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What you need to know about NRI investment in India?

Non- Resident Indian (NRI) is the term used for citizens of India who are currently living in a foreign land. The NRI investment is allowed in mutual funds, real estate and several other industries. However, NRIs have to follow some regulations prescribed under Foreign Exchange Management Act (FEMA) for all their stock market investments. Here are a few things that NRIs need to know about investing in mutual funds in India.

Application Form

NRIs have to fill a basic application form for investing in mutual funds and stocks. It is necessary that the form is signed by the NRI and submitted at the official points of acceptance. The applicant must provide the payment instrument drawn in the scheme and indicate the method of investment, i.e., repatriable and non-repatriable basis. It is also mandatory to include KYC papers and a copy of PAN.

 

Power of Attorney Holder

The power of attorney (POA) holder has the right to operate the NRI account for all the mutual fund transactions. To open and operate the account, the POA should be registered for mutual funds transactions. There are a few things need to be attained to get the POA authority. The POA holder should submit an original or duty notarised copy of the POA. For validation of power of attorney, both POA holder and NRI must sign it.

Payment Method

The payment method is a little different for repatriable and non-repatriable basis. For repatriable basis, the payment method is drawn on NRE or FCNR account of the investor. For non-repatriable basis, the payment instrument is through NRE, FCNR, or NRO account of the investor.

Redemption Process

Redemption is the process of deduction of taxes. Redemption is paid in rupees by cheque to the provided account number. Some banks offer a direct credit of redemption proceeds to the NRE/NRO account. For non-repatriable basis, redemption process is credited to NRO account.

TDS Certificate

The investments in equity funds that are held over a year are exempted from the tax and thus tax is not deducted from the source. A digitally signed TDS certificate is sent along with the redemption proceeds.

It is crucial to know that the investment carries the right of repatriation of capital invested and capital appreciated only till the investor is an NRI. Also, it is mandatory to fill overseas address on the application form for NRI banking.

 

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