Indians are the third largest migrant group in Australia. Many Indians have been migrating to Australia for study and jobs over a couple of years. Indians in Australia, including NRIs and PIOs (Persons of Indian Origin), are eligible to apply for various financial and banking services in India, such as NRI bank accounts, investment in stocks, mutual funds and exchange-traded funds (ETFs), etc. However, unlike resident Indians, there are limited mutual funds for NRIs in Australia. NRIs who want to invest in mutual funds in India have to follow some important rules and guidelines of Foreign Exchange Management Act (FEMA).
Best mutual funds for NRIs from Australia
Here are some of the AMCs (Asset management companies) that offer mutual funds for NRIs from Australia:
- Sundaram Mutual Funds
- L&T Mutual Fund
- UTI Mutual Fund
- BNP Paribas Mutual Fund
Conditions to accept investment from NRIs based in Australia vary from AMC to AMC. While some of the mutual fund houses accept investment only in paper application forms, a few of them accept online applications through NSE NMFII or BSE STARMF platforms.
Best performing mutual funds for NRIs from Australia
Based on the previous years’ performance, here are some of the best performing mutual funds for NRIs from Australia.
|Funds||Net Assets (Cr)||3 Mo||6 Mo||1 Yr||3 Yr||5 Yr|
|L&T Emerging Businesses Fund||Rs. 5,774||17.7||44.3||118.9||7.4||18|
|L&T India Value Fund||Rs. 6,741||5.3||25.8||80.8||9.6||14.7|
|Sundaram Rural and Consumption Fund||Rs. 1,336||0.5||13.8||51.3||5.6||11.8|
|UTI Banking & PSU Debt Fund||Rs. 273||1.1||1.2||5.3||4.6||5.8|
|UTI Dynamic Bond Fund||Rs. 221||0.8||0.5||3.9||1.9||4.5|
|L&T Business Cycles Fund||Rs. 525||2.4||23||80.8||5.6||11.6|
|Sundaram Mid Cap Fund||Rs. 6,152||2.5||25.2||76.2||4.8||11.2|
|L&T Midcap Fund||Rs. 6,428||7||25||73.9||8.2||15.7|
|L&T Tax Advantage Fund||Rs. 3,407||4.2||20.3||68||7.5||13.5|
|BNP Paribas Multi Cap Fund||Rs. 520||5.5||25.3||66.3||11.2||13.3|
Note: Returns up to 1 year are on an absolute basis & more than 1 year are on CAGR basis as on 19 May 2021.
Rules for NRI mutual fund investment
NRI mutual fund investments are subject to restrictions or conditions in the Foreign Exchange Management Act 1999 (FEMA). Under the provisions of FEMA, investments into the Indian capital market are allowed only with the compliance of conditions like the opening of rupee-denominated NRI accounts (NRE/NRO), submitting KYC documents, etc.
KYC procedure for Australian NRIs to invest in mutual funds
- KYC form: NRIs need to submit the KYC form with all the necessary details filled to the SEBI registered intermediate. They can courier/ post the documents to the intermediate.
- Documents: The following documents need to be submitted:
- Overseas address proof
- Indian address proof
- A copy of passport
- A recent photograph
NRIs in the Merchant Navy must submit a mariner’s declaration or certified copy of the Continuous Discharge Certificate.
- Attestation: NRIs in Australia can get these documents attested by any of the entities like the authorized officials of overseas branches of scheduled commercial banks registered with the RBI, judge/ court magistrate, Public Notary, or the Indian Embassy/Consulates in Australia.
- In-Person Verification (IPV): In-person verification is compulsory for investment in mutual funds for NRIs. IPV can be done via video conferencing with the official representatives of the mutual fund house where you intend to invest.
Mutual funds for NRIs in Australia: Investment procedure
- Direct/self-investment: NRIs can start investing in mutual funds in India directly through their rupee-denominated NRE/NRO account. Download copies of the mutual fund KYC forms available on the portals of mutual fund houses. You can also visit the Indian Embassy in Australia to complete in-person verification.
- Power of Attorney (POA): NRIs can also appoint a Power of Attorney in India on their behalf to invest in NRI mutual funds. The appointed POA must be KYC compliant. Signatures of the NRI and POA should be on the KYC documents that you submit to the respective mutual fund company.
NRI mutual fund taxation
Capital gains tax
NRIs’ gains from mutual fund investment will be taxed in the same manner as resident Indians. Sale of equity mutual funds held for a period above 12 months shall be taxable at 10% without indexation benefit if the gain (Long-Term Capital Gains) on sale is above Rs. 1 lakh. Short-term Capital Gains tax at 15% is applicable for redemption within 1 year.
If the investment is redeemed after 36 months for debt and other types of funds, LTCG tax shall be applicable at 20% with indexation benefit. STCG tax shall be applicable at 30% if the investor belongs to the highest income tax slab and redeems the investment before 36 months.
Relief from double taxation
India has signed the Double Taxation Avoidance Agreement (DTAA) with more than 90 countries across the world. As per the DTAA, NRIs can pay tax in either of the countries. In other words, if you have already paid taxes on your mutual fund gains in India, you are not required to pay tax for the same in the country of your residence. If you live in one of these countries, you can take relief from double taxation.
Unlike resident investors, NRIs can claim TDS deduction on mutual fund investments in India. Investment in equity funds is subject to TDS deduction from LTCG at 10%. The same for debt and other non-equity funds is 20%.
Before investing in Indian market, NRIs must consult market experts to make informed decisions. You can get detailed mutual fund advisory from experts at SBNRI. You can download SBNRI App from the Google Play Store or App Store to ask any questions related to mutual fund investment, NRI account opening online and tax filing in India. To ask any questions related to Mutual Funds, click on the button below. Also visit our blog and YouTube channel for more details.
Yes, NRIs can invest in Indian stock market under the portfolio investment scheme (PIS) of the Reserve Bank of India. They need to open an NRE/ NRO account with an RBI-authorized bank to invest in Indian stock market.
Yes, NRIs can invest in mutual funds in India subject to restrictions and conditions in the Foreign Exchange Management Act (FEMA). In other words, an NRI has to meet certain requirements as per the guidelines of FEMA for being an NRI for investing in NRI mutual funds.
NRIs can claim TDS deduction on mutual fund investments in India. Investment in equity funds is subject to TDS deduction from LTCG at 10%. Investment in debt and other non-equity funds is subject to TDS deduction at 20%.