Mutual Funds for Australia-Based NRI Investing in India

As, India is one of the fastest growing economies in the world with over 5 percent GDP growth for many years, it attracts thousands of NRI investors from abroad. World Bank and IMF have projected India’s GDP to grow at 7.4 percent and 7.8 percent in 2018 and 2019 respectively. Currently, India is world’s fifth largest economy at $2.7 trillion GDP.

Non-Resident Indians (NRIs) living in Australia can plan their investment in Mutual Funds India in order to earn optimal returns in the long-run. Australia-based NRIs can invest in stocks in India via mutual funds by Investing in Equity Funds. Equities are ideal for long-term investments, if you have goals like retirement, purchase of a house, or if you just want to build wealth these funds can be an ideal option. And in case, if you want to earn returns higher than bank savings accounts than investing in debt funds for short-term is advisable. Before investing, one should always access their risk ability.

Australia-based NRIs who want to invest in Mutual Funds in India there are some of the important guidelines & rules that need to be followed in order to begin their investment.

Accounts for NRIs Living in Australia

To invest in Mutual Funds in India one is supposed to open any of the following accounts with an Indian bank:

NRE Account

This is Non-Resident External (NRE) account which can be in the form of savings, current, fixed or Recurring deposit. You need to deposit the foreign currency in this account. To be able to deposit Indian currency, you must open NRO account. There is no upper limit on the transaction amount in an NRE account.

NRO Account

The NRO or Non-Resident Ordinary account is in the form of savings or current account that is meant for NRIs to manage their income earned in India. In NRO account, foreign currency gets converted into Indian rupees after it gets deposited. An NRO account can be held jointly with another NRI as well as resident Indian (close relatives).

FCNR Account

This stands for Foreign Currency Non-Repatriable account deposits. In this account, NRIs can remit their earnings in one of the six currencies such as Canadian $, US$, Euro, AU$, Yen, and Pound. Funds can be transferred from other FCNR or NRE accounts. In FCNR, the principal and interest don’t accrue any tax.

Once you open any of these accounts, you need successfully complete your KYC (Know Your Customer), under KYC norms, which is set by SEBI (Securities Exchange Board of India). One can complete their KYC with any of the SEBI-registered intermediates.

KYC Procedure for Australia NRIs to Invest in Mutual Funds

To successfully complete your KYC procedure, Australia NRIs need to complete certain important steps and furnish documents like:

a. KYC Form

An NRI needs to submit the KYC Form with all the necessary details filled to the SEBI registered intermediate. The documents can be sent by courier/post to the intermediate.

b. Documents

Following are the necessary documents that need to be submitted:

• Overseas address proof
• Indian resident address proof
• A recent photograph
• Passport copy

In case of NRIs in the Merchant Navy, a mariner’s declaration or certified copy of Continuous Discharge Certificate must be submitted.

c. Attestation

NRIs or PIOs (Person of India Origin) can get the above documents attested by the authorised officials of overseas branches of scheduled commercial banks registered in India, judge, court magistrate, public notaries, or the Indian embassy/consulate general in the country that they are located.

d. In Personal Verification (IPV)

As per SEBI rules, IPV is mandatory for KYC process. The intermediate should conduct the IPV of NRIs/PIOs.

Please note that all the above documents/proofs while submitting should be in the English language.

Mutual Fund Taxation for Non-Resident Indian(NRI)

Capital Gains Tax Rates on NRI Mutual Fund Investments for the Financial Year 2017-18 (Assessment Year 2018-19) are as below:

NRI taxation on Mutual Funds- Capital Gains Tax Rates- FY 2017/2018 (AY- 2018-19)

Mutual Fund Taxation on Dividends

• Dividends on Equity Funds: The dividend received in the hands of unit holder for equity funds is completely tax-free. The dividend is also tax-free to the AMC.

• Dividends on Debt Funds: The AMC has to pay a dividend distribution tax (DDT) of 28.84% before distributing this dividend income to its unit-holders. The dividend income received by a debt fund unit holder is also tax-free.

Below is the TDS rate applicable on MF redemptions by NRIs for AY 2018-19.

NRI Taxation on Mutual Funds- Capital Gains Tax Rates- FY 2017/2018 (AY- 2018-19)

Popular Cities in Australia

Some of the most popular cities in Australia where you can find most Indians are:

• Sydney
• Melbourne
• Brisbane
• Perth
• Adelaide

Best Mutual Funds for Australia-Based NRIs