Can US / Canada NRIs invest in Indian Mutual Funds?

If you’re an NRI based in the US or Canada, chances are you’ve wondered whether you can invest in Indian mutual funds without setting foot in India. Maybe you’ve lived in India earlier and had investments back home. Or maybe you’re just starting out and want to diversify your dollar income into Indian assets.

Whatever your motivation, the question is a fair one—and an important one. Because while mutual funds remain one of the most accessible ways to grow your wealth in India, the process for NRIs—especially from the US and Canada—comes with a few additional layers.

In this blog, we’ll walk you through the complete journey: from understanding which mutual funds even allow you to invest, to completing your KYC from thousands of miles away, to dealing with taxes in both countries. By the end of this, you’ll have a clear, confident roadmap to start investing without ever boarding a flight to India.

So, can you actually invest in Indian mutual funds from the US or Canada?

Yes, you absolutely can.

But there’s a catch. Due to FATCA, a US tax compliance law, many Indian mutual fund houses have chosen not to accept investments from US and Canadian residents. 

The good news? A growing number of AMCs have figured it out and reopened the doors for US and Canada-based NRIs.

As of now, 10+ prominent mutual fund houses in India accept investments from NRIs in the US and Canada:

Some of them are Aditya Birla Sun Life Mutual Fund, SBI Mutual Fund, UTI Mutual Fund, ICICI Prudential Mutual Fund, Canara Robeco Pramerica Mutual Fund, L&T Mutual Fund, PPFAS Mutual Fund, Sundaram Mutual Fund, TATA Mutual Fund, Nippon India Mutual Fund and Quant Mutual Fund

Some of these AMCs may still impose restrictions—such as only allowing investments through certain platforms or requiring physical documentation. But they do accept, and that’s a big first step.

Disclaimer: This list is based on current AMC compliance policies. Mutual fund houses may update their onboarding rules for US/Canada NRIs, so it’s important to check with the AMC or your investment platform before initiating an investment.

What if you already had investments as a resident?

This is a common scenario. Let’s say you invested in mutual funds while you were living in India. You had a regular PAN, a bank account, maybe even an SIP running. But then you moved abroad and became an NRI.

Now what?

The first thing you should check is whether your existing investments are linked to a DEMAT account or are held directly with AMCs in a Statement of Accounts (SOA) format. This will help determine the next steps in becoming compliant.

Technically, your resident Indian KYC is no longer valid. From a compliance standpoint, you’re expected to update your KYC and reclassify yourself as a Non-Resident Indian under FEMA (Foreign Exchange Management Act)

Here’s a 3-step approach to ensure your investments are compliant with NRI regulations:

1. Convert your resident bank account to an NRO account or open a new NRE/NRO account. As an NRI, you are not permitted to operate resident savings accounts under FEMA regulations.
2. If your mutual fund investments are linked to a DEMAT account, convert your existing resident DEMAT to an NRI DEMAT account. This process usually involves submitting KYC documents and linking the correct NRE/NRO bank account.
3. If your mutual fund units are held directly with AMCs (SOA mode), then follow the NRI KYC process outlined below in this article

Completing NRI KYC—from anywhere in the world

The best part? You can now complete your mutual fund KYC as an NRI from the comfort of your home in New York, Toronto, or anywhere else.

Here’s how the process works:

1. Choose where you want to do your KYC.
   You can do this directly through an AMC (like PPFAS or ICICI) or via a broker

2. Check your existing KYC status.
   Use your PAN on CVL KRA or KARVY KRA to see your current KYC standing.

3. Prepare your documents.
   You’ll need to submit notarized copies of your identity and address documents. Most platforms accept notarization via the Indian Embassy, public notaries in your country, or platforms that offer compliant remote notarization

4. Complete an In-Person Verification (IPV).
   This typically happens over a scheduled video call with a KYC officer

5. Submit the documents online (and sometimes via courier).
   While many platforms allow full digital submission, some AMCs still require physical copies to be couriered to India.
   

Once this is done, your NRI KYC is processed and linked to your PAN. You’re now eligible to invest across any mutual fund that accepts US/Canada NRIs—without having to repeat the process each time.

A quick look at the document checklist

To complete your NRI KYC, you typically need the following:

Mandatory Documents

• PAN Card
• Passport

Proof of Overseas Address (any one)

• Utility Bill (not older than 3 months)
• Driving License (with address)
• Overseas Bank Statement (not older than 3 months
• Government-issued ID (with address)
• Residence Permit

Proof of Indian Address (if required)

• Aadhaar Card
• Indian Bank Statement (not older than 3 months)
• Indian Utility Bill (not older than 3 months)
• Voter ID
  

All documents must be self-attested and notarized.

Once KYC is done, how do you invest?

Now comes the easy part. Once your KYC is approved and your bank account is linked, you can start investing in mutual funds through any AMC Websites, Bank linked brokers and Mutual Fund aggregator platforms.

If you’re a long-term investor, you can even set up SIPs via your NRE/NRO account. Just make sure you understand which funds are allowed under your residency status.

Note that if you use your NRE account for investments, redemption proceeds can be credited back to either NRE or NRO accounts. But if you use NRO, proceeds can only go to the NRO account.

Just one more compliance 

If you’re an NRI investing in mutual funds, there’s one more compliance checkbox to tick. If you’re an NRI investing in mutual funds, you’ll soon need to get your Aadhaar linked with PAN and your KYC upgraded to “Validated.”

• New deadline: April 30, 2026 (extended from April 2025).

• Until then, you can invest with KYC Registered, but after the deadline, KYC Validated will be mandatory.

What the statuses mean:

• KYC On-Hold: Your details are incomplete (like missing/invalid email or phone).

• KYC Registered: Your basic details are captured, but not fully verified.

• KYC Validated: Your identity is fully verified — only then can you invest without restrictions.
  

How to get KYC Validated:

1. Aadhaar-based eKYC on CAMS/Karvy (needs Aadhaar linked to PAN + Indian mobile number).

2. Offline physical KYC with attested documents (if you don’t have Aadhaar or Indian phone number).

What about taxes?

Here’s where things get a bit technical—but we’ll keep it simple.

In India

When you redeem your mutual fund units, TDS (Tax Deducted at Source) is automatically deducted based on the nature of the fund and your holding period. If your income in India is more than Rs 2.5 lakh/Rs 3 lakh, you need to file an income tax return. The TDS amount is reflected in your Form 26AS and can be used when filing taxes in the US.

In the US (for US tax residents)

Here comes the tricky part—PFIC taxation.

Under IRS rules, Indian mutual funds are treated as Passive Foreign Investment Companies (PFICs). This means:

• You are taxed on unrealized gains each year
• Gains are treated as ordinary income, which could be taxed as high as 37%
• You must file Form 8621 every year—for each mutual fund scheme you hold

Note: PFIC taxes are applicable if your mutual fund gains exceed $25,000 (after converting your gains from Rupees to USD).

This tax filing process can be complex. It’s often advisable to work with a tax expert familiar with PFIC filings.

Can I avoid double taxation?

Yes—by claiming Foreign Tax Credit (FTC) in the US.

If you’ve paid TDS on gains in India, you can use that to offset your PFIC tax liability in the US. To do this, you’ll need to:

1. Download your Form 26AS (shows TDS deducted)
2. Get your Capital Gains statement from your AMC or broker
3. Convert the amount to USD using IRS-approved exchange rates
4. File Form 1116 with your IRS return
   

The IRS allows you to offset your US tax liability by the amount already paid in India—though only up to a certain extent.

Note that – Under the US-India Double Taxation Avoidance Agreement (DTAA), you can avail the FTC benefit only if you have a Tax Residency Certificate issued by the US.

Paid Tax in India? Here’s When You Claim Credit in the US

One area of confusion for many NRIs is the mismatch in financial year timelines between India and the US:

• India follows an April to March financial year. Taxes are paid based on the financial year ending March 31.
• The US follows a calendar year—January to December—for tax filings.

So what happens when you pay tax in India for a financial year that ends in March?

You can claim the Foreign Tax Credit (FTC) in your US tax filings for the same calendar year in which the Indian financial year ends. For example:

• You redeem a mutual fund in India in February 2025 (FY 2024–25)
• TDS is deducted and reported in your Indian ITR for FY ending March 2025
• You can claim FTC for this TDS while filing your US tax return for the calendar year 2025 (filed in April 2026)

The key is to align the year in which the tax was actually paid in India with the US tax calendar to claim FTC correctly.

Final Thoughts

So yes—you can invest in Indian mutual funds from the US or Canada. But it does require a few extra steps: updating your KYC, opening the right bank account, choosing compliant AMCs, and staying on top of taxes in two countries.

The good news? Platforms and processes have evolved to support you. What used to require physical visits and paperwork can now be done from your laptop in a matter of days.

If you’re ready to begin—or just want to assess your current KYC and tax situation—this is a great time to get started. After all, investing in India isn’t just a financial decision. For many NRIs, it’s also a way to stay connected to home.

Disclaimer: This blog is intended solely for informational purposes and should not be construed as financial, legal, or tax advice. Please consult a qualified advisor or financial institution to receive guidance tailored to your specific situation.