 15CB) on the tax position. Your bank handles the transfer.

Moving back to India

When you return, tell your bank and every fund house. NRE accounts are re-designated as resident accounts (or moved to a Resident Foreign Currency account), and your folios are updated to resident status. Your existing investments can usually stay invested.

Many returning NRIs are treated as RNOR (Resident but Not Ordinarily Resident) for a period. During RNOR, income earned abroad is generally not taxed in India, unless it comes from a business controlled in, or a profession set up in, India. Whether you qualify depends on your years of stay, so it is worth working out with a CA before you move.