Investment & Financial Planning

Repatriation Of Mutual Funds: Different Ways & Means

Vipul Jain
Written by Vipul Jain
Updated on: April 2, 202611 mins Editorial Standards
Repatriation Of Mutual Funds

For tax purposes and investment in India, individuals are classified based on their residential status, such as Non-Resident Indian, Resident Indians, and Persons of Indian Origin (PIOs). Unlike other investment products, NRIs can invest in mutual funds in India without any prior RBI approval.

NRIs' mutual fund investments in India can be either repatriable or non-repatriable. 

In this blog, we will discuss the repatriable and non-repatriable mutual fund investments by NRIs in India. 

Key Takeaways
  • Repatriable investments allow investors to transfer their capital and earnings from mutual fund investments back to their home country. 
  • Non-repatriable investments restrict the transfer of funds out of the country of investment, or the repatriation happens with certain restrictions. 
  • If an NRI has invested in a mutual fund through their NRE account, all of these investment proceeds are fully repatriable. 
  • If an NRI invested in mutual funds through an NRO account, then the proceeds are repatriable only up to USD 1 million. 
  • NRIs from the US and Canada may face restrictions when investing in Indian mutual funds offered by certain AMCs that may not be FATCA/CRS compliant. 
  • Gains from mutual fund investments by NRIs are taxed in India. 
  • The tax rates for NRI investing in a mutual fund are the same as those for resident Indians. 

NRI Repatriable & Non-Repatriable Mutual Fund Investments 

When a person of Indian origin or an Indian citizen living abroad makes a mutual fund investment from abroad, the redemption proceeds must be credited to the originating NRE account. This kind of investment is called a repatriable investment. 

On the other hand, mutual fund investments made using funds from an NRO account cannot be repatriated. Such investments are called non-repatriable mutual fund investments. 

Repatritiation Of Mutual Fund Investment Proceeds

A repatriable mutual fund investment is one in which the NRI has used funds from a Non-resident External (NRE) or Foreign Currency Non-resident (FCNR) account. In terms of the definition, an NRE account allows NRIs to park their foreign-sourced income in India. Additionally, NRIs may repatriate funds from this account at any time without any restrictions. 

FCNR account is a deposit account maintained by an NRI in foreign currencies. Similar to an NRE account, the funds in an FCNR account are also repatriable. Now, as an NRI investing in mutual funds in India, you must decide before investing whether you want to repatriate the earnings from this investment.

If the answer is yes, then mutual fund investments should be made only through an NRE account. The funds available in these accounts are reaptriable without restrictions. 

Whereas, if an NRI makes any mutual fund investment through a Non-resident ordinary account, the earnings from that investment are repatriable only up to USD 1 million.

NRIs, please note that you can invest in mutual funds through a Systematic Investment Plan (SIP) as well. Additionally, as a security measure for your account, do not gift mutual fund units to any of your relatives in India. 

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The Bottom Line

NRIs can repatriate their earnings from mutual fund investments only if they made the investments using funds remitted from overseas. Post-tax, capital gains from investments can be easily repatriated. Even for non-repatriable investments, dividends from such investments can be repatriated.

However, if you are an NRI seeking professional assistance with setting up a mutual fund for NRI investments in India, then Savetaxs is the name to trust. We have been helping NRIs in 90+ countries manage their investment portfolios in India, ensuring investments are made strategically aligned with their financial goals. 

Connect with us to serve our clients 24/7 across all time zones. 

This article is for general informational purposes only and does not constitute tax, legal, financial, or investment advice. Laws, regulations, rates, and procedures may change over time and may vary based on individual circumstances.

While SaveTaxs makes reasonable efforts to keep the information accurate and up to date, readers should verify applicable rules with official authorities or consult a qualified professional before making decisions based on this information.

About Author
Vipul Jain
Vipul Jain Co-Founder & NRI Tax Advisor

Vipul Jain is the Co-Founder of SaveTaxs and a tax expert with experience in Indian and NRI taxation. He advises individuals, NRIs, and businesses on tax filing, tax planning, capital gains, DTAA, and compliance matters. He focuses on making complex tax concepts simple and helping taxpayers make informed, compliant decisions. See Full Bio

  • Written by
    Vipul Jain
    Co-Founder & NRI Tax Advisor
  • Reviewed by
    Hatim Dudhiyawala
    Certified Public Accountant (CPA)
  • Last reviewed
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Frequently Asked Questions

Repatriation means transferring the gains generated from mutual fund redemption (principal and gains) from India to your overseas bank account.

Yes, NRI mutual fund investments can be repatriated abroad if they were made through an NRE or FCNR account. Whereas investments made through an NRO account are generally non-repatriable completely, however, you can exceed the USD 1 million limit per financial year.

Repatriable investments allow both the principal and the returns to be sent abroad freely (NRE/FCNR route), while non-repatriable investments (NRO route) are subject to certain restrictions, with a USD 1 million limit per financial year.

The redemption receipts are credited to the investor's bank account used to make the investments, which can be an NRE, NRO, or FCNR account.

Yes, TDS is deducted at source on capital gains when NRIs redeem mutual fund units, in accordance with the short- and long-term capital gains tax rates.