Can NRI Invest in ELSS Mutual Funds?

Diversified equity mutual funds are ELSS mutual funds. With the potential for large gains, these funds distribute your money among a variety of securities. But that's not all. For ELSS investors, the Income Tax Act provides a unique tax advantage. Coming to your query, can NRI invest in ELSS mutual funds? Yes, Non-Resident Indians can invest in Equity-Linked Savings Schemes (ELSS) mutual funds in India. 

Can NRI Invest in ELSS Funds?

Yes. ELSS is a tax-saving mutual fund that primarily invests in equities and offers potential long-term capital appreciation. For NRIs, ELSS can also lead to NRI long-term capital gain tax, and it comes with the shortest lock-in period (3 years) among tax-saving options. NRIs must follow specific rules and procedures.

NRIs can invest in ELSS using:

1. NRE (Non-Resident External) Account: For repatriable investments (funds can be transferred abroad).

2. NRO (Non-Resident Ordinary) Account: For non-repatriable investments (funds remain in India).

They must also complete Know Your Customer (KYC) compliance, including:

1. PAN Card

2. Indian Bank Account (NRE/NRO)

3. Overseas and Indian Address Proof

4. FATCA Declaration (for US/Canada NRIs)

Because of FATCA (Foreign Account Tax Compliance Act) regulations, some Indian mutual fund houses do not allow investments from NRIs in the US and Canada. However, a few fund houses like ICICI Prudential, Aditya Birla Sun Life, and SBI Mutual Fund allow investments after additional documentation.

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Can a foreigner buy property in India?

Most people believe that only Indian citizens can invest in ELSS mutual funds but No, an NRI can invest in ELSS mutual funds as well. There are just certain steps to be followed in that case. So if you are trying to find the answer of can NRI invest in ELSS mutual funds, be sure you will get it here. Also note that only NRIs that complied with the

Foreign Exchange Management Act (FEMA) rules can invest in ELSS mutual funds. 

What are the rules for investing in ELSS for NRI?

There are two important aspects that an NRI needs to look at before investing in ELSS funds like

• NRIs who visited India for less than 120 days in a financial year can only invest in ELSS mutual funds

• If the total income of the NRI must be more than Rs 15 lakhs during a financial year then only this 120 days rule will imply

Mutual fund Asset Management companies in India do not accept investments in foreign currency. So to invest in ELSS mutual funds, an NRI will need to 

Open an NRE or NRO account and activate it. After that they can start investing by some methods like

• An NRI can carry out credit/debit or other transactions through normal banking channels

• Their application with their KYC must state that the investment is on a repatriable or non-repatriable basis

Another method of investing in ELSS funds is by having someone else to invest on behalf of an NRI. However, in such a case, both the NRI investor and PoA should be present on the KYC documents and then only can proceed with the investment.

I hope this answers can NRI invest in ELSS funds or not and how.

Mutual Funds are hence one of the best investments an NRI can apply for. This is what I can say to answer- can NRI invest in ELSS mutual funds.