NRI is a person residing outside India who is a citizen of India or Person of Indian Origin (PIO).

  • Person of Indian Origin (PIO) means a citizen of any country (other than Bangladesh or Pakistan), if :
    • a. He/She at any time has held an Indian passport or
    • b. He/She or either of his / her parents or grand parents was a citizen of India by virtue of the constitution of India or Citizenship Act, 1955 (57 of 1995) or He / She is a spouse of an Indian citizen or of a person referred above.
Person of Indian Origin (PIO) Cards are issued by Ministry of External Affairs (CPV Division), Government of India to persons of Indian origin through Indian missions abroad.
FII means an institution established or incorporated outside India, which proposes to make investments in Indian securities and is registered with SEBI.
No special approval is required. NRIs/FIIs have been granted a general permission by RBI [Schedule 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000] for investing in/redeeming units of the schemes subject to conditions set out in the aforesaid regulations.
NRIs / Persons of Indian Origin / FIIs are entitled to invest in Mutual Fund schemes in India.
To invest in Indian Mutual Funds, the NRI has to open any one of the following three kinds of accounts through the banks who provide such facility. They are:
  • Non-Resident (External) Rupee (NRE) accounts are Rupee accounts from which funds are freely repatriable. They can be opened with either funds remitted from abroad or local funds transferred from NRE/FCNR accounts, which can be remitted abroad.
  • Non-resident Ordinary Rupee (NRO) accounts are Rupee accounts and can be opened with funds either remitted from abroad or generated in India. The amount in such accounts is non-repatriable. However, funds in NRO accounts can be remitted abroad subject to/as per various directives in force at the time of repatriation. More details can be found on the Reserve Bank of India (RBI) websitewww.rbi.org.in
  • Foreign Currency Non Resident (FCNR) accounts are similar to the NRE account except that the funds are held in permitted foreign currency like USD, GBP, JPY, EUR, CAD and AUD and that it can be opened only in the form of term deposits with a maturity of up to five years.
An NRI cannot make the investment in foreign currency. He needs to give a Rupee cheque from his NRE/ NRO bank account in India. He may also send a Rupee cheque from abroad payable in a bank in India. However, for an NRI to invest, it is mandatory that he maintains a bank account in India.
Redemption proceeds may be paid by cheque. The cheque will be payable to the first unit holder and will include the bank account number. Alternatively the redemption proceeds may be credited directly to the investor's (Unit Holder/ First Holder in the folio) bank account.

Redemption proceeds/repurchase price and/or dividend or income earned (if any) will be payable in Indian Rupees only. The fund will not be liable for any loss due to exchange fluctuations, while converting the Rupee amount into US Dollar or any other currency.
The investments shall carry the right of repatriation of capital invested and capital appreciation so long as the investor continues to be a resident outside India.

In the case of an FII, the designated branch of the authorized dealer may allow remittance of net sale/maturity proceeds (after payment of taxes) or credit the amount to the Foreign Currency account or Non-Resident Rupee account of the FII, maintained in accordance with the approval granted to it by the RBI [Clause 5(i) of the Regulations].

In the case of NRIs:-, where the investment is made out of inward remittance or from funds held in the NRE/FCNR account of the investor, the maturity proceeds/repurchase price of units (after payment of taxes) may be credited to the NRE/FCNR/NRO/NRSR account of the non-resident investor maintained with an authorized dealer in India [Clause 5(ii) of the Regulations].
No. Investors need to contact their authorized dealers for this service.

Section 206AA of the Income Tax Act (the Act) provides for tax deduction at source at the higher of the following rates, if the recipient of the income has not furnished his/her Permanent Account Number (PAN). 

  • At the rate specified in the relevant provision of this Act
  • At the rate or rates in force
  • At the rate of 20%

To reduce the compliance burden of foreign companies and non-residents, the Finance Act, 2016 has relaxed the condition of obtaining a PAN by such foreign companies and non-residents, subject to the recipient foreign companies or non-residents (deductee) furnishing the following details

  • Name, email id, contact number
  • Address in the country or specified territory outside India of the home country of the non-resident
  • A certificate of residence in any country or specified territory outside India from the government of that country or specified territory if the law of that country or specified territory provides for the issuance of such certificate i.e. Tax Residency Certificate (TRC); and
  • Tax Identification Number (TIN) of the non-resident in the country or specified territory of his residence and, in case no such number is available, a unique number on the basis of which the non-resident is identified by the government of that country or specified territory of which he claims to be a resident.

Furthermore, these details are required to be reported to the Indian tax authorities by HDFC Mutual Fund (for investments in our schemes) by way of including it in the withholding tax returns and stating ‘PAN not available’

A TDS certificate is issued in the name of the Unit holder / First holder mentioning the details of the transaction and the tax deducted. The TDS certificate is commonly known as Form16 A.
TDS Certificates (Form 16A) are dispatched to the investors once in a quarter.
No, Units issued to FIIs/NRIs will not be treated as assets as defined under section 2(ea) of the Wealth-Tax Act, 1957 and hence will not be liable to wealth tax.
No, Units cannot be redeemed or allotted on the basis of fax applications. A request that lacks a valid signature cannot be processed/accepted.
Yes, unlike banks where a POA holder cannot open an account on behalf of the NRI/FIIs, in a mutual fund the POA has the authority to invest on behalf of the investor and sign documents for initial and additional purchases as well as redemptions.

While applying for purchase of units the POA holder needs to submit the original POA or a copy duly notarized should be submitted. The Power of attorney should contain the signature of both the first holder and the POA holder. Only when the POA is registered does the POA holder have the right to transact on behalf of the NRI/FII investor. His signature will be verified for processing any transaction/request.
Yes, it is allowed only for Individuals.
Yes, the same rules apply for nominees to resident Indian folio(s). An NRI can be a nominee to a folio(s) which is in the name of a resident Indian.
To be able to transfer money, received in India from the sale of your property, it is important that the payment for the property is accepted through legal banking channels. Documentary proof showing source of money will be required when transferring money abroad. In order to transfer the money it must first be deposited in an NRO bank account.
1.To start the repatriation process, the first step is to get a certificate from a Chartered Accountant (CA) in India.
The certificate required from a chartered account, is actually issued in a form that is called 'Form 15CB'. This form can be downloaded by simply logging on to the Indian government tax website: https://www.tin-nsdl.com/download/Form15CB.pdf. The CA will fill in the form and sign it. Basically the form is to verify that the money being sent abroad, has indeed been acquired from legal sources such as, from the sale of your property and all taxes that were due, have been paid. The CA will verify and sign the form for you.2.Once you have the completed CA certificate on 'Form 15CB' the next step involves filling a Form called Form 15CA.
This is a form that is filed online with the tax department. Visit Indian government tax website www.tin-nsdl.com to access the form. Once you access the form, fill in the required information. You will need some of the information provided by your CA, on Form 15CB.After submitting the duly filled form with the tax authorities, submit signed undertaking along with the CA certificate on Form 15CB, to the bank where you have your NRO account. Your bank will transfer your money abroad. No further permission is required by banks as RBI has authorized dealers to submit funds once the above mentioned documents are provided.
  • Form 15CA.
  • Form 15CB in duplicate signed by the Chartered Accountant
  • Form A2 - Your bank should supply you with this form, a sample form A2 is included in this book.
  • Application for foreign exchange- this form would also be supplied by the bank To verify that the person who is sending the money abroad, did have legal ownership of the property sold and the transmission of funds are the sale proceeds of property; banks may want to see documentary proof such as:
    • Copy of the sale document of the property.
    • If the property had been inherited then copy of the WILL, legal heir certificate, death certificate on whose death the property has been inherited.

While the repatriation procedure is fairly simple, with some planning you can probably make it much easier.

  • It might be prudent, for non-residents, to consult a CA before selling their property in India. They can guide you how to accept money from the sale proceeds and what documentation to get.
  • CA can help in calculating as well as methodically paying any taxes that may be due, on the sale of your property.