SIP for NRI
An SIP in India provides an easy and disciplined way for Non-
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SIP Plan Benefits
Start SIP with as low as ₹1000
No hidden charges
Save upto ₹46,800 in Taxunder section 80C^
Zero LTCG Tax¶
Disciplined & worry-free investing
What is a SIP for NRI?
SIP for NRI is a Systematic Investment Plan that allows a Non-Resident Indian (NRI) to invest in Indian financial products, primarily mutual funds and sometimes ULIPs, by making regular, small, fixed payments over a period of time.
It's essentially the same investment mechanism used by resident Indians, but with specific rules and procedures that NRIs must follow under Indian regulatory laws like the Foreign Exchange Management Act (FEMA).
By choosing SIP in India, an NRI can benefit from rupee cost averaging and the potential for long-term returns, making it a convenient and efficient investment option for NRIs.
SIP Plans for NRI in India
Details of SIP for NRI
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SBI PSU Fund Growth
The investment objective of SBI PSU Fund Growth is to provide opportunities for long-term growth through active management of investments in a diversified basket of equity stocks of domestic Public Sector Undertakings (PSUs) and in debt and money market instruments issued by PSUs and others.
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ICICI Prudential Infrastructure Fund-Growth
The scheme seeks to generate capital appreciation and income distribution to unit holders by investing predominantly in equity/equity related securities of the companies belonging to the infrastructure theme.
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HDFC Flexi Cap Fund Regular-Growth
The fund aims to generate long-term capital appreciation/income by predominantly investing in equity and equity-related instruments. There is no guarantee the investment objective will be realized.
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Axis Midcap Fund Regular-Growth
The investment objective of Axis Midcap Fund Regular-Growth is to generate long-term capital appreciation by investing predominantly in equity and equity-related securities of mid-sized companies.
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Tata Mid Cap Fund Regular-Growth
The investment objective of the Tata Mid Cap Fund Regular-Growth is to seek long-term capital appreciation by investing predominantly in equity and equity-related instruments of growth-oriented mid-cap companies.
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Kotak Small Cap Fund Regular-Growth
The investment objective of Kotak Small Cap Fund Regular-Growth is to generate capital appreciation from a diversified portfolio of equity and equity-related securities by investing predominantly in small cap companies. The scheme aims for long-term capital growth by spotting small cap stocks early and benefiting from their potential growth. There is no assurance that the investment objective will be achieved.
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Nippon India Small Cap Fund - Growth
The investment objective of Nippon India Small Cap Fund - Growth is to generate long term capital appreciation by investing predominantly in equity and equity related instruments of small cap companies.
What are the Key Features of a SIP Investment for NRI?
The key features of a SIP for NRI in India are as follows:
- Affordable Investment: SIPs allow NRIs to start investing with as little as ₹100 per month, making it accessible for various income levels.
- Rupee Cost Averaging: SIP for NRI ensures that investments are spread across market cycles, reducing timing risks.
- Convenience and Automation: SIP in India automatically deducts fixed amounts from your savings account, which ensures consistent investing.
- Goal-Based Investing: NRIs can set specific financial goals, such as retirement or education, and choose best SIP plans that align with these objectives, making it easier to track progress.
What are the benefits of an SIP for NRI in India?
The best Systematic Investment Plans in India are excellent investment options for NRIs who want to grow their wealth. They offer the following key benefits to NRIs/ PIOs/ OCIs:
- Wealth Creation: SIP in India helps NRIs build wealth over time through regular, disciplined investing.
- Power of Compounding: Investments through SIP plans in India grow exponentially over time as returns are reinvested, allowing NRIs to build wealth significantly.
- Easy Access: NRI SIP investments can be managed online from anywhere in the world.
- Tax Benefits: Tax-Savings Mutual Funds and Unit Linked Insurance Funds are the SIP investments for NRI in India offering potential tax advantages under Section 80C.
- High Returns Potential: SIP investment in India provides an opportunity to earn attractive long-term returns.
Eligibility Criteria for NRIs to Invest in a Systematic Investment Plan in India
- Resident Status: The investor must qualify as a Non-Resident Indian (NRI) as per the Income Tax Act, 1961.
- Bank Account: An NRI must have an NRE, NRO, or FCNR account to facilitate investments in SIPs.
- KYC Compliance: Completion of Know Your Customer (KYC) formalities, including submission of identity, address proof, and overseas address, is mandatory.
- FEMA Guidelines: Investments must comply with the Foreign Exchange Management Act (FEMA) regulations.
- Tax Implications: Gains from SIP investments for NRIs in India are subject to applicable tax laws and TDS.
- Repatriation Rules: For NRE or FCNR accounts, investments and returns are repatriable, while NRO accounts allow limited repatriation.
How Does SIP for NRIs Work?
The SIP investment for NRI can be done by following the steps mentioned below:
- Step 1: Account Setup: Open an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account with an Indian bank to facilitate SIP investment for NRI. This ensures compliance with FEMA regulations and enables financial transactions.
- Step 2: KYC Documentation: Complete the Know Your Customer (KYC) process by submitting necessary documents. NRIs can complete this online or through authorized agents.
- Step 3: Choosing SIP Plans: Research and select suitable SIP investment plans in India based on risk tolerance and financial goals. Choose from various mutual fund houses that offer plans tailored for NRIs.
- Step 4: Decide Investment Amount and Frequency: Choose the amount to be invested regularly (monthly or quarterly) in the selected SIP plan in India. This amount is deducted automatically from NRE or NRO account.
- Step 5: Complete Application Forms: Fill out the application forms for the selected SIP plan, ensuring accurate details and attaching required documents.
- Step 6: Submit Application: Submit the completed application and KYC documents to the Asset Management Company (AMC) or via a financial advisor. Some AMCs allow online submission for convenience.
- Step 7: Activation of SIP: Once approved, the SIP will be activated. The investor receives confirmation detailing the investment schedule and plan specifics.
- Step 8: Monitor Investments: Regularly track the performance of the investments made through SIP in India for NRI. Adjust the portfolio if necessary to meet financial goals.
- Step 9: Redemption Process: When ready to redeem, submit a redemption request form to the AMC. The accumulated corpus will be credited to the NRI’s account after tax deductions.
KYC Documents Required for NRIs to Invest in a SIP in India
To begin SIP in India for NRIs, the following documents are required:
- Passport Copy.
- Overseas Address Proof (e.g. utility bill, bank statement, or rental agreement).
- Indian Address Proof (Aadhaar card, voter ID, or any government-authorised document).
- Permanent Account Number (PAN Card).
- Bank Account (NRE/ NRO Account).
- Recent Passport-sized Photographs.
How are NRI Investors Taxed for SIP Plans?
Non-Resident Indians (NRIs) investing in SIP plans in India are subject to tax regulations as per following:
ULIPs (Unit-Linked Insurance Plans) Taxation
- Tax-free ULIPs (Maturity Proceeds): If the aggregate annual premium of all ULIP policies issued on or after February 1, 2021, is below ₹2.5 lakh, the maturity proceeds remain fully tax-exempt under Section 10(10D) of the Income Tax Act, subject to other prescribed conditions (like premium not exceeding 10% of the sum assured).
- Taxable ULIPs (Maturity Proceeds): If the aggregate annual premium of ULIP policies issued on or after February 1, 2021, exceeds ₹2.5 lakh in any financial year, the maturity gains are taxable as Capital Gains.
- Deductions in ULIP: Premiums paid up to ₹1.5 lakhs per year in ULIP can be claimed as a deduction under Section 80C, provided the policy meets the specified conditions (e.g., premium not exceeding 10% of the sum assured).
Capital Gains Tax on Mutual Funds and Taxable ULIPs
Capital gains tax applies to mutual fund redemptions and the maturity proceeds of taxable ULIP policies (those with an annual premium over ₹2.5 lakh). The tax rate depends on the type of fund (Equity or Debt) and the holding period:
Equity Funds (Equity-Oriented Mutual Funds or Equity-Oriented ULIP Gains)
The holding period for Long-Term Capital Gains (LTCG) is more than 12 months.
- Short-Term Capital Gains (STCG): Gains are taxed at 20% (plus applicable Surcharge and Cess) if units are sold within 12 months, for transfers happening on or after July 23, 2024.
- Long-Term Capital Gains (LTCG): Gains are taxed at 12.5% (plus applicable Surcharge and Cess) on gains exceeding ₹1.25 lakhs in a financial year, without indexation, for units held for more than 12 months, for transfers happening on or after July 23, 2024.
Debt Funds (Non-Equity-Oriented Mutual Funds)
The current tax treatment applies to units acquired on or after April 1, 2023, irrespective of the holding period.
- Short-Term/Long-Term Capital Gains: All capital gains from these funds are taxed as per the investor’s income tax slab rates (plus applicable Surcharge and Cess), regardless of the holding period. This treatment applies to units acquired on or after April 1, 2023.
TDS (Tax Deducted at Source)
TDS is applicable on capital gains at the time of redemption/transfer. Note that the tax liability is the final amount due; the deducted TDS can be claimed as a credit when filing the income tax return.
- Equity Funds (Transfer on or after July 23, 2024): TDS is applicable at 20% for short-term capital gains and 12.5% for long-term capital gains (on gains exceeding ₹1.25 lakh).
- Debt Funds: TDS is applicable at a flat rate of 30% (plus applicable Surcharge and Cess) on the capital gains. However, this TDS rate can be reduced as per the Double Taxation Avoidance Agreement (DTAA) provisions if a lower rate is specified.
Double Taxation Relief
- Double Taxation Avoidance Agreement (DTAA): NRIs may be subject to taxation in their country of residence. They can use the Double Taxation Avoidance Agreement (DTAA) between India and their country of residence to claim relief or a tax credit to avoid double taxation on their investment income. The benefits under DTAA are generally available only upon providing a Tax Residency Certificate (TRC) and Form 10F.
Important Points for NRIs to Invest in a SIP Investment in India
An NRI should consider the following key aspects before starting to invest in a SIP in India:
- Eligibility: NRIs can invest in SIPs in India through NRE or NRO accounts.
- KYC Compliance: Complete KYC formalities, including submitting documents like a PAN card, passport, and overseas address proof.
- Investment Options: NRIs can choose between repatriable and non-repatriable investments. Repatriable investments allow funds to be transferred back to the investor's home country, while non-repatriable investments do not.
- Repatriation Benefits: Investments made from NRE accounts are fully repatriable, while NRO accounts have restrictions.
- Currency Conversion: SIP for NRIs in India involves currency conversion, so consider exchange rate fluctuations.
- Tax Implications: Gains from SIPs are taxable. Check DTAA (Double Taxation Avoidance Agreement) between India and your country.
- Investment Horizon: SIP plans in India work best for long-term goals. Choose a suitable tenure and fund.
- Fund Options: Explore SIP investment plans in India across equity, debt, or hybrid funds based on risk appetite. Diversification of funds is crucial for a balanced portfolio when opting for a SIP for NRI.
- Ease of Management: NRIs can set up SIPs online, making it convenient to monitor and modify investments.
Wrapping it Up
SIP plans offer NRIs a smart way to grow wealth systematically, combining the benefits of regular investing, market-linked returns, and tax efficiency. With flexibility in fund choices and the power of compounding, it is an effective tool for long-term financial goals.
FAQs
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Can NRIs invest in mutual funds through SIPs in India?
Yes, NRIs can invest in Indian mutual funds via SIPs using their NRE or NRO accounts.
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Can NRIs invest in ULIPs through SIPs in India?
Yes, NRIs can invest in ULIPs through SIPs, provided they meet insurance company guidelines and KYC requirements.
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Is KYC mandatory for NRIs to invest in SIP Plans?
Yes, NRIs must complete KYC using their overseas address and relevant documents like passport and visa copies.
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What documents do NRIs need to start a SIP?
NRIs need a PAN card, KYC compliance documents, proof of residence, passport, and bank account details.
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Can NRIs use both NRE and NRO accounts for SIP investments?
Yes, NRIs can use either NRE or NRO accounts, depending on their choice for fund repatriation.
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Are there tax implications for NRIs investing in SIPs in mutual funds?
Yes, NRIs are subject to TDS on gains. The tax rate depends on the type of mutual fund and holding period.
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What factors should NRIs consider before starting a SIP?
NRIs should consider tax implications, repatriability, currency risks, and KYC requirements.
