Home >Money >Personal Finance >Some AMCs don’t allow NRIs to invest here

We are planning to move to Canada. We have investments in FDs, PPF, EPF, mutual funds, shares and liquid funds. We broke a few of these to showcase proof of funds to the Canadian government and the money is lying in savings accounts. Given the uncertainty, we don’t want the funds to get accumulated in savings accounts and want to invest in other instruments. What happens once we move to Canada? Do we need to break these instruments, open an NRE or NRO account and then invest back? Or can we let them continue till maturity and then take a call?

—Name withheld on request

Once you get a PR (permanent residency) of a Canadian province, you become an NRI and hence you no longer can maintain a resident bank account in India. You will have to redesignate your resident bank accounts as NRO (non-resident ordinary) accounts. It would be feasible to merge all the Indian bank accounts and convert them into an NRO account. This is because managing multiple accounts and reporting them for taxation purposes could become challenging from abroad.

Any income generated from India can be credited to the NRO account; however, there is a limit of repatriation in the NRO account. Hence, it will also be beneficial to have an NRE/FCNR (foreign currency non-resident) account that allows the transfer of income from India or abroad without any restrictions.

In terms of investments, you can either liquidate or consider continuing them. Please note that some asset management companies (AMCs) do not allow NRIs to invest in India due to compliance issues, hence first get the confirmation from the fund house.

If you wish to continue these investments, fresh KYC details will have to be provided to update the new residential status. Your demat account will have to be converted into an NR status account. If you wish to continue investing in equities of Indian companies after becoming an NRI, you can open a PIS (portfolio investment scheme) account.

For taxation purposes, please note that any income that arises or accrues in India (directly or indirectly generated through India) will be taxable in India, even for non-residents. Tax treatment on capital gains on shares and mutual funds is similar for NRIs and residents except that AMCs will be liable to deduct tax at source from an NRI’s income before crediting the gains.

Archit Gupta is founder and CEO, ClearTax.

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