Tips for NRIs to invest in Indian mutual funds, stock market

Surojit Pandya, an India-born US citizen, wanted to invest in an Indian mutual fund scheme, but was told that the fund house does not accept investments from people residing in the US.

Most US-registered mutual fund companies which have India operations do not accept investments from Indians living in the US as they are bound by the cap on the number of non-resident investors they can take.

Regulators in some countries require fund managers to be registered with them if they are handling more than a certain number of accounts of their residents. For example, the Dodd-Frank Act of the US requires fund managers handling over 15 US-based investors to be registered with the US regulators and follow their rules. To avoid dual regulators, many fund houses have stopped taking investors from these countries.

For someone like Pandya, one way to invest in the Indian market is to opt for India-specific funds launched by US mutual funds or go for Indian mutual fund houses that allow US-based NRIs to invest in their schemes. But for millions of NRIs not residing in the US, investing in Indian stock markets or mutual funds is not a tough proposition.

As an Indian staying overseas, if you want to take advantage of the high growth back home, you can do so by investing in stocks and mutual funds by following some simple steps. Despite the recent dull phase in Indian equity markets, the country’s economic prospects continue to be bright and its long-term growth story remains intact. But before we go ahead with the procedures for investment, it is important to know who according to Indian law is considered a non-resident Indian.

KYC for NRIs

Who’s an NRI?

– Submission of passport
copy is mandatory. Relevant pages of passport having name, photo, date of
birth and address should be submitted.

– A person who has been
in India for 182 days or more during a financial year and 365 days or more
during the preceding four financial years qualifies as a resident of India.

– Overseas address is
mandatory. Either the permanent or correspondence address must be an Overseas
address.

– NRIs can continue to
enjoy non-resident status in India if their presence in the country is more
than 60 days but less than 182 days in a financial year, even if their stay
in India during the past four financial years is 365 days or more.

 

– A person, who has been
deputed overseas for more than 6 months, also qualifies for non-resident
status.

According to the Foreign Exchange Management Act (Fema), 1999, “an NRI is a person resident outside India who is either a citizen of India or a person of Indian origin (PIO).”

Fema further clarifies that a PIO is a foreign citizen of Indian origin residing outside India who has held an Indian passport at any time or who himself or his father or grandfather was a citizen of India.

The Income Tax Act further identifies the criteria for availing tax exemptions extended to NRIs.

HOW TO GET STARTED?
All investments made by NRIs have to be in local currency, that is, the rupee. Mutual funds in India are not allowed to accept investments in foreign currency. For investing in Indian mutual funds, therefore, an NRI needs to open one of the three bank accounts-non-resident external rupee (NRE) account, non-resident ordinary rupee (NRO) account or foreign currency non-resident account (FCNR)-with an Indian bank.

An NRE account is a rupee account from which money can be sent back to the country of your residence. The account can be opened with money from abroad or local funds. An NRO account is a non-repatriable rupee account. An FCNR account is similar to the NRE account, except for the fact that the funds are held in a foreign currency.

The amount that is be invested can be directly debited from an NRE/NRO account or received by inward remittances through normal banking channels. An NRI needs to give a rupee cheque or draft from his NRE/NRO account. He can also send a rupee cheque/draft issued by an exchange house abroad drawn on its correspondent bank in India.

If the investment is made through cheques or drafts, the investor should attach with the application form a foreign inward remittance certificate (FIRC) or a letter issued by the bank confirming the source of funds.

FIRC is a proof of payment received by the individual from outside the country in a foreign currency. It is issued by the bank where you have the account to receive the funds.

Other know-your-customer documents such as Permanent Account Number and address proof are also to be submitted, just as in case of resident investors.

POWER OF ATTORNEY
After you have made the initial investments, is it possible for you to keep track of your money and react to market movements that at times may call for additional purchases, switches or redemptions even as you are away?

Mutual funds allow a power of attorney (PoA) holder to take these decisions on your behalf. All that the PoA holder needs to do is to submit the original PoA or an attested copy of it to the fund house. The PoA should have signatures of both the NRI and the PoA holder. The PoA holders signature will be verified for processing any transaction.

Similarly, an NRI can make a resident Indian his/her nominee in the mutual fund scheme. An NRI can also be the nominee for investments made by a local resident. Fund houses also allow an NRI to have a joint holding with a resident Indian or another NRI in a scheme.

HOW TO REDEEM?
Redemption proceeds are either paid through cheques or directly credited to the investor’s bank account. All earnings will be payable in rupees.

As mentioned earlier, investments made through inward remittances or from NRE/FCNR accounts are fully repatriable. Hence, earnings made by redeeming the units or through dividends are fully repatriable.

However, in case of investments made through NRO accounts, only the capital appreciation is repatriable, not the principal amount.

TAX LIABILITIES
While tax liabilities of an NRI investing in India are the same as that of a resident investor, tax is deducted at source in case of the former.

“The key difference between investment rules for NRIs and those for resident Indians in case of both MFs and stocks is tax deduction at source (TDS),” says Rajmohan Krishnan, executive vice president, regional head, North & South, Kotak Wealth Management.

But are NRIs subject to double taxation-once in India and again in the country of their residence? It depends on the country of residence. If the Indian government has a avoidance of double taxation treaty (ADTT) with that country, the NRI will be spared from paying tax twice.

According to Kavitha Menon, vice president, Wealth Management Group, Parag Parikh Financial Advisory Services, a number of countries have an ADTT with India.

“To give an example, India has an ADTT with the US. If an NRI based in the US makes short-term capital gains from equity investments in India, he pays 15% tax. However, the rate for such gains is 30% in the US. The investor will need to pay tax only for the difference in rate. This means he gets a deduction on the tax paid in India from his tax payable in the US.

 TAX
LIABILITIES OF NRIs

NRI earnings from investments in India is taxed at the rate
given below:

 

EQUITY FUNDS/STOCKS

DEBT FUNDS

 Short-term Capital Gains Tax

15%

As per tax slab

 Long-term Capital Gains Tax

Nil

10% without indexation,
20% with indexation

 Dividend Distribution Tax

Nil

25% on liquid funds,
12.5% on other debt funds

 Total NRI investment should not go beyond 10% of the
paid-up capital of a company.

EQUITY INVESTMENTS
NRIs can invest in Indian stock markets under the portfolio investment scheme (PIS) of the Reserve Bank of India (RBI). Under this scheme, an NRI has to open an NRE/NRO account with an RBI-authorised Indian bank. An individual open only one PIS account for buying and selling stocks.

Aggregate investment by NRIs/PIOs cannot exceed 10% of the paid-up capital in an Indian company and a PIS account helps the RBI ensure that the NRI holding in an Indian company does not cross that limit. Each transaction through a PIS account is reported to the RBI.

The next step is to open a demat account and a trading account with a Sebi-registered brokerage firm. An NRI cannot transact in India except through a stock broker.

NRIs cannot trade shares in India on a non-delivery basis, that is, they can neither do day trading nor short-sell in India. If they buy a stock today, they can only sell it after two days.

Short-selling is selling stocks that one doesn’t own in expectation that their prices will drop, and buy them back at lower prices.

SUBSCRIPTION TO IPOs
Shares issued through initial public offerings (IPOs) are not covered under he PIS. In case of IPOs, it is the responsibility of the issuing company to inform the RBI the number of shares it is allotting to NRIs.

However, NRIs need NRE/NRO accounts to subscribe to IPOs. The shares acquired through IPOs can also be sold without a PIS account. However, NRIs must furnish their bank details, besides the date of allotment and cost of acquisition of the shares to calculate the tax on any gains they may have made.

Investing in India’s long-term success story is not all that tough after all. All an NRI needs is a right bank account and other documents which even a resident investor will require to submit.

Source: http://businesstoday.intoday.in/story/tips-for-nris-to-invest-in-indian-mutual-funds-stock-market/1/18846.html

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Mutual Fund – Application Forms

Below is the online application forms of all Mutual Funds* of India

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To invest in onetime mode just download the Common Application
Form, fill it and submit to the branch

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To start an SIP download the Common Application and SIP (ECS)
form, fill it and submit to the branch

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Just click on common application form of which ever company you
want to invest in

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Just click on SIP (ECS) Auto Debit Form of which ever company
you want to invest in

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For more queries and FAQ please see below the table

Mutual Fund (A-Z)

Common Application Form

SIP (ESC) Auto Debit Form

AIG Global Investment
Group Mutual Fund

AIG Mutual Common Application Form

AIG Mutual Fund SIP AutoDebit Form

Axis Mutual Fund

Axis Mutual Fund Common Application Form

Axis Mutual Fund SIP AutoDebit Form

Bharti AXA Mutual Fund

Bharti Axa Mutual Fund Common Application Form

Bharti Axa Mutual Fund SIP Auto Debit Form

Birla Sunlife
Mutual Fund

Birla Mutual Fund Common Application Form

Birla Mutual Fund SIP AutoDebit Form

BNP Paribas Mutual Fund

BNP Paribas Common Application Form

BNP Paribas Mutual Fund SIP AutoDebit Form

Canara Robeco Mutual Fund

Canara Robeco Mutual Fund Common Application Form

Canara Robeco Mutual Fund SIP Auto Debit Form

DSP BlackRock
Mutual Fund

DSP Black Rock Mutual Fund Common Application Form

DSP Black Rock Mutual Fund SIP (ECS) AutoDebit Form

DWS Mutual Fund

DWS Mutual Fund Common Application Form

DWS Mutual Fund SIP (ECS) AutoDebit Form

Edelweiss Mutual Fund


uploading soon

Escort Mutual Fund

Escorts Mutual Fund Common Application Form

uploading soon

Fidelity Mutual Fund

Fidelity Mutual Fund Common Application Form

Fidelity Mutual Fund SIP (ECS) AutoDebit Form

Franklin Templeton Mutual
Fund

Franklin Templeton Mutual Fund Common Application Form

Franklin Templeton Mutual Fund SIP (ECS) AutoDebit Form

Goldman Sachs Mutual Fund

Goldman Sachs Mutual Fund Common Application Form ETF

uploading soon

HDFC Mutual Fund

HDFC Mutual Fund Common Application Form

HDFC Mutual Fund SIP Auto Debit Form

HSBC Mutual Fund

HSBC Mutual Fund Common Application Form

HSBC Mutual Fund SIP Auto Debit Form

ICICI Prudential Mutual
Fund

ICICI Mutual Fund Common Application Form

ICICI Mutual Fund SIP (ECS) AutoDebit Form

IDFC Mutual Fund

IDFC Mutual Fund Common Application Form

IDFC Mutual Fund SIP Auto Debit Form

ING Mutual Fund

ING Mutual Fund Common Application Form

ING Mutual Fund SIP (ECS) AutoDebit Form

JM Financial Mutual Fund

JM Mutual Fund Common Application Form

JM Mutual Fund SIP (ECS) AutoDebit Form

JPMorgan Mutual Fund

JPMorgan Mutual Fund Common Application Form

JPMorgan Mutual Fund SIP (ECS) AutoDebit Form

Kotak Mahindra Mutual Fund

Kotak Mutual Fund Common Application Form

Kotak Mutual Fund SIP Auto Debit Form

L&T Mutual Fund

L&T Mutual Fund Common Application Form

L&T Mutual Fund SIP (ECS) AutoDebit Form

LIC Nomura Mutual Fund

LIC Nomura Common application Form

LIC Nomura SIP (ECS) AutoDebit Form

Mirae Asset Mutual Fund

Mirae Asset Mutual Fund Common Application Form

Mirae Asset Mutual Fund SIP (ECS) AutoDebit Form

Morgan Stanely Mutual Fund

Morgan Stanley Mutual Fund Common Application Form

Morgan Stanley Mutual Fund SIP (ECS) AutoDebit Form

Peerless Mutual Fund

Peerless Mutual Fund Common Application Form

Peerless Mutual Fund SIP Auto Debit Form

Pramerica Mutual Fund

Pramerica Mutual Fund Common Application Form

Pramerica Mutual Fund SIP Auto Debit Form

Principal Mutual Fund

Principal Mutual Fund Common Application Form

Principal Mutual Fund SIP Auto Debit Form

Reliance Mutual Fund

Reliance Mutual Fund Common Application Form

Reliance Mutual Fund SIP Auto Debit Form

Religare Mutual Fund

Religare Mutual Fund Common Application Form

Religare Mutual Fund SIP Auto Debit Form

Sahara Mutual Fund

Sahara Mutual Fund Common Application Form

Sahara Mutual Fund SIP Auto Debit Form

SBI Mutual Fund

SBI Common Application Form

SBI Mutual Fund SIP Auto Debit Form

Sundaram Mutual Fund

Sundaram Mutual Fund Common Application Form

Sundram Mutual Fund SIP Auto Debit Form

Tata Mutual Fund

Tata Mutual Fund Common Application Form

Tata Mutual Fund SIP Auto Debit Form

Taurus Mutual Fund

Taurus Mutual Fund Common Application Form

Tauras Mutual Fund SIP Auto Debit Form

UTI Mutual Fund

UTI Mutual Fund Common Application Form

uploading soon

-Why Invest in Mutual Funds?

Click here for details

-Why do SIP in Mutual Funds?

Click here for details

-Where to submit the Application Forms?

Click here for details

-How to get online view of Investment?

Now you can get all your family investment details in one Login ID and password by contacting at contactcorpus@gmail.com. Just keep in mind
that the forms you are submitting are downloaded from our website only.

-What is the benefit of Investing with us?

First and the foremost is you can have the personnel service offered by us at no extra charges, on successfully investment you will be provided with our Relationship Managers contact numbers, they are going to take all your investment related queries whether it is from any Mutual Fund and solve them at immediate priority.

-How to get the Account Statement?

For Account Statement you can contact directly to the respective Mutual Fund company in which the investment have made or contact on contactcorpus@gmail.com or by contacting our Relationship Manager which will
be provided to you.

* Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Scheme will be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme can go up or down depending on the factors and forces affecting the capital markets.The name of the Scheme and does not in any manner indicate either the quality of the Scheme; its future prospects or returns. Please read the Scheme Information Document and Statement of Additional Information carefully before investing. For more details about the scheme features and risk factors refer respective Scheme Information Documents of the Scheme(s) available on the Mutual Fund company website