Can Non Resident Indians( NRI) Invest in Mutual Funds in India ?

Yes, Non Resident Indians (NRI) can invest in Mutual funds in India.

Who is a Non Resident Indian ?

“A non Resident Indian ( NRI) means a person residing outside india but is a citizen of India or is a person of Indian Origin (PIO).”

Who is a person of indian Origin ?

A PIO refers to a citizen of any country if:

  1. He/She holds an Indian passport
    OR
  2. He/She or either of his/her parents or any of his grandparents was a citizen of India
    OR
  3. The person is a spouse of an India citizen or a person referred to in (A) or (B)

Note:- The specified countries whose nationals are ineligible to grant of PIO Card are Pakistan, Bangladesh, Sri Lanka, Bhutan, Afghanistan, Iran, China and Nepal.

Further, if the applicant himself/herself or either of his/her parents, grandparents or great grandparents held the nationality of these specified countries at any time, he/she will not be granted a PIO Card.

Can a Foreign Individual invest in Mutual Funds in India?

No, only a citizen of India or a person of Indian Origin can invest in Mutual Funds in India.

How to determine that an Individual is an NRI?

In order to determine whether an individual is a non resident in india or not, his/her residential status is to be determined as per section 6 of the Income Tax Act. As per section 6 of the income tax act, an individual is said to be non-resident in India if he/she is not a resident in India.

An individual who is a citizen of India or is a person of Indian origin is deemed to be resident in India in any previous year if he/she satisfies following conditions else he/she will be treated as non-resident.

If the Income from India is below 15 Lakhs 

  • He/she must stay in India for at least 182 days in the financial year. 

If the Income from India is more than 15 lakhs

  • He/she must stay in india for at least 182 days in the financial year
    OR
  • He or she is in India for at least 120 days in the financial year and 365 days in preceding 4 years. 

Only applicable to India Citizen

If Income from india is more than 15 lakhs and not liable to pay tax in any other countries

  • In the above case he/she would be treated as Resident Indian irrespective of his/her number of days stay in India.

Is it mandatory for a non-resident Indian to have a PAN?

Yes, It is mandatory to have a PAN to invest in Mutual Funds in india.

What are the documents to be enclosed along with the NRI PAN application Form ? NRI is required to submit the copy of passport (alongwith PAN application Form) as proof of identity. He/She is also required to submit any of the following documents as proof of address:

NRI is required to submit the copy of passport (alongwith PAN application Form) as proof of identity. He/She is also required to submit any of the following documents as proof of address:

  1. Copy of passport;
    OR
  2. Copy of the bank account statement in country of residence; OR
  3. Copy of NRE bank account statement (showing at least two transactions in last six months period and duly attested by Indian Embassy/Consular office/high commission or Apostille or by the manager of the bank in which the account is held. The applicant may be a joint holder).

Source :- (http://incometaxindia.gov.in/Documents/PAN-NRI.htm)

What is an OCI card ?

OCI is actually a card that the government of India gives to certain foreigners who can prove their eligibility as per the criteria given below.

  1. An OCI refers to a Person of Indian Origin who was a citizen of India on January 26, 1950 or thereafter or was eligible to become a citizen of India on January 26, 1950 or who belonged to a territory that became part of India after 15.08.1947.
  2. A person who is a child or grandchild or a great grandchild of such a citizen mentioned above.
  3. Spouse of a foregin origin of a citizen of india or spouse of foregin origin of an overseas citizen of india cardholder registered under section 7A of the Citizenship act 1955 and whose marriage has been registered and subsisted for a continues period of not less than 2 years immediately preceding the the presentation if application. 

Note 1:- No person, who or either of whose parents or grandparents or great grandparents is or had been a citizen of pakistan, Bangladesh or such other country as the central government may , by notification in official Gazette Specify, shall be eligible for registration as an Overseas Citizen of india cardholder.

Note 2: 

  • As per the Gazette of India (Part-I, Section-I) published on 09.01.2015, all the existing Persons of Indian Origin (PIO) card holders registered as such under the new PIO Card scheme 2002, shall be deemed to be Overseas Citizens of India Cardholder.

    All PIO card holders with valid PIO cards as on 09.01.2015 are advised to apply for conversion of their PIO card to OCI card.

Source: https://boi.gov.in/content/person-indian-origin-pio

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