Indian diaspora constitutes the largest population of the UAE, approximately 33% of the country’s population. NRIs living in UAE can invest in mutual funds in India to achieve their short and long-term financial goals, such as the purchase of house, child’s education, retirement, etc. However, there are some important guidelines and rules related to investment in mutual funds by NRIs. They need to adhere to Foreign Exchange Management Act (FEMA) to invest in mutual funds in India. Here are some of the best mutual funds for UAE-based NRIs along with guidelines.
Best mutual funds for UAE-based NRIs
Here is the list of some of the best mutual fund houses for NRIs living in UAE:
- ICICI Prudential Mutual Funds
- IDBI Small Cap Mutual Funds
- DSP BlackRock Mutual Funds
- Nippon Indian Mutual Funds
- L&T Emerging Businesses Mutual Funds
- PGIM Mutual Funds
- SBI NRI Mutual Funds
- Kotak Mahindra Mutual Funds
You need to contact the mutual fund house to confirm the mode of investment. Mutual fund houses set different rules to accept investments from NRIs living in the UAE. Some of them accept investment only through paper application forms, but others also accept online investment applications through NSE NMFII or BSE STARMF platforms.
NRIs living in UAE can download SBNRI App to choose from 3000+ mutual fund schemes in India or to ask any questions related to mutual fund investment.
SBNRI is an authorised Mutual Fund Distributor platform & registered with Association of Mutual Funds in India (AMFI). ARN No. 246671
Best performing mutual funds for UAE-based NRIs
Based on the past performance, here are some of the best performing mutual fund investment options for NRIs in UAE to invest in India. SBNRI is an authorized Mutual Fund Distributor platform & registered with Association of Mutual Funds in India (AMFI). ARN No. 246671.
|Funds||3 Mo||6 Mo||1 Yr||3 Yr||5 Yr||2021|
|PGIM India Midcap Opportunities Fund||16.1||18||9.8||41.9||19.4||63.8|
|Nippon India Small Cap Fund||15||19||16||37.7||18.4||74.3|
|Kotak Small Cap Fund||11.7||13.1||9||37.5||18.1||70.9|
|SBI Small Cap Fund||16.1||20.3||19.4||33.3||19.3||47.6|
|DSP BlackRock Small Cap Fund||10.5||12.8||13.2||33||13.8||58.9|
|SBI Magnum Mid Cap Fund||17||21.6||17.4||32.3||14.7||52.2|
|IDBI Small Cap Fund||17.2||20||21.6||32.1||13.8||64.7|
|ICICI Prudential Small Cap Fund||11.5||18.4||13.3||32||15.9||61|
|SBI Contra Fund||12.3||18.8||17.6||31.7||15.2||49.9|
|L&T Emerging Businesses Fund||13.2||16.6||15.7||30.7||13.9||77.4|
Note: Returns up to 1 year are on an absolute basis & more than 1 year are on CAGR basis as on 7 Sep 2022.
Rules for NRI mutual fund investment
Non-Resident Indians (NRIs) who want to invest in mutual funds in India need to follow important rules of the Foreign Exchange Management Act (FEMA) 1999 to be eligible to invest in NRI mutual funds in India. As per FEMA, it is mandatory for NRIs to open a rupee-denominated account, complete KYC documentation procedure, etc.
KYC procedure for NRIs from UAE to invest in mutual funds in India
- KYC form: NRI investors will need to submit the KYC form with all necessary details filled to the SEBI registered intermediate. You can send the documents to the intermediate via courier.
- Documents: Here are the documents to be submitted to complete the NRI mutual fund investment application process:
- Address proof of your country of current residence
- Resident proof in India
- A copy of passport
- A recent photograph
NRIs working in the Merchant Navy have to submit a mariner’s declaration or certified copy of the Continuous Discharge Certificate.
- Attestation: NRIs living in the UAE need to get their 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): In-person verification is compulsory for investment in mutual funds for NRIs. In-person verification can be done through video conferencing with the official representative of the mutual fund house where you intend to invest.
Mutual funds for UAE-based NRIs: Investment procedure
NRIs can start investing in mutual funds by following any of the below given methods:
- Direct/self-investment: Start mutual fund investment in India directly through your NRE or NRO account. You can download copies of the mutual fund KYC forms available on the websites of mutual fund houses. Alternatively, visit the Indian Embassy in the UAE to complete in-person verification.
- Power of Attorney (POA): Indian mutual fund houses allow NRI investors to appoint a POA (Power of Attorney) to act on their behalf. Hence, NRIs can also appoint someone else to invest in mutual funds on their behalf. The appointed POA must get their KYC done. Signatures of the NRI and POA should be present on the KYC documents to be submitted to the respective mutual fund company.
NRI mutual fund taxation
Capital gains tax
NRIs need to pay income tax on the gains from mutual fund investment in the same manner as resident investors. Sale of equity mutual funds held for above 1 year is taxed at 10% without indexation benefits if the capital gain exceeds Rs. 1 lakh. On the other hand, short-term capital gains shall be taxable at 15% for redemption within 1 year.
Long-term capital gains (LTCG) on debt and other types of funds redeemed after 3 years are taxable at 20% with indexation benefits. If the investor belongs to the highest income tax slab and redeems the investment before 3 years, the income shall be taxable at the rate of 30%.
Relief from double taxation
India has the Double Taxation Avoidance Agreement (DTAA) with more than 90 countries across the world. As per the DTAA, NRIs have to pay tax in either of the countries. Which means, if they have already paid taxes on their mutual fund gains in India, they are not liable to pay tax for the same in the country of their residence. If you are currently living in one of these countries, you don’t have to pay double tax.
Unlike resident investors, NRI mutual fund investment is subject to TDS deduction in India. Investment in equity funds is subject to TDS deduction at 10% from the long-term capital gains (LTCG). Investment in debt and other non-equity funds is subject to deduction at 20%.
Before investing in the 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, OCIs (Overseas Citizens of India) and PIOs (Persons of Indian Origin) can invest in the Indian market in the same way as NRIs. OCIs have to adhere to the same rules and guidelines as NRIs to invest in the Indian market.
Non-resident Indians can invest in Indian mutual funds as long as they adhere to the rules and guidelines of the Foreign Exchange Management Act (FEMA) for being NRIs for investing in mutual funds in India.
Some of the best mutual funds for UAE-based NRIs include:
– ICICI Prudential Mutual Funds
– SBI Mutual Funds
– Aditya Birla Sun Life Mutual Funds
– Tata Mutual Funds
– Nippon Indian Mutual Funds
– UTI Mutual Funds
– PGIM Mutual Funds
– Franklin India Mutual Funds
NRIs are not allowed to invest in PPF. However, if you opened a PPF account before you became an NRI, you can continue it till maturity.