SIP in India: A Complete Guide for NRIs
The growth of the Indian market has attracted the attention of NRIs worldwide. Mutual funds have certainly caught the attention here, thanks to their diversification and ease of investment. For those new to investing, SIP India presents a great option. . We will also help you find the best ...read more
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What is SIP Investment in India?
SIPs help people regularly invest their money in mutual funds.
With an SIP, you can invest a fixed amount in particular mutual funds in a periodical manner (weekly, or monthly).
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Can NRIs Invest in SIP India?
Yes, NRIs can easily invest in mutual funds in India via SIPs. However, they must adhere to the Foreign Exchange Management Act (FEMA), which does not allow mutual fund investments in foreign currencies.
How to Invest in SIP in India?
Here’s how you can invest in an SIP in India —
- Open an NRE or NRO account
- Once the account is activated, you can directly invest or use Power of Attorney (PoA)
- Complete the KYC process by submitting a few details — this may include a copy of your passport, date of birth, and address
Important: For SIPs in India, NRIs get two options — repatriable and non-repatriable investments.
For the repatriable option, you need to open a non-residential external (NRE) or a foreign currency non-resident (FCNR) bank account. With a non-resident ordinary (NRO) bank account, however, repatriation limits may apply.
What are the Benefits of SIP Plans for NRIs?
Here are the benefits of SIP investments in India for NRIs —
- Easy to start — you can begin investing in mutual funds with a small capital as low as INR 100 (~AED 4.3)
- High returns — Nifty 50, an index of India’s 50 companies, has a compound annual growth rate (CAGR) of around 17.9% over the last 5 years. With SIPs, you can get even higher returns than this, although some risk would be involved.
- Large number of options
- High flexibility — you can easily choose the investment plan amount and the duration as per your financial plan
- Cost averaging
- Development of financial discipline over time
Is SIP Tax Free in India?
Most SIPs are not tax-free in India. In fact, they are subject to capital gains tax, which is calculated as per the duration for which the funds were held.
As per the latest regulations, short-term capital gain (STCG) tax can go up to 20%. Long-term capital gain (LTCG) tax, meanwhile, can go up to 12.5%.
However, if you invest in an equity-linked savings scheme (ELSS) fund, you can claim a deduction for tax of up to INR 150,000.
What is the Best SIP Plan in India?
When talking about SIP plans for NRIs, there are over 2000 mutual fund schemes available. Here are the best SIP mutual funds in India.
Note: Amount is in INR Crores.
|
Mutual Fund |
Asset Under Management |
Expense Ratio |
1 Year Return |
5 Year Returns (Annual) |
|---|---|---|---|---|
|
Canara Robeco Small Cap Fund Growth |
12,028 |
1.67% |
44.75% |
35.63% |
|
HDFC Small Cap Fund Growth |
33,181 |
1.57% |
38.56% |
29.72% |
|
HDFC Mid-Cap Opportunities Fund Growth |
75,382 |
1.39% |
49.03% |
30.44% |
|
Motilal Oswal Midcap Fund Growth |
14,445 |
1.69% |
70.03% |
33.59% |
|
Nippon India Small Cap Fund Growth |
60,372 |
1.42% |
51.82% |
38.08% |
|
Nippon India Growth Fund – Growth |
32,970 |
1.59% |
54.9% |
31.06% |
|
Quant Small Cap Fund Growth |
24,529 |
1.61% |
57.2% |
48.9% |
|
Quant Mid Cap Fund Growth |
9,282 |
1.73% |
57.51% |
37.5% |
|
SBI Magnum Midcap Fund – Regular Plan — Growth |
21,127 |
1.6% |
40.78% |
29.69% |
|
Tata Small Cap Fund Growth |
8,448 |
1.7% |
47.6% |
33.67% |
Frequently Asked Questions:
Who should buy SIPs?
If you want to regularly invest in mutual funds and create wealth in the long run, you can invest in SIPs.
Can NRIs invest in SIPs?
Yes, NRIs can easily invest in SIPs in India.
How to choose the best mutual fund for SIP in India?
You can compare the top mutual funds and check their past returns, expense ratios, risk factors, exit loads, and similar aspects to find the best one for yourself.
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