Many Non-Resident Indians commonly known as NRI’s want to invest in Indian Mutual Funds and why not. After all the Indian financial market is one of the most stable markets. As per SEBI Overseas investment has been on an average of Rs. 100 Million + per working day from March 2009 onwards.
If an NRI wants to invest in Mutual funds in India, the Reserve Bank of India has set certain guidelines. The guidelines are simple whether on a repartiable or non-repartiable basis, the remittance for investment has to come through normal banking channels or out of funds held in his / her NRE / FCNR account. All investments have to be in Indian Rupees only.
Repartiable means the sale proceeds can be taken out of India.
On sale in case of repartiable basis the net sale proceeds (after payment of taxes) of such units sold, can be remitted abroad or at the NRI's option, credited to his / its NRE / FCNR / NRO / NRSR / NRNR account. Note that tax is deducted at source on the sale of units. Though there is no long term capital gains, tax is still deducted to have an audit trail.
If the investment was on non-repartiable basis then the net sale proceeds (after payment of taxes) of such units sold, can be remitted can only be credited at the NRI’s option to his to his / her NRO or NRSR account.
These were only the guidelines of the Reserve bank of India. It is also mandatory that for all investments being made in mutual funds in India you need a PAN card.
What is a PAN card?
PAN stands for Permanent Account Number. This is similar to the Social Security Number (SSN) in USA. It is a document of identity for all financial transactions in India. It is a 10 character code with first 5 being characters, followed by 4 digits and then a character. PAN card has become a very important document, it is also required for filing your income tax returns, opening a demat account, purchase or sale of property etc.
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