As per AMFI estimates, the AUM of India’s mutual fund industry stood at ₹64.5 lakh crore in 2025. This makes it one of the most accessible and professionally managed investment avenues for resident and non-resident Indians alike. For NRIs, mutual funds offer a regulated, tax-aware, and diversified entry into India’s capital markets without the need to directly manage stocks or time the market.

• What are the exact legal steps for NRIs to invest in mutual funds from abroad?

• How do taxes work for NRIs, and what is the DTAA’s role in avoiding double taxation?

• Which type of mutual fund account, NRE or NRO is better for income repatriation?

This blog addresses these key questions while breaking down all the steps, risks, and benefits of mutual fund investments for NRIs.

Whether you live in the UAE, US, UK, or Singapore, this guide will help you invest wisely in Indian mutual funds.

Key Takeaways

• NRIs can invest in Indian mutual funds via NRE/NRO accounts under FEMA guidelines.

• KYC and FATCA compliance is mandatory before investing.

• Investments are managed professionally, making it ideal for NRIs who want hands-free investing.

• DTAA helps avoid paying taxes in both countries on the same income.

• Some AMCs restrict US/Canada NRIs due to FATCA; others permit offline investment.

What Are Mutual Funds and Why Should NRIs Consider Them?

A mutual fund collects money from investors and invests it in a diversified mix of equity, debt, and other securities. It is managed by professionals with market expertise. For NRIs, mutual funds provide the ease of investing in Indian growth without having to monitor or pick individual stocks.

Benefits of Mutual Fund Investing for NRIs

NRIs looking to benefit from India’s growth story choose mutual funds for multiple reasons:

• Diversification: Spread investments across asset classes and sectors.

• Professional Management: Portfolio managed by SEBI-registered fund managers.

• Low Minimum Investment: Start with as little as ₹500 monthly via SIP.

• Currency Advantage: Possible rupee appreciation offers extra gains on repatriation.

India’s growth outlook, coupled with an organized asset management industry, makes mutual funds a structured choice for NRIs with medium to long-term horizons.

Can NRIs Legally Invest in Mutual Funds in India?

Yes. NRIs are legally allowed to invest in mutual funds in India under Foreign Exchange Management Act (FEMA) regulations. However, the investment must be done in Indian currency, and routed through NRE or NRO accounts, not foreign bank accounts.

Regulatory Permissions for NRIs

To comply with FEMA rules, NRIs must:

• Hold a valid Non-Resident External (NRE) or Non-Resident Ordinary (NRO) account.

• Complete KYC verification with valid passport, PAN, overseas proof of address.

• Submit FATCA declaration for tax compliance.

Some mutual fund houses may not accept investments from NRIs residing in the US or Canada due to FATCA compliance. Others may allow investments with additional paperwork or offline submission.

Step-by-Step Process to Start Mutual Fund Investment as an NRI

Step 1: Set Up an NRE or NRO Account

To invest in mutual funds from abroad, an NRI must first hold an account with an Indian bank:

• NRE Account: Income from abroad, fully repatriable, no tax in India.

• NRO Account: Income from Indian sources, taxable in India, partially repatriable.

The choice between NRE and NRO depends on the source of funds and repatriation needs.

Step 2: Complete Your KYC and FATCA Compliance

Before any investment, an NRI must complete KYC:

Documents required:

• PAN Card

• Passport copy with photo and address

• Overseas address proof

• Recent passport-size photo

• Cancelled cheque or Indian bank statement

FATCA form: Mandatory for tax compliance under international regulations.

Verification may be offline or video-based. Some AMCs mandate in-person verification, especially for high-value investments or US/Canada-based NRIs.

Step 3: Choose Investment Mode – Self or PoA

NRIs can invest directly or through a Power of Attorney (PoA) holder in India. For PoA-based investing:

• Both the NRI and PoA holder must sign the KYC documents.

• The PoA can transact and manage investments on the NRI’s behalf.

This is a common route for NRIs who have a trusted family member or advisor in India.

Step 4: Select a Platform to Invest

NRIs can invest through:

• AMC Websites and Mobile Apps

• Registrars like CAMS and Kfintech

• MF Utility or MF Central

• BSE STAR MF or NSE NMF-II

• Investment Advisors or RIAs

Each platform provides tracking, performance analytics, and online redemption support.

Step 5: Make Investments and Track Performance

Once verified, NRIs can begin investing via:

• Lumpsum: One-time investment in chosen mutual fund schemes.

• SIP: Systematic Investment Plan for regular monthly investment.

Most platforms allow tracking via dashboards and monthly email updates.

What Are the Tax Rules for Mutual Funds for NRIs?

Taxation for NRIs investing in Indian mutual funds is the same as for resident investors, but with Tax Deducted at Source (TDS) and DTAA relief options.

Capital Gains Tax

Equity Mutual Funds

• Short Term (<1 year): 15%

• Long Term (≥1 year): 10% (if gains > ₹1 lakh annually)
  
  

Debt Mutual Funds

• Short Term (<3 years): Added to income, taxed at slab rates

• Long Term (≥3 years): 20% with indexation

TDS on Capital Gains

The fund house deducts TDS at the time of redemption. For example:

• Equity Funds: 15% on short-term gains

• Debt Funds: 20% with indexation on long-term gains

TDS is auto-deducted and reported in Form 26AS.

Double Taxation Avoidance Agreement (DTAA)

If India has a DTAA with your resident country, you can avoid paying tax twice. Submit tax credit documentation in your country of residence to claim relief.

Examples of DTAA-covered countries include:

• United States

• United Kingdom

• UAE

• Canada

• Singapore

Challenges NRIs Face While Investing in Mutual Funds

Despite ease of access, NRIs face a few challenges when investing from abroad:

• Restricted Access for US/Canada Residents: Due to FATCA compliance, some AMCs do not accept investments from these countries.

• Paper-Based KYC: Not all fund houses support online KYC, making onboarding harder.

• Currency Conversion Costs: Fund transfer involves forex charges and margin spreads.

• Redemption Delays: Overseas bank holidays may delay remittance.

Despite these, most of the top Indian AMCs now support digital onboarding for NRIs with PoA or in-person verification.

How to Choose the Right Mutual Fund as an NRI

Not all mutual fund schemes are equally suited for NRIs. Factors like investment goals, taxation, repatriation needs, and country-specific compliance must guide the selection process.

Key Criteria to Consider

1. Residency Restrictions
Some schemes may limit access to NRIs from the US or Canada. Always check FATCA and KYC acceptance.

2. Repatriation Flexibility
Funds invested via NRE accounts are fully repatriable. If you plan to move funds overseas later, ensure the fund allows for easy withdrawal and transfer.

3. Investment Objective Alignment
Your risk appetite and time horizon must match the fund type—equity, hybrid, debt, or ELSS.

4. Expense Ratio and Exit Load
Lower fees directly impact returns. Also, check exit load charges for premature redemption.

5. Consistency of Returns and Fund Manager Track Record
Rather than chasing recent highs, look at how consistently the fund has performed across market cycles.

Why Should You Choose Ckredence Wealth?

When NRIs look to invest in mutual funds, they need not just access, but advice, tax efficiency, and regulatory guidance. Ckredence Wealth bridges this gap with services built for global investors with roots in India.

What Makes Us Stand Out?

Compliant NRI Onboarding
We help NRIs complete KYC, FATCA, and PoA paperwork across countries with full support.

Personalized Scheme Selection
Every client’s goals are mapped to suitable equity, hybrid, or debt mutual fund schemes.

Tax Planning and DTAA Optimization
Our advisory ensures that clients avoid dual taxation and repatriate profits legally.

Dedicated Advisor Desk for NRIs
Advisors understand the needs of NRIs from compliance to currency hedging and exit planning.

Access to Research and Reports
Our internal team provides regular insights, AMC reviews, and risk ratings on schemes.

Conclusion

Mutual funds offer NRIs a smart and legal path to participate in India’s economic rise. While setting up the investment path involves initial regulatory steps like KYC and NRE/NRO account setup, the long-term benefits can be strong.

• NRIs can invest through Indian mutual funds if FEMA, KYC, and FATCA norms are followed.

• Taxation is on par with residents but includes TDS and DTAA benefits.

• AMC policies may differ for US/Canada NRIs—check eligibility before investing.

• Ckredence Wealth offers full support for onboarding, selection, compliance, and tax planning.

Mutual funds for NRIs are not just possible, they're practical and profitable when done right.

FAQs

1. What is the process to start investing in mutual funds for NRIs?

NRIs must open NRE/NRO accounts, complete KYC and FATCA, and then choose a platform.

2. Can NRIs from the US and Canada invest in Indian mutual funds?

Yes, but only in select AMCs that accept US/Canada-based NRIs with offline declarations.

3. Are mutual fund gains taxable for NRIs in India?

Yes. TDS applies on capital gains, but DTAA helps reduce tax in the home country.

4. Which account is better for NRI mutual fund investments, NRE or NRO?

NRE allows full repatriation; NRO is taxable in India and allows partial repatriation.