Under FATCA, it is compulsory for all financial institutions to share the details of transactions involving US citizens, including NRIs with the US Government. FATCA ensures that there is no deliberate tax evasion by US citizens on income generated overseas. India signed the Inter-Governmental Agreement (IGA) with the USA on July 9, 2015, for improving International Tax Compliance and implementing FATCA. The documentation is standard for all investors, whether they are NRIs or RIs. The KYC, Additional KYC and FATCA details are mandatory for all the mutual fund investors.
Some of these fund houses have certain conditions on which they allow investors based in USA and Canada to put money in their schemes. For example, ICICI Prudential AMC, Birla Sun Life Mutual Fund and SBI Mutual Fund allow investments only through offline transaction with additional declaration signed by the client. Similarly, L&T Mutual Fund doesn’t allow US and Canada based clients to invest in close-ended funds.
NRIs are allowed to invest in mutual funds in India on a repatriable or non-repatriable basis subject to regulations prescribed under the Foreign Exchange Management Act (FEMA). For general NRIs (not from USA and Canada) the process of investing in Indian mutual funds is as simple as it is for the Indian investors. They just need to comply by certain norms set by the country they are based in.
If an investor has investments in India and moves to USA or Canada as an NRI, the investments can be stopped by the AMC. “When the investor moves to either USA or Canada, the fund house will stop taking further investments if the particular fund house doesn’t allow investments from USA and Canada. If the fund house accepts such investments, then you just have to update the needed documents,” says Sneha Kalsekar, Financial Planner, My Financial Advisor.