Sunday, October 17, 2021

Mutual fund portfolio for NRI investor and income tax rules

I’m NRI staying in Gulf Oman. My present investments are as beneath:

1.50 lakh p.a. in PPF account

5,000 month-to-month SIP in SBI Heath Care Alternatives Fund

1,000 month-to-month SIP in SBI Consumption Alternatives Fund

5,000 month-to-month SIP in SBI Gold Fund

I need to make investments a further sum of 10,000 each month in mutual funds. My time horizon is 15 years. I’m investing on-line from my regular financial savings account and never from my NRI account. I m not submitting any ITR in India. Kindly advise whether or not I have to file tax returns? What’s the most restrict upto which an NRI can spend money on mutual funds? I’m staying in Muscat.

-Anil Madhavan

By Balwant Jain, funding and tax skilled

It’s by no means advisable to spend money on sectoral schemes, since efficiency of the fund will depend on the efficiency of that exact sector. An investor investing in sectoral funds has to time the entry and exit proper to make positive factors. It’s at all times advisable to spend money on diversified fairness funds the place the fund supervisor makes allocation to the sector which is in vogue. So it is best to cease your current SIPs in SBI Well being Care Alternatives Fund and SBI Consumption Alternatives Fund. Your allocation to gold funds is simply too excessive as a share of your general mutual fund portfolio. So, it is best to scale back your SIP in SBI Gold Fund to 2,000.

Funding advice will depend on your funding time horizon and your danger profile since your time horizon is round 15 years, you’ll be able to take danger of investing in fairness, aggressively. You need to overview your investments periodically, no less than as soon as in a yr.

I like to recommend the next mutual fund portfolio to take a position 21,000 per 30 days:

Axis Blue Chip Fund – 10,000

DSP Mid Cap Fund – 5,000

SBI Small Cap Fund – 4,000

SBI Gold Fund – 2,000

Since gold funds have annual bills whereas investments in Sovereign Gold Bonds (SGB) provide you with curiosity on the charge of two.50% in your funding quantity, I’d suggest you to purchase SGB from the market as an alternative of constant with the SIP in gold fund if you are able to do that in order to make sure that your funding in gold on common doesn’t exceed 10% of your general common month-to-month investments.

There isn’t a higher restrict upto which an NRI can spend money on mutual funds in India. Nonetheless among the fund homes don’t enable residents of some international locations like US, Canada to spend money on their mutual funds. You do not need to file your ITR right here simply since you are an NRI. It’s important to file an ITR right here in India provided that your revenue in India earlier than numerous deductions exceeds the fundamental exemption restrict.

Whenever you change into an NRI, it’s your responsibility to tell your financial institution about change in your standing from resident to non resident for banking and funding functions and the financial institution has to then designate your current checking account as NRO account. Please inform your financial institution instantly about your NRI standing.

Since, you’re NRI, you’ll be able to spend money on the PPF account until its maturity and you can’t prolong your PPF account as soon as it matures. So, be sure to don’t prolong your PPF account even by mistake as soon as it matures. It’s unlawful and it’s possible you’ll face drawback for claiming the proceeds.

(Views as expressed by the skilled.)

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