How NRIs Can Invest in Indian Mutual Funds in 2026

A Complete Step-by-Step Guide (US, UK, Canada & GCC)

Indian mutual funds remain one of the most attractive long-term investment options for NRIs. Strong equity growth, professional fund management, and rupee diversification make India a natural allocation for global Indians.

Yet, many NRIs struggle with how to invest correctly. Account confusion, FATCA restrictions, taxation, repatriation rules, and platform limitations often lead to costly mistakes.

This guide explains exactly how NRIs can invest in Indian mutual funds in 2026, what accounts are required, how taxation works, and how to avoid common pitfalls.

Who This Guide Is For

This article applies if you are:

• An NRI or OCI under FEMA

• Living in the US, Canada, UK, UAE, or other GCC countries

• Looking to invest in Indian mutual funds (lump sum or SIP)

• Unsure about taxation, repatriation, FATCA, or platform choice

Step 1: Confirm Your NRI Status (FEMA Perspective)

You are treated as an NRI if:

• You reside outside India for employment, business, or uncertain duration

Once your status changes to NRI:

• You cannot use a resident savings account

• All investments must flow through NRE or NRO accounts

Step 2: Open the Correct Bank Account (NRE vs NRO)

NRE Account

• For income earned outside India

• Fully repatriable

• Interest is tax-free in India

NRO Account

• For income earned in India

• Repatriation capped at USD 1 million per FY

• Interest is taxable in India

📌 Mutual fund investments can be made from either account, but repatriation differs.

Step 3: PAN, KYC, and FATCA (Mandatory)

PAN

Required for:

• Mutual fund investments

• Redemptions

• Tax filing

NRI KYC

Requires:

• Passport

• Overseas address proof

• NRE/NRO bank proof

• Video or in-person verification

FATCA / CRS

Mandatory if you are a US or Canadian tax resident.

⚠️ FATCA is the biggest reason many AMCs restrict US/Canada NRIs.

Step 4: Choose the Right Holding Mode (SOA vs Demat)

Non-Demat (SOA / Direct Mutual Funds) – Preferred for NRIs

• Units held directly with AMC

• Zero brokerage

• NAV-based execution

• Cleaner SIP automation

• Easier repatriation & inheritance

Demat Mode

• Units held in Demat account

• Brokerage + transaction costs

• Market-hour execution

• Higher operational friction for NRIs

📌 For long-term mutual fund investing, SOA mode is generally superior for NRIs.

Step 5: Mutual Fund Houses (AMCs) That Accept NRI Investments (India – 2026)

Not all AMCs accept NRIs, and online access varies by country. Below is a practical, verified list of AMCs that currently allow NRI investments, along with representative schemes.

AMCs Allowing NRI Investments (Including Online / Digital*)

How to read this table

• “Online / Digital” means investments can be made without physical paperwork

• “Limited” usually means offline FATCA declaration or couriered documents

• Scheme lists are illustrative, not exhaustive

• AMC policies change frequently, especially for US & Canada NRIs

Step 6: How SIPs Work for NRIs

• SIPs can be set up from NRE or NRO accounts

• Mandate activation is slower for NRIs

• Missed SIPs are common due to bank or mandate mismatches

📌 Using NRI-focused platforms materially reduces operational failures.

Step 7: Taxation of Mutual Funds for NRIs (India)

Equity Mutual Funds

• STCG (≤12 months): 20%

• LTCG (>12 months): 12.5% on gains above ₹1.25 lakh

Debt Mutual Funds

• Taxed at slab rates, irrespective of holding period

TDS

• Tax is deducted at source on redemption

• Filing an Indian ITR helps claim refunds and align DTAA credits

Step 8: Country-Specific Considerations

US NRIs

• Indian mutual funds are treated as PFICs

• Extremely punitive US taxation

• Most US NRIs should avoid Indian mutual funds unless advised carefully

Canada NRIs

• Taxed annually in Canada

• Foreign tax credit available

• T1135 reporting required

GCC NRIs

• No local income tax

• Simplest structure for Indian MF investing

Step 9: Repatriation Rules

• NRE investments: Fully repatriable

• NRO investments: USD 1M per FY

• Requires CA certificate (15CB) and bank filings (15CA where applicable)

Common Mistakes NRIs Make

• Using resident accounts after becoming NRI

• Investing via Demat for long-term SIPs

• Ignoring FATCA restrictions

• Assuming TDS is final tax

• Not planning repatriation upfront

Final Takeaway

Indian mutual funds can be powerful wealth builders for NRIs, if structured correctly.

Most problems NRIs face are not market-related.
They are process, platform, and compliance errors.

Get the structure right once, and compounding does the rest.