Kriti Shroff asked on 30/03/2020

Which Indian mutual funds are allowed for US NRIs?

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SBNRI Team
answered on 30/03/2020

The basic problem that NRIs from the USA encounter is the lack of knowledge of investment opportunities that are present in India considering Mutual Funds.

 

Mutual Funds

 

Here is a list of Mutual Fund Houses that accept investments from US: 

  • DHFL Pramerica Mutual Fund
  • Birla Sun Life Mutual Fund
  • ICICI Prudential Mutual Fund
  • SBI Mutual Fund
  • UTI Mutual Fund
  • L&T Mutual Fund
  • PPFAS Mutual Fund (Parag Parikh Financial Advisory Services)
  • Sundaram Mutual Fund

Different types of Mutual Funds are taxed differently: 

 

*(Equity Funds: An equity fund is a mutual fund that invests principally in stocks)

 

*(Debt Funds: A debt fund is a mutual fund that invests in fixed-interest generating securities such as corporate bonds, government securities)

 

Nature of Profits / Income

Equity Funds* Debt Funds*
Minimum Holding period for Long term capital gains 1 year

3 years

Short term capital gains taxation

15% + 4% cess* = 15.60% As per the tax rate of the investor (30% + 4% cess = 31.20% for investors in the highest tax slab)
Long term capital gains taxation 10% + 4% cess = 10.40% (if the long term gain exceeds Rs 1 Lakh)

(long term gains up to Rs 1 Lakh is tax-free) 

20% with indexation*

 

*(Cess: A cess is a tax on tax that you pay to the government for purposes set by the government. The cess is charged till the objective set by the government is fulfilled. Eg: Krishi Kalyan Cess, Swachh Bharat Cess etc.)

 

*(Indexation: Indexation refers to the technique of adjusting income payments using a price index to maintain the purchasing power of the public after inflation) 

 

Note: NRIs need not pay double taxes. There is a provision called DTAA (Double Taxation Avoidance Treaty). If the DTAA is signed between India and the country of residence of the NRI, the NRI will not be paying double taxes on the same source of income. NRIs will however need to pay differential taxes. (For example: If for a certain investment, taxes are 30% in India and 40% in the USA, NRIs from the USA need to pay the remaining 10% to US.)

 

India has signed DTAA with more than 85+ countries all around the globe including USA, UK, Saudi Arabia and UAE. You can check the list of the countries and find additional information regarding DTAA here.

 

 

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