NRI Investment Route Finder

Why can't US and Canada NRIs invest in Indian mutual funds?

This is not an SEBI rule — it is an operational decision by most Indian AMCs. Under the US Foreign Account Tax Compliance Act (FATCA) and Canada's FCCFA, AMCs must register as Foreign Financial Institutions and file annual disclosures with the IRS/CRA. Most Indian fund houses chose not to register, so they stopped accepting subscriptions from US/Canada NRIs. Some AMCs (Motilal Oswal, PPFAS) still accept them with additional KYC. The alternative route is AIF Category III via FEMA (NDI) Rules 2019, Schedule 5 — AIFs are not subject to the same FATCA operational constraint.

What is a PIS account and when is it mandatory?

Portfolio Investment Scheme (PIS) is an RBI-approved framework under Schedule 2 of FEMA (NDI) Rules 2019 allowing NRIs to invest in listed equity shares and convertible debentures on a recognised stock exchange. PIS is mandatory for NRIs buying listed equities through NRE accounts. NRI purchases of mutual funds, unlisted equity, or AIF units do not require PIS.

What is the LRS limit for NRIs?

Liberalised Remittance Scheme (LRS) under RBI Master Direction on Liberalised Remittance Scheme (RBI/2015-16/11 A.P. (DIR Series) Circular No. 01) allows resident individuals (not NRIs) to remit up to USD 2,50,000 per financial year for permitted capital and current account transactions. NRIs are not covered by LRS — they use NRE/NRO accounts governed by FEMA (NDI) Rules 2019 and RBI Master Circular on Non-Resident Accounts.

What FEMA schedule covers NRI AIF investments?

FEMA (Non-Debt Instruments) Rules 2019, Schedule 5 covers NRI/OCI investment in AIF units. NRIs may invest in AIF units subject to compliance with the relevant regulations. AIF fund documents (PPM/Contribution Agreement) must specify whether NRI investment is permitted. Category I and II AIFs with less than 25% of corpus from NRIs are generally permitted; Category III AIFs have stricter requirements.

When is Form 15CA/15CB required for NRI investments?

Form 15CA/15CB is required for remittances abroad that are chargeable to tax in India — primarily when an NRI repatriates income from India (dividends, rent, interest, capital gains). Form 15CB is a CA certificate (Section 195 read with Rule 37BB) confirming that applicable tax has been deducted at source and the remittance is permitted under FEMA. It is required when remittance exceeds ₹5 lakh in a financial year and is not exempt under Rule 37BB Appendix I.

What is the Schedule FA disclosure requirement for NRIs?

NRIs who become Resident and Ordinarily Resident (ROR) in India must disclose all foreign assets and income in Schedule FA of their ITR. Under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, failure to disclose foreign assets attracts a penalty of ₹10 lakh per asset per year plus 30% tax and 90% penalty on undisclosed income. The RNOR (Resident but Not Ordinarily Resident) window — typically 2 years after return — exempts foreign income earned abroad from Indian tax under Section 5(1) and 6(6).

PIS — Schedule 2, FEMA (NDI) Rules 2019

FEMA (Non-Debt Instruments) Rules 2019, Schedule 2: NRI/OCI investment in listed Indian equity through Portfolio Investment Scheme. Mandatory for exchange-route equity purchases via NRE accounts. NRO account investments are subject to separate repatriation limits (USD 10 lakh per FY after tax).

NRI AIF Investment — Schedule 5, FEMA (NDI) Rules 2019

FEMA (Non-Debt Instruments) Rules 2019, Schedule 5: NRI/OCI investment in Alternative Investment Funds. AIF units are treated as non-debt instruments. NRI/OCI investors must comply with applicable AIF PPM restrictions. FATCA operational restriction on mutual funds does NOT apply to AIF subscriptions.

Form 15CB — Section 195 read with Rule 37BB

Income Tax Act 1961, Section 195: TDS on payments to non-residents chargeable to tax in India. Rule 37BB of the Income Tax Rules: CA certificate (Form 15CB) required for remittances exceeding ₹5 lakh per FY not covered under Rule 37BB Appendix I exempt category. Form 15CA (taxpayer self-declaration) must accompany 15CB.

RNOR Status — Section 6(6), Income Tax Act 1961

Section 6(6) of the Income Tax Act 1961: A returning NRI is Resident but Not Ordinarily Resident (RNOR) if (a) they were NRI for 9 of the 10 preceding FYs, or (b) total stay in India during the 7 preceding FYs was 729 days or less. During RNOR years, foreign income earned and received abroad is NOT taxable in India under Section 5(1).

Schedule FA Disclosure — Black Money Act 2015

Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, Section 42: Penalty of ₹10 lakh for failure to furnish information in return of income in respect of foreign assets. Applies once NRI becomes ROR — RNOR persons are exempt from Schedule FA disclosure for assets held during non-residency.

FATCA — not Indian law but operationally binding

US Foreign Account Tax Compliance Act (FATCA) requires Indian Financial Institutions (FFIs) to register with IRS and report US Person accounts annually. India signed an IGA (Intergovernmental Agreement) with the US in 2015. Most AMCs chose to stop accepting US/Canada NRI subscriptions rather than comply with the reporting burden. This is an AMC operational decision, not an SEBI restriction — hence some AMCs (PPFAS, Motilal Oswal) still accept US/Canada NRIs.