Who is a non-resident Indian (NRI)?
A person who has been outside India for 182 days or more during a financial year is a non resident Indian.
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.
Can NRIs invest in domestic mutual funds?
Yes, NRIs can invest in units of domestic mutual funds.
How can NRIs invest in mutual funds in India?
All investments made by NRIs have to be in local currency. 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. The amount that is to be invested can be directly debited from an NRE/NRO account or received by inward remittances through normal banking channels. With Moneyfront, NRIs can start investing online once the account is open and the bank mandate is set up.
What is the KYC requirement for NRIs?
Submission of passport copy is mandatory. Relevant pages of passport having name, photo, date of birth and address should be submitted. Overseas address is mandatory. Either the permanent or correspondence address must be an overseas address. If the details are in a foreign language, translation is to be done in English and to be self attested.
To open a Moneyfront online investment account, please upload a scan image of ID proof, overseas address proof, cancelled cheque etc. to us and the account can be opened online in a paperless format.
What is a Portfolio Investment Scheme (PIS)?
Portfolio Investment Scheme (PIS) is a scheme of RBI under which NRIs can purchase/sell shares/convertible debentures of Indian companies on Stock Exchanges under Portfolio Investment Scheme. For this purpose, the NRI/PIO has to apply to a designated branch of a bank, which deals in Portfolio Investment. All sale/purchase transactions are to be routed through the designated branch.
Who is a person of Indian Origin?
For the purposes of investments in shares/securities in India, person of Indian origin means a citizen of any country other than Pakistan or Bangladesh, if
a) He at any time, held an Indian passport; or
b) He or either of his parents for any of his grandparents was a citizen of India by virtue of the constitution of India or Citizenship Act, 1955; or
c) The person is a spouse of an Indian citizen or a person referred to in clause (a) or (b).
Who is an overseas citizen of India (OCI)?
Under OCI Scheme, government of India decided to grant overseas citizenship of India (OCI) commonly known as "dual citizenship". A foreign national, who was eligible to become a citizen of India on 26.01.1950 or was a citizen of India on or at any time after 26.01.1950 or belonged to a territory that became part of India after 15.08.1947 and his/her children and grand children, provided his/her country of citizenship allows dual citizenship in some form or other under the local laws, is eligible for registration as an Overseas Citizen of India (OCI). Minor children of such person are also eligible for OCI. However, if the applicant had ever been a citizen of Pakistan or Bangladesh, he/she will not be eligible for OCI.
Is it mandatory for a client to provide local (Indian) address?
At the time of client registration, client needs to provide his/her foreign address along with documentary proof of the same. If a client so desires, local address can be maintained as correspondence address. In such scenario they are required to provide documentary evidence in support of local address also.
What are NRE and NRO accounts and what is the difference between them?
A Non-Resident Indian is often faced with the situation of maintaining a Rupee account in India. Primarily there are two reasons for opening such account: NRI wants to repatriate overseas earned money back to India and/or NRI wants to keep India based earnings in India. NRI has the option of opening a Non Resident Rupee (NRE) account and/or a Non Resident Ordinary Rupee (NRO) account. An NRO account can also be opened by a Person of Indian Origin (PIO) and an Overseas citizen of India (OCI). Similarities between NRE and NRO accounts: Both accounts can be opened as Savings as well as current accounts and are Indian Rupee accounts. The Differences between NRE and NRO accounts:
Repatriation: NRE account is freely repatriable (Principal and interest earned) while the NRO account has restricted repatriability i.e. permitted remittance allowed from NRO is up to USD 1 million net of applicable taxes in a financial year after giving undertaking along with a certificate from a chartered accountant.
Tax Treatment: NRE account is Tax free (no Income tax, wealth tax and gift tax) in India. On the other hand the interest earned in NRO account and credit balances are subject to respective income tax bracket and are also subject to applicable wealth and gift tax.
Deposit of Rupee funds generated in India: If an NRI/PIO/OCI is earning income originating in India (such as salary, rent, dividends etc.) he/she is only allowed to deposit it in NRO account. Deposit of such earnings is not permitted in NRE account.
Joint Holding: NRE account can be jointly held with another NRI but not with resident Indian. On the other hand NRO account can be held with NRI as well as resident Indian (close relative) as defined under Section 6 of the Companies Act 1956.
Choose NRE accounts if you: (Primary reason) want to park your overseas earnings remitted to India converted to Indian Rupees; want to maintain savings in Rupee but keep them liquid; want to make a joint account with another NRI; want Rupee savings to be freely repatriable.
Choose NRO account if you: (Primary reason) want to park India based earnings in Rupees in India; want account to deposit income earned in India such as rent, dividends etc; want to open account with resident Indian (close relative).
What is FCNR account?
An FCNR (Foreign Currency Non Resident) account is a term deposit account that can be maintained by NRIs and PIOs in foreign currency. Thus, FCNRs are not savings accounts but fixed deposit accounts.
Can two separate accounts (NRE and NRO) be opened by NRI simultaneously?
Yes, clients can have both NRE & NRO accounts simultaneously.
Can an NRI maintain multiple accounts with different banks in India, simultaneously?
Yes, there is no prohibition to open and maintain multiple accounts.
Can an NRI open joint accounts with one or more NRIs?
Yes, NRE accounts can be jointly held with other NRIs.
Can an NRI open joint accounts with residents?
Yes, NRIs can open Joint NRO Account with Resident Close Relative as defined in Companies Act 1956.
Should all the NRI desirous of opening joint accounts be residing in the same country?
No, they can be residing in different countries, also.
Can NRI accounts be opened from abroad also?
Yes. An NRI can also open accounts from abroad by sending duly filled and signed AOF(account opening form) duly attested by Indian Consulate along with attested copies of passport and Visa, and other mandatory documents.
Can an NRI open an account with Zero balance?
Yes, an individual taking up an employment, business, vocation etc. can complete the account opening formalities prior to going abroad with zero balance. Subsequently, he must remit funds to make the account operative within a reasonable time, where after only cheque book will be issued.
Can an NRI give Power of Attorney to a resident to operate his accounts and for making investments on his behalf?
Yes, an NRI can appoint a Power of Attorney holder to make local payment from his NRE / NRO accounts and also investments on his / her behalf.
What are the restrictions imposed on the Power of Attorney?
A Power of Attorney holder cannot do the following acts.
Open and close NRI accounts in the name of NRI.
Repatriate funds from a/c in the form of DD/TT etc. unless specified in P.A.
Transfer funds to NRE accounts other than that of Principal.
Cannot raise loans/execute documents on behalf of NRI.
Cannot tender Foreign Currency (FC)/Foreign Currency Traveller Cheques (FCTC).
How much foreign currency (FC) can an NRI bring along with him on his/ her visit to India, without custom declaration form (CDF)?
An individual NRI can bring USD 10,000/- or equivalent (in the form of FCTC /FC) of which maximum USD 5000/-can be in the form of currency notes without declaring the same in CDF. Any amount in excess of the above limits needs to be declared in CDF to the customs. The balance amount or even the entire amount can be in the form of TCs.
Can an NRI deposit local funds into NRE account?
No, only credits coming from abroad in the form of DDs/TTs/MTs/FCs/TCs etc. can be deposited in NRE a/c. Local money has to be credited to NRO account of an NRI.
Is interest earned on NRE/NRNR/FCNR/NRO a/cs. taxable?
No tax is applicable to interest earned on NRE/FCNR & NRNR a/cs. However, interest earned on NRO a/cs is subject to TDS as per extant guidelines.
What is the rate of TDS on NRO accounts?
Banks have obligation under Income Tax Act to deduct tax at source in respect of interest income of Non Resident Indians. The rate of TDS is specified in the Finance Act, every year. Accordingly as on date TDS applicability is as under-
Interest earned upto Rs. 10 lacs TDS@ 30.90%
Interest earned beyond Rs. 10 lacs TDS @ 33.99%
Before you make your investment in Indian mutual funds, being an NRI, you need to know that the gains that you make on your mutual fund investments are subject to tax. You need to be aware of what tax rate will be applicable on short term as well as long term capitals gains on your investment in equity and non-equity mutual funds.
Is interest on NRO account repatriable?
Yes, interest earned on NRO a/cs. can be repatriated or credited to NRE/FCNR accounts subject to payment of tax.
Is nomination permitted in NRI a/cs?
Yes, NRIs can nominate either a resident or a non-resident as Nominee. However, only one nominee is permitted per account. Nominee can also be a minor in which case, guardian has to be appointed to receive payment on minor`s behalf.
What are the formalities in death claim settlement?
If the nominee, either resident or non-resident, plans to utilize the funds locally, payment will be made in Indian Rupees. If, however the nominee is an NRI and desires to repatriate the amount, the nominee will have to comply with certain formalities as prescribed by respective banks.
Can NRI invest in immovable properties on repatriation basis?
Yes, Repatriation benefit is available for 2 residential houses. The purchase should be out of funds remitted from aboard or out of NRE/FCNR a/cs, in accordance with the provisions of FERA/FEMA.
What happens to accounts of the NRI on his/her return to India?
A returning Indian`s NRE/FCNR accounts will be designated as Resident account. However, they will continue to run till maturity at the contracted rate of interest.
Is a NRI subject to tax after returning to India?
Yes, NRIs earnings are subject to tax laws of the country.
Can a returning Indian maintain Foreign Currency account?
Yes, the returning NRI can get his NRE, FCNR a/cs converted into RFC (Resident Foreign Currency) a/cs on maturity.
Who can open RFC account?
A returning NRI who was resident outside India earlier and are returning now for permanent stay are permitted to open RFC account.
What are the benefits of RFC accounts?
The benefits of RFC accounts are: In case of conversion from FCNR(B) accounts there is no exchange loss.Balance in RFC account can be used for local payments and can be remitted abroad for all bonafide purposes.In case the NRI was residing abroad continuously for a period of 9 years out of previous 10 years, then there will be no tax on interest earned on RFC accounts for next 2 years. In the event of the returning Indian regaining NRI status, the balances in RFC account can be reconverted into NRE /FCNR (B) deposits.
Can an NRI transfer funds between NRE accounts?
Yes, the funds can be transferred between NRE or FCNR accounts of an account holder and also between NRE or FCNR accounts of two different NRIs, ie, the funds lying in NRE or FCNR accounts of an NRI can be freely transferred to NRE or FCNR account of any other NRI.
Are NRE or NRO account holders eligible for loans or overdrafts against their fixed deposit/Investments?
The NRO or NRE account holders are eligible to apply for loans or overdrafts against their fixed deposit holdings and Investments.
What foreign currencies can one maintain in FCNR accounts?
Prior to 2011, FCNR deposits were allowed to be maintained in six currencies: US dollar, Pound Sterling (GBP), Euro, Japanese Yen, Australian dollar and Canadian dollar. However, in October 2011, the RBI decided that authorised dealer banks in India may be permitted to accept FCNR deposits in any permitted currency. "Permitted currency" for this purpose would mean a foreign currency which is freely convertible and popularly include Danish Krone, Swiss Frank and Swedish Krona among others.
How can one transfer funds to FCNR accounts?
The funds in an FCNR account must necessarily come from your overseas funds. There are several ways in which you can open an FCNR account.
You can transfer funds from your overseas bank account directly to open an FCNR account. You can do this either as a wire transfer or a cheque transaction.
You can transfer funds from an existing NRE account.
You can open an FCNR account using foreign currency notes or travelers cheques when you visit India.
Are balances in the FCNR accounts freely repatriable?
Yes, balances in FCNR can be freely repatriated outside India.
Can funds in the FCNR account be used for local India payments?
Yes, you can use the balance in FCNR account for making local payments in India.
However, as FCNR can be maintained only as term deposits, it would be more convenient to make payments after transferring the balance to NRE account.
Can you hold FCNR accounts jointly?
Yes, the RBI permitted NRIs to hold FCNR accounts jointly with other NRIs or with residents who are close relatives. In this case, the resident relative can operate the account as a power of attorney holder.
Is nomination facility available?
Nomination facility is available in FCNR accounts and the nominee can be either an NRI or a resident Indian.
The balance in FCNR deposit of a deceased NRI can be credited to an NRI nominee`s FCNR account and such funds can be freely repatriated.
Can NRIs avail loans against FCNR deposits?
Rupee loans and foreign currency loans can be taken in India against the security of the deposit. Banks may also give loans to resident individuals, firms or companies against collateral security of FCNR deposits.
How can NRIs/PIO remit Sale proceeds?
In case of NRI/PIO, if the mutual funds sold were held on repatriation basis, the sale proceeds (net of taxes) may be credited to his NRE /FCNR (B)/NRO accounts of the NRI/PIO, whereas sale proceeds of non repatriable investment can be credited only to NRO accounts.
In case a person who is resident in India becomes a non-resident, will he/she be required to change the status of his/her holding from Resident to Non-Resident?
NRI can continue to hold the mutual funds which he/she had purchased as a resident Indian, even after he/she has become a non resident Indian, on a non-repatriable basis.
In case a non-resident Indian becomes a resident in India, will he/she be required to change the status of his/her holding from Nonresident to Resident?
Yes. It is the responsibility of the NRI to inform the change of status to the RTA,. Subsequently, a new account in the resident status will have to be opened, and bank mandate be moved to a resident account. For any such queries, MoneyFront Team will help you with all associated formalities and ensure a seamless transition.
Are NRIs permitted to invest in Commercial Paper (CP) issued by Indian companies?
Yes. General permission has been granted by Reserve Bank to Indian companies to issue CP to NRI individuals subject to the conditions that the amount invested will not be repatriated outside India and the CP will not be transferable.
What are the benefits for NRIs to invest in India?
The India Shining story is something we have all heard in the past.
India has managed to slowly and steadily outperform the rest of the emerging nations, proving that as an investment destination, we need to look no further than our own home country to help us plan for and achieve our life`s financial goals.
A Mutual Fund would be a safer bet compared to direct equity for a foreign investor who has limited expertise. For an NRI, no specific approval for investing or redeeming from mutual fund is required. At Moneyfront we make investments completely hassle-free and paperless for all NRs. Plus our user-friendly and customized Portfolio section will make it comfortable to manage, report and consolidate investments across family members. However, residents of USA/Canada are not allowed to invest currently.
What is repatriable basis?
To invest on a repatriable basis, NRI investor must have an NRE or FCNR Bank Account in India. The Reserve Bank of India (RBI) has granted a general permission to Mutual Funds to offer mutual fund schemes on repatriation basis, subject to the following conditions :
The amount representing investment should be received by inward remittance through normal banking channels, or by debit to an NRE / FCNR account of the non-resident investor.
The net amount representing the dividend / interest and maturity proceeds of units may be remitted through normal banking channels or credited to NRE / FCNR account of the investor, as desired by him subject to payment of applicable tax.
What is non repatriable basis?
The Reserve Bank of India (RBI) has granted a general permission to Mutual Funds to offer mutual fund schemes on non-repatriation basis, subject to the following conditions :
Funds for investment should be provided by debit to NRO account of the NRI/ FII investor. Alternatively, funds may be invested by inward remittance or by debit to NRE / FCNR Account.
No permission of Reserve Bank either by the Mutual Fund or the NRI investor is necessary.
What is the proof of tax deduction at source?
A TDS certificate is issued in the name of the unit holder mentioning the details of the transaction and the tax deducted. TDS certificate is commonly known as Form 16 A. This is sent by the Fund Houses directly at the correspondence address of the investor.
Is the indexation benefit available to NRIs?
Yes,indexation benefit is available on long term capital gains arriving out of debt funds (Please refer to current tax guidelines on this).
Can a POA invest on behalf of NRI investor?
Yes a registered POA can invest in mutual funds on behalf of investor and sign documents for initial and additional purchases as well as redemptions. His signature will be verified for any transaction request. However, at MoneyFront we currently don`t have an option to register POA and accept investments through them.
Why should I transact online rather than doing investments with my current bank?
Mostly all banks offer mutual fund schemes to their customers. However, your current bank will only offer Regular Plans of Mutual Funds. Regular plans, have higher expense ratios as compared to Direct Plans because a large portion of this expense ratio is paid-out to bankers/distributors as in-built commission, popularly called as "Trail Fee". You pay this hidden commission apart from entry and exit loads on schemes. Online platform Moneyfront offers you investment ONLY in Direct Plans of all mutual funds which saves you this in-built commission. Also, since we are not earning out of fund houses, the recommendations we provide are free of bias. Banks will require a lot of paperwork to be done before you can actually start transacting and also for every transaction that you make. However with Moneyfront you can start investing in a paperless manner as soon as you open an account.
Do I need to be physically present in India while investing with Moneyfront?
No, investors need not be physically present in India if they want to make an investment. With our website and mobile app you can transact from anywhere across the globe.
Will I have someone to meet or talk to discuss my portfolio at Moneyfront ?
Moneyfront is an online platform and everything from our recommendations to detailed scheme details are available online. However, if you every wish to speak with someone, our online relationship managers will be happy to assist you. You can mail us at firstname.lastname@example.org or call us on +91.22.41202615 and we shall gladly assist you.
Does RBI permit NRIs to invest in mutual funds?
Yes, RBI allows NRIs to invest in mutual funds in India. However the investments can only be made in INR (Indian Rupees). Hence NRIs need to ensure that they have either NRE or NRO accounts through which payments can be made for buying and selling mutual funds. Your bank mandate with Moneyfront needs to be a rupee account held in an Indian bank.
Will Moneyfront help me with taxation on my mutual fund portfolio?
No, Moneyfront does not offer any help with tax filing or computation as, clearly, we are not tax experts. We are an online investment platform and offer investment advisory services.
However, to make your tax-filling and computation simple and hassle-free we have a Gain/Loss report section which will clearly give details on all your short-term and long-term gains/losses across asset classes. You just need to download these reports which will give you all details. It will always be prudent to get these verified by your accountants/tax advisors once.
Can I invest in foreign currency on your platform?
An NRI cannot make investment in foreign currency as per central bank guidelines. He needs to give a Rupee cheque or debit instruction from his NRE, NRO bank account in India. For an NRI to invest, it is mandatory that he maintains a bank account in India.
For making investments through Moneyfront, please set up a bank mandate which is either an NRE or NRO account in India.
Do I run a currency risk on my portfolio when investing in India?
If your end-goal is to repatriate back your investments & returns then currency risk is applicable to you. However, if your end-goal is to create a corpus in India by income earned in India or from funds lying in INR, then currency risk might not be applicable to you.
Assuming, it`s the former case where you are investing via NRE account and intend to repatriate back the proceeds, then by choosing to invest in Indian rupee instruments such as mutual funds, you are taking currency risk. Rupee depreciation against your local currency will have a negative impact on your returns. If you are a long term investor, then simply pick good schemes and stay invested for a few years. The rupee may fluctuate in the short to medium term, but over a period of time, if the Indian economy continues to grow at a pace relatively higher than the global average, currency will also adjust itself. If on the other hand you tend to book profits every few months, then you should take into account currency risk.