SIP for NRI

What is SIP?

NRI individuals can utilize SIP to invest a consistent small amount in their chosen mutual funds. This fixed sum will be automatically deducted from their bank account every month and invested in the selected mutual fund to initiate the SIP. 

Opting for SIP enables an investor, including NRI, to avoid the need for a large one-time investment. Instead, their investments are spread out in manageable timely deposits. This disciplined approach encourages investors to allocate funds for regular interval payments.

Investment Return Calculator (Power of Compounding)

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Top Funds with High Returns (Past 7 Years)

13.12%

Equity Pension

15.49%

Global Equity Index Funds Strategy

19.1%

Pension Growth Super

13.3%

Opportunities Fund

21.04%

Multi Cap Fund

14.36%

Accelerator Mid-Cap Fund II

15.8%

Multiplier

14.78%

Frontline Equity Fund

18.41%

Pension Mid Cap Fund

11.32%

Equity II Fund

14.8%

US Equity Fund

15.21%

Growth Opportunities Plus Fund

11.84%

Equity Top 250 Fund

14.19%

Future Apex Fund

12.15%

Pension Dynamic Equity Fund

14.53%

Pension Enhanced Equity

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What are the Benefits of SIP?

India attracts several foreign investors because of its fast-growing economy. These investors play an essential role in the Indian economy. 

The following are some of the benefits that NRIs can avail of by investing in mutual fund schemes through SIP:

1. Flexibility:

   SIP provides a convenient avenue for investing in mutual fund schemes for NRIs. It allows for adaptable payments at regular intervals, making it suitable even during market fluctuations.

2. Higher Returns:

   Systematic Investment Plans (SIPs) offer a more efficient and reliable means of attaining higher returns during inflation compared to FDs or RDs.

3. Compounding Power:

   SIPs enable NRI investors to augment their returns over the long term, thanks to the power of compounding.

4. Easier Management:

   Managing a substantial lump sum investment can be overwhelming. SIP schemes simplify the process by allowing the purchase of units at regular intervals, making it effortless to track and manage funds.

5. Profits from Rupee Appreciation:

   If the value of the Indian rupee increases relative to the investor's resident currency, the potential for profit is significantly higher.

How Does SIP Work?

An NRI can opt for a SIP investment, which involves regularly investing a fixed amount in a mutual fund scheme. They have the flexibility to choose the investment date and can contribute a set amount monthly or quarterly, based on their preference. 

When an NRI invests through SIP, they acquire a specific number of units corresponding to their investment, without the need for in-depth market analysis. This allows them to capitalize on both bullish and bearish trends.

Are NRIs Eligible for Investing in Mutual Funds SIPs in India?

Non-Resident Indians (NRIs), Persons of Indian Origin (PIO), and Overseas Citizens of India (OCI) have the same eligibility as Indian residents for investing in Indian mutual fund SIP schemes. Moreover, there is no need for special permission from RBI or any other banking body to invest in these schemes.

What are SIPs for NRIs?

Systematic Investment Plans (SIPs) are straightforward and convenient investment avenues for Indian residents. However, NRIs often need clarification on the procedures and regulations governing SIPs. 

There are two choices available for NRIs looking to invest in Indian mutual fund schemes through SIPs: repatriable and non-repatriable. To opt for the repatriable option, an NRI must possess an NRE or FCNR account with an Indian bank. For non-repatriable assets, an NRI must maintain either an NRE or NRO account with an Indian banking institution.

How Can the NRIs Invest in SIP?

For NRI investors looking to invest in India, two essential tools are

1. Non-Resident Original Account (NRO) 

2. Non-Resident External Account (NRE)

These accounts can be easily set up with any Indian bank. To gain a comprehensive understanding of the investment process through SIPs, let's delve into it.

Before entering an Indian mutual fund scheme, NRIs must register with Registered Transfer Agents (RTAs). These RTAs maintain meticulous records of Mutual Fund Investors. There are various digital platforms and wealth management firms that assist NRIs in registering and handling KYC documents, ensuring a seamless investment experience. Among the top-rated RTAs in India are Computer Age Management Services (CAMS) and Karvy.

1. Online KYC

   Online KYC is a hassle-free process through which NRIs can fulfill their KYC (Know Your Customer) requirements for Indian Mutual Funds. This involves submitting necessary documents online, and the system verifies the details through In-Person Verification (IPV).

2. Required Documents:

   • Completed and signed KYC form.

   • Self-attested copies of Passport and PAN Card for identity verification.

   • Mandatory address proof for both correspondence and overseas address verification.

3. In-Person Verification Process:

   In-Person Verification is a crucial step after document submission. Authorized entities conduct IPV to verify the authenticity of the provided documents. This can be done through two methods:

   • Offline Method: This involves physical document verification where NRIs either visit the nearest office or officials visit their workplace or home for verification.

   • Online Method: This is the most common method in the digital age. IPV is conducted through a video call with authorized agencies and entities. Officials may ask questions about the details provided in the KYC form. If any discrepancies are detected, the application may be canceled.

How are NRI Investors Taxed?

NRI investors in Indian mutual fund schemes often worry about facing double taxation. However, this fear stems from a lack of understanding. It's important to note that if India has a Double Taxation Avoidance Agreement (DTAA) with the investor's country, they won't have to pay taxes twice.

Here are the tax rates on capital gains for mutual funds:
Note: Tax benefit is subject to changes in tax laws. Standard T&C apply.

Important Points for NRI Investors

When considering investments in Indian Mutual Funds, Non-Resident Indians (NRIs) should keep certain important points in mind. These serve as essential guidelines for Mutual Fund Investments. 

The following points are crucial for every NRI to contemplate before venturing into an Indian mutual fund:

• Providing foreign bank account details as an investment tool will result in the cancellation of any NRI application.

• Tax will be deducted at the source of capital gains when redeeming mutual fund units.

• As long as an individual maintains NRI status, they have full authority over the transfer of mutual fund investments. They can repatriate both the invested amount and the earnings from the MF schemes.

• Compliance requirements are more stringent in the USA and Canada compared to other nations. For instance, under FATCA norms, financial institutions are mandated to share transaction details of all individuals, including US residents employed by the US government.

• Before investing in Indian Mutual Fund schemes, individuals must verify their residency status in the ninety countries that have adopted the CRS (Common Reporting Standard).

Wrapping it Up

The initial stages may get tedious for an individual; however, the returns earned on mutual fund investing will be beneficial compared to the hassles taken. Make sure to do the research thoroughly in regards to the SIP investments for an NRI.