Starting a mutual fund SIP from the Gulf: a guide for NRIs from Kerala

Half of the Indians working in the Gulf come from Kerala, and most of them send money home every month. Much of it lands in savings accounts and fixed deposits. A SIP is a simple way to put part of that remittance to work for a goal at home, and it can be run almost entirely without visiting India.

Choose the account

• NRE account: for money earned abroad. Investments made from it, and their proceeds, are fully repatriable.
• NRO account: for income earned in India such as rent. Repatriation is limited to an annual ceiling with paperwork.
• Most Gulf investors invest from the NRE account so the money can go back abroad if needed.

Complete NRI KYC once

You will need your passport, a valid visa or residence permit such as an Emirates ID, overseas address proof, your PAN, a photograph and a FATCA declaration that states your country of tax residence. Many fund houses now accept video KYC, so this can be done from Dubai, Doha or Muscat.

Which funds you can buy

Residents of the UAE, Qatar, Oman, Kuwait, Bahrain and Saudi Arabia can invest in almost every Indian scheme. Residents of the United States and Canada face restrictions from some fund houses because of reporting rules in those countries. If you might move, ask before you invest.

How tax works

Gulf countries do not tax your Indian investments, but India does. When an NRI redeems, the fund house deducts tax at source on the capital gain. Equity gains held over a year are taxed as long-term capital gains above an annual exemption, and shorter holdings at a higher short-term rate. Rates have changed in recent budgets, so we check the current figures with you before you redeem. You may need to file an Indian return to claim back excess TDS.

When you come home

On returning to Kerala for good, your status changes to resident. Your folios are updated to resident status, the NRE account is converted, and SIPs can continue. This is one of the most common jobs we handle for returning families, and it is easier when the original paperwork was done carefully.

This guide is general information from Parayil Agencies & Financial Supermarket, a mutual fund distributor and insurance intermediary in Angamaly, Kerala. It is not personalised advice. Mutual fund investments are subject to market risks; read all scheme-related documents carefully.