Common Mutual Fund Investment Mistakes NRIs Should Avoid

When you become an NRI, your existing mutual funds remain yours. However, you should update your residential status with your bank and AMCs. Additionally, convert your residential savings accounts to NRE/ NRO accounts and complete NRI KYC. Also, link all your investments to your new account.

If you are an NRI, the key mechanism to avoid double tax is that your current resident country and India have a Double Taxation Avoidance Agreement (DTAA).

Yes, as an NRI, you need to declare any income (dividends or capital gains) from Indian mutual funds in your ITR. This is needed for tax compliance, even if the TDS is deducted by the fund house.

For NRIs, in a financial year, the first INR 1,25,000 of long-term capital gains received from equity-oriented mutual funds is tax-free in India. Generally, all other mutual fund gains in India, based on the fund type and holding period, are taxable in India.

No, you cannot move money from one mutual fund to another without paying taxes, as this event is treated as a taxable event. It is because switching is considered a fund redemption and a new purchase in the new fund, which provides STCG or LTCG taxes depending on the fund type and holding period.