How UAE based NRI invest in Indian mutual funds?

NRIs in Dubai investing in India
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As an NRI, you have multiple options to invest in India. One of the most popular investment options for NRIs is mutual funds. Most NRIs in the United Arab Emirates (UAE) invest in mutual funds in India or wish to do so. If you are an NRI in the UAE and have not started with mutual fund investment, it is probably because of a lack of knowledge. Today, we will discuss how UAE-based NRIs can invest in mutual funds.

Mutual funds as investment options

NRIs living in the UAE have hundreds of mutual fund schemes to choose from, and they can select mutual fund schemes based on their risk profile and investment horizon. You can consult advisors at Right Horizons if you need assistance evaluating your risk profile. Mutual funds are also excellent investment options as they help investors diversify their portfolios and earn good returns on investment.

UAE-based NRIs investing in India

As per a survey, India now has a stable government, and hence a large UAE-based Indian community prefers to invest in India. Also, most experts are saying that this decade will belong to India. As a result, investors across the globe don’t want to miss the opportunity to invest in India.  

NRIs from the UAE prefer to make investments spread across a wide range of asset classes. The survey suggests that 30% are looking for long-term investment plans, 26% want to invest in retirement plans, and 15% want to invest in government-backed infrastructure funds.  

Guidelines for UAE-based NRIs while investing in mutual fund

We have discussed why a UAE-based NRI wants to invest in Indian mutual funds. If you plan to do so, you must know the crucial guidelines and rules for mutual fund investment in India.

To invest in a mutual fund in India, you need to have one of two accounts with an Indian bank:  

  • NRE accounts: NRE stands for Non-Resident External Account and can be in the form of current, savings, fixed, or recurring deposits. You can deposit your foreign currency in this account. The good part is that there is no upper limit on the transaction amount for this account type.
  • NRO account: NRO stands for Non-Resident Ordinary account. It is in the form of a current or savings account and is useful to NRIs to manage their income earned in India. When you deposit your foreign currency in an NRO account, the foreign currency gets converted to Indian rupees after it gets deposited.

Once you have one of the above two accounts, you must complete your KYC under the KYC norms set by SEBI (market regulator).    

How can UAE NRIs complete the KYC procedure?

To complete your KYC procedure, UAE NRIs need to complete the below:  

KYC form: You need to submit the KYC form with all the necessary details to the SEBI registered intermediate (broker). You can send the documents to the intermediate by courier or post (you can also check for the online KYC option).  

Documents: You need to submit documents like Overseas address proof, recent photograph, Indian resident address proof, PAN copy, and passport copy.  

Attestation: NRIs can get the above documents attested by the authorized officials of overseas branches of scheduled commercial banks registered in India, public notaries, court magistrates, judges, or the Indian embassy/consulate general in the country where they are located.  

As an NRI, you may face obstacles to getting started with mutual fund investment. You can use the services of a financial advisor to get end-to-end support for all investment-related queries.

Taxation on capital gains for UAE NRIs on the mutual fund investment

Taxation rules for Indian residents and NRIs are the same. If you made mutual fund investments when you stayed in India and paid taxes on capital gains, the same rules will apply when you move to the UAE and invest in a mutual fund. For those new to mutual funds, below is the taxation rule:  

  • For equity mutual funds and an investment period of upto a year, capital gains are taxed at 15% (Short Term Capital Gains). For an investment period of over a year, equity mutual funds are taxed at 10% (Long Term Capital Gain). You will have to pay taxes only if your capital gains exceed Rs 1 lakh in a financial year.
  • For non-equity (debt) schemes, STCG is taxed at a rate of 30% and LTCG at a rate of 20% with indexation.
  • Note that surcharges on the above tax rate would also apply.

We hope the above information was helpful to you and will help you get started with mutual fund investment and fulfill your financial dreams.  Do fee free to reach out to us if you need any support.



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