The growing economy of India has been attracting investors from around the world to invest in India. Mutual funds are one of the most popular financial instruments not only among Indian investors, but also Non-Indian Residents (NRIs) from across the world. Germany-based NRIs can pursue their long-term financial goals like a child’s education, retirement, purchase of a house, etc., by investing in mutual funds, especially in equity funds. They can also invest in debt funds to earn better returns than bank savings in the short term. Let’s look at some of the best mutual funds for NRIs in Germany to invest in India.
Best mutual funds for NRIs from Germany to invest in India
Here are some of the mutual fund investment options for NRIs based in Germany:
- ICICI Prudential Mutual Funds
- Aditya Birla Sun Life Mutual Funds
- Tata Mutual Funds
- Nippon Indian Mutual Funds
- UTI Mutual Funds
- PGIM Mutual Funds
- SBI Mutual Funds
- Franklin India Mutual Funds
Each mutual fund house has different conditions to accept investment from NRIs based in Germany. While some of the mutual fund houses allow investment only through paper application forms, a few of them also accept online applications through NSE NMFII or BSE STARMF platforms.
Best performing mutual funds for NRIs in Germany
The following table shows the list of best performing mutual funds for Germany-based NRIs, based on previous years’ returns:
|Funds||3 Mo||6 Mo||1 Yr||3 Yr||5 Yr||2020|
|ICICI Prudential Technology Fund||8.1||32.6||128.9||29||22.3||70.6|
|Nippon India Pharma Fund||17.1||28.6||65||28.7||17||66.4|
|Aditya Birla Sun Life Digital India Fund||8.4||31.5||106.3||26.9||22.6||59|
|Tata India Pharma and Healthcare Fund||11.6||21.7||55.4||25.8||11.8||64.4|
|UTI Healthcare Fund||15.2||23.9||62.6||25.8||12.5||67.4|
|SBI Healthcare Opportunities Fund||13.8||25.8||64.4||25.3||10.2||65.8|
|PGIM India Global Agribusiness Offshore Fund||-16.5||-1||35.5||24.9||18.7||72.4|
|Tata Digital India Fund||8.8||33.4||106.2||24.9||21.3||54.8|
|SBI Technology Opportunities Fund||7.8||28.1||79.5||23.8||19.5||47.3|
|Franklin India Technology Fund||-2.5||16.7||77||22.9||18.9||56.8|
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
Germany-based NRIs need to follow important rules and guidelines of the Foreign Exchange Management Act (FEMA) 1999 in order to begin their investment in NRI mutual funds in India. The law makes it compulsory for NRIs to open a rupee-denominated account, submit KYC documents, etc.
KYC procedure for NRIs from Germany to invest in mutual funds in India
- KYC form: As an NRI, you will need to submit the KYC form with all the required details filled to the SEBI registered intermediate. You can courier/ post the documents to the intermediate.
- Documents: The following documents need to be submitted:
- Address proof of your country of current residence
- Indian address proof
- A copy of passport
- A recent photograph
NRIs employed in the Merchant Navy must submit a mariner’s declaration or certified copy of the Continuous Discharge Certificate.
- Attestation: NRIs in Germany can get the KYC 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 Germany.
- In-Person Verification (IPV): For investment in mutual funds for NRI, in-person verification is compulsory. You can connect to the official representative of the mutual fund house where you intend to invest via video conferencing.
Mutual funds for NRIs in Germany: Investment procedure
There are two ways to invest in mutual funds for NRIs:
- Direct/self-investment: You can start investing in mutual funds in India directly through your rupee-denominated NRI account. Get copies of the mutual fund KYC forms available on the portals of mutual fund houses. You can also visit the Indian Embassy in Germany to complete in-person verification.
- Power of Attorney (POA): Another common method is to appoint someone else to invest on your behalf. In India, mutual fund houses allow NRIs to have a POA (Power of Attorney) to invest in mutual funds on their behalf. The appointed POA must be KYC compliant. Signatures of the NRI investor and POA should be present on the KYC documents that you submit to the respective mutual fund company.
NRI mutual fund taxation
Capital gains tax
Your gains from mutual fund investment are subject to income tax in the same way as resident Indians. Sale of equity mutual funds held for above 1 year shall be taxable at 10% without indexation benefit if the long-term capital gain (LTCG) on sale is above Rs. 1 lakh. Short-term Capital Gains are taxable at 15% for redemption within 1 year.
For redemption of debt and other types of funds after 3 years, LTCG is taxable at 20% with indexation benefit. Tax shall be applicable at 30% on short-term capital gains if the investor belongs to the highest income tax slab and redeems the investment before 3 years.
Relief from double taxation
India has signed the Double Taxation Avoidance Agreement (DTAA) with more than 90 countries across the world. Whereby NRIs have to 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 liable to pay tax for the same in the country of your residence. If you are currently living in one of these countries, you are exempt 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 at 10% from the long-term capital gains (LTCG). 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.
An NRI needs to follow the redemption procedure mentioned by his/ her mutual fund house. Different houses follow different procedures for the redemption of mutual fund investment by NRIs. The corpus (investment + gain) you get after fund redemption will be credited to your NRE/ NRO account after deduction of taxes.
No, your application will be rejected. To invest in mutual funds in India, NRIs need to open a rupee-denominated NRI bank account (NRE/NRO) with an RBI-registered bank in India.
Just like residents Indians, NRIs, OCIs and PIOs can also invest in SIP or systematic investment plans in India. SIP helps you to invest in mutual funds in an affordable way.
As an NRI, you need to choose a mutual fund company or AMC (Asset Management Company and select the best plan from a wide range of mutual fund schemes. To start investing in mutual funds, you should open an NRI bank account in India from where the amount will be deducted.