Indian mutual funds can be a great way for Non-Resident Indians (NRIs) to grow their money and diversify their portfolios. However, if you’re an NRI living in the United States, there are a few extra steps you need to follow due to U.S. tax laws. This guide will help you understand all about investing in India from US.
Why US NRIs Are Treated Differently
While most NRIs can invest in Indian mutual funds quite easily, things are slightly different for those living in the United States. This is mainly because of a U.S. law called the Foreign Account Tax Compliance Act (FATCA).
What is FATCA?
FATCA is a law introduced by the U.S. government in 2010. Its goal is to prevent tax evasion by U.S. taxpayers who have money in foreign accounts. Under FATCA, financial institutions across the world (including in India) are required to report the financial holdings of U.S. taxpayers to the U.S. tax department.
If you are a U.S.-based NRI, this means your Indian financial accounts and investments must be declared as per FATCA rules. It also means mutual fund companies in India need to collect and share certain information about you with tax authorities.
Also read: What is FATCA in Mutual Funds?
How FATCA Affects You
As a US-based NRI, if you hold NRE (Non-Resident External) or NRO (Non-Resident Ordinary) bank accounts in India, you must provide self-declarations with details like:
- Your full name
- PAN (Permanent Account Number)
- Indian and overseas addresses
- Country of tax residence
This is required for you to stay compliant with both Indian and U.S. tax laws.
Can US NRIs Still Invest?
Yes! FATCA does add a few extra steps, but it does not stop you from investing in Indian mutual funds. However, not all Indian fund houses accept investments from U.S.-based NRIs because of the extra paperwork and reporting involved.
The good news is – many reputed fund houses do allow US NRIs to invest.
Mutual Fund Houses That Accept US NRI Investments
These are some of the fund houses that allow investing in India from US:
- ITI Mutual Fund
- Nippon India Mutual Fund
- Quant Mutual Fund
- Shriram Mutual Fund
- Sundaram Mutual Fund
- UTI Mutual Fund
- White Oak Capital Mutual Fund
Bank Accounts You Need
For investing in India from US, you must have either an NRE or NRO bank account. Mutual fund companies do not accept foreign currency—so your investments will be made in Indian Rupees.
Many financial advisors suggest using an NRE account for mutual fund investments, as it makes it easier to repatriate (send back) your funds abroad later.
FATCA and KYC Documents You Must Submit
Before you can invest, you must complete your KYC (Know Your Customer) process. Here are the documents typically required:
- PAN Card (mandatory for all investors)
- Passport (with visa stamp if applicable)
- Overseas address proof (like a Driving License or Rental Agreement)
- Recent passport-sized photograph
- OCI card (if you hold a foreign passport)
You will also need to fill out a FATCA declaration form, which includes:
- Your country of tax residence
- Tax Identification Number (TIN) or Social Security Number (SSN)
- Type of address (residential or business)
- Consent for information sharing with tax authorities
Why US NRIs Should Consider Indian Mutual Funds
Investing in Indian mutual funds can offer several benefits:
- Exposure to India’s growing economy
- Portfolio diversification
- Potentially higher returns compared to U.S. savings products
- Opportunity to invest in INR-denominated assets
However, because of the added regulations, it’s important to follow the process carefully and make informed decisions.
Always Seek Expert Advice
Because investing as a US NRI involves tax laws in two countries and specific fund house rules, it’s best to consult a financial advisor who understands both Indian and U.S. regulations.
They can help you:
- Choose the right fund houses
- Navigate KYC and FATCA formalities
- Select funds based on your goals and risk tolerance
- Stay compliant with tax reporting in both countries
Final Words
While it may seem complicated at first, many U.S.-based NRIs have successfully invested in Indian mutual funds. With the right guidance, documentation, and a bit of patience, you can too. Always read the mutual fund documents carefully and be aware that mutual fund investments are subject to market risks.
Invest in Indian Mutual Funds as NRI/OCI with SBNRI
SBNRI is an authorized Mutual Fund Distributor platform & registered with the Association of Mutual Funds in India (AMFI). ARN No. 246671. NRIs willing to invest in mutual funds in India can download the SBNRI App to choose from 2,000+ mutual fund schemes or can connect with the SBNRI wealth team to better understand Mutual Fund investments.
NRIs can now download the SBNRI App and choose to invest in different NRI mutual fund schemes in India with ease. You can also get detailed investment advice from experts at SBNRI. Also, visit our blog and YouTube channel for more details.Download App
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions. SBNRI does not intend to predict future returns, please read all related documents before investing.
FAQs:
1. Can US-based NRIs invest in Indian mutual funds?
Yes, US-based NRIs can invest in Indian mutual funds, but they need to comply with additional regulations like FATCA and select fund houses that accept US-based investors.
2. What is FATCA and why is it important for US NRIs investing in India?
FATCA (Foreign Account Tax Compliance Act) is a US regulation that requires financial institutions to report assets held by US taxpayers overseas. It’s important because Indian fund houses must comply before allowing US NRIs to invest.
3. Which mutual fund houses allow online investments from US NRIs?
Some fund houses that accept online investments from US NRIs include Aditya Birla Sun Life, Groww, Nippon India, UTI, Quant, Samco, White Oak Capital, and Sundaram Mutual Fund.
4. Do I need an NRE or NRO account to invest in Indian mutual funds?
Yes, US NRIs need an NRE or NRO bank account to invest in Indian mutual funds, as Indian fund houses do not accept foreign currency investments.
5. What documents are required for US NRIs to complete KYC in India?
Documents include PAN card, overseas address proof (like a driving license), passport, passport-size photo, and OCI card (if applicable).
6. Is investing in Indian mutual funds safe for US NRIs?
Like any investment, mutual funds carry market risks. However, with proper KYC and FATCA compliance, investing through SEBI-registered fund houses can be a safe and regulated process.7.
7. Should I consult a financial advisor before investing?
Yes, due to tax implications and compliance requirements, it’s always best to consult a financial expert who understands both Indian and US regulations before investing.
