Critical details to watch while investing in MF for NRI

Arnav PandyaNon Resident Indians (NRIs) have an interest in investing in mutual funds in India and the choice is open for them to do so. However there are some procedural hurdles that they might end up facing and this is something that they need to keep in mind because the best plans can come unstuck if they are unable to complete the required process. Attention to these details will ensure that there is no roadblock that is present for non residents and they can complete their investment process smoothly. Here are a few of those things that they would need to watch out for.PAN cardThere are a lot of non residents who want to invest in India but do not have a permanent account number (PAN). The common thought for many non residents is that we do not have to pay taxes in India so there is no need to have a PAN. This might not work for them as now the PAN has to be present for most investments in the country. This is especially true for mutual funds and hence the first place where they could find a roadblock is the absence of a PAN. There is no need to worry because just having a PAN does not put a great burden on the individual because they would need to file a return only when their taxable income exceeds the basic exemption limit. Also it could be that if the investor has a refund to be obtained then the PAN will help them in the process as they will be able to file their tax return and claim it.Non resident bank accountA lot of people who might have been residents here and have now obtained the non resident status might not have changed their bank account status. This could be another problem as a person who is a non resident would be able to invest only through a non resident bank account so they need to have this bank account with them. There are a lot of non residents who have not opened such an account in the country and this would mean that once again they would have to halt on the procedural aspect and review the entire situation. The opening of the bank account can now be done from abroad too as various banks provide the facility of collection of documents and even dispatch of the account details and cheque book overseas. Mutual fund permissionThere is another problem that can also crop up for non resident investors from specific countries like the US and Canada. There are mutual funds in India especially those that have a foreign ownership in them especially from these countries that do not allow those who are based in some of these countries to invest in their specific funds. There is a clear mention of this fact and the investor will not be allowed to put in their application or else this will be rejected. This can be a big blow for the investor because they might want to invest in a particular fund that is offered by these fund houses but are not able to do so. This is an area where nothing much can be done because now fund houses are also getting very strict on who they take the investment from and hence this is something that needs to be checked. One point that might help the investors to some extent is that the fund houses that do not accept these foreign investments might have India specific funds in the foreign countries and these could be checked out for the exposure that one wants. However it is not likely to be the same as what they would have been able to get through investment in their funds.