Home > Money > Question
Need Expert Advice?Our Gurus Can Help

NRI Tax Implications on SIP Total Return?

Vipul

Vipul Bhavsar  |97 Answers  |Ask -

Tax Expert - Answered on Feb 20, 2025

Vipul Bhavsar is a chartered accountant from The Institute of Chartered Accountants of India. He has over 16 years of experience in corporate advisory, taxation and financial reporting.
His interest areas are consulting, income tax, GST and due diligence.
He founded his CA firm, V J Bhavsar and Associates, in 2010 through which he offers services like virtual CFO, trademark registrations, company /LLP formation, MIS reporting, audit, tax and TDS compliances, accounts receivable/payable management and payroll processing.... more
Asked by Anonymous - Dec 09, 2024Hindi
Listen
Money

Hii samkit, Is there any tax implication on total return from SIP for a NRI. Except tax saving MF with max deduction of 150000.. is there any tax that I have to pay after 5 years of my SIP return..? Please advise thank you

Ans: Based on Long Term and Short Term capital gain, you can claim exemption and balance shall be liable to tax as per applicable rates
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |9790 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 18, 2024

Asked by Anonymous - Apr 27, 2024Hindi
Listen
Money
I am 37 years old NRI. I have made investment in MF, which is approx 35 Lacks through SIP from the year 2017 and currently my portfolio is around 1 CR. I have done all investment through NRO account. I would like to keep continuing my SIP for the next 5 years. My portfolio is diversified. My Question here is how much corpus I can expect & How much tax I have to pay if withdrawing after 5 years. any advise?
Ans: Assessment of NRI Mutual Fund Investment Strategy

Analyzing Investment Performance and Tax Implications

Congratulations on the substantial growth of your mutual fund portfolio through systematic investment plans (SIPs) over the past few years. Let's delve into your investment strategy, expected corpus, and potential tax implications upon withdrawal after 5 years.

Evaluating SIP Investment Performance

Your disciplined approach to SIPs has yielded remarkable growth in your portfolio, reaching approximately 1 crore. This demonstrates the power of systematic investing and the potential for wealth accumulation over time.

Analyzing Portfolio Diversification

Diversification is key to mitigating risk and maximizing returns in your investment portfolio. With a diversified approach, you've spread your investments across various mutual funds, enhancing portfolio resilience and growth potential.

Potential Corpus Growth Expectations

Given the current portfolio size and your intention to continue SIPs for the next 5 years, the corpus could experience significant growth. However, the exact corpus depends on various factors such as market performance, fund selection, and contribution amounts.

Tax Implications on Withdrawal

As an NRI, tax implications on mutual fund withdrawals depend on the holding period and type of mutual funds. Equity mutual funds held for more than 1 year qualify for long-term capital gains tax of 10% without indexation, while debt mutual funds attract tax as per the individual's tax slab.

Guidance on Tax Planning

To optimize tax efficiency, consider the composition of your mutual fund portfolio and the tax implications of each fund category. Consulting with a Certified Financial Planner (CFP) specializing in NRI taxation can provide personalized guidance on tax planning strategies.

Mitigating Tax Liabilities

Explore tax-saving investment options such as Equity Linked Savings Schemes (ELSS) or tax-saving fixed deposits to minimize tax liabilities on mutual fund withdrawals. Additionally, consider staggered withdrawals over multiple financial years to manage tax obligations effectively.

Conclusion

Your prudent investment strategy and disciplined approach to SIPs have positioned you for significant wealth accumulation over time. To maximize returns and mitigate tax liabilities, seek guidance from a Certified Financial Planner (CFP) specializing in NRI taxation for personalized tax planning strategies aligned with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |9790 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 12, 2024

Listen
Money
Thanks for replying. Also, I found below that if my income in india i.e by bank deposits,shares,MF , PPF etc in my case exceeds 2.5L ,only then I will be taxed. Is this correct , sir! "The basic exemption limit for NRIs is INR 2.5 lakhs. If an NRI's taxable income in India during the financial year exceeds this limit, they are required to file an income tax return in India." Thanks
Ans: The statement you found is mostly correct. Here's a breakdown of tax implications for NRIs in India:

Basic Exemption Limit:

Yes, NRIs are eligible for a basic exemption limit of ?2.5 lakhs on their total taxable income earned in India during a financial year. This means if your income from Indian sources (including bank deposits, shares, mutual funds, but excluding PPF interest) is less than ?2.5 lakhs, you generally don't need to pay taxes or file an income tax return in India.
Taxable Income for NRIs:

Interest income earned on NRO accounts is taxable in India.
Dividend income from Indian companies is generally taxable in India at a rate of 20% (plus surcharge and cess if applicable).
Capital gains from selling shares or equity mutual funds in India are taxable depending on the type and holding period of the investment.
Rental income from property in India is taxable.
NRIs and PPF:

NRIs cannot open new PPF accounts, but they can continue to contribute to existing PPF accounts opened while they were resident Indians.
The good news is that interest income earned on PPF and the maturity amount are completely tax-free for everyone, regardless of residential status.
Filing Income Tax Returns:

Even if your total income is below ?2.5 lakhs, you might still need to file an income tax return in India if you want to claim a tax refund on TDS (Tax Deducted at Source) deducted from your income, such as on interest from NRO accounts.
NRIs are advised to consult with a qualified tax advisor or chartered accountant familiar with NRI taxation to determine their filing requirements and tax liabilities.
In summary, while the ?2.5 lakh limit is a general guideline, it's important to consider all your income sources in India and the specific tax treatment of each to determine your tax filing obligations.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |9790 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 09, 2024

Asked by Anonymous - Dec 09, 2024Hindi
Money
Hii Sir, I am an NRI and having income of around 50 LPA. My age is 32 nd I have recently started SIP with 15k in motilal oswal defence India direct growth.. the portfolio of this MF includes defence stocks like HAL , BDL .. I want to invest more of around 50K per month in SIP. Please advise on how should I put in my money here and in which MF. My target is 1cr plus in next 5-10 years. Also being an NRI, is there any tax to be paid on total return. I already have robeco and elss tax saving sip of 50000. I can get max deduction of 1,50,000 as per IT ACT.. however I still want to know further. Please advise. Thank you
Ans: Your current investment in a defence-themed mutual fund is a focused sectoral choice. While sectoral funds can deliver high returns, they also carry higher risks due to limited diversification. Defence stocks like HAL and BDL depend on sector-specific policies and global dynamics.

Your ELSS tax-saving investments are well-aligned with your goal of availing tax deductions under Section 80C. They also provide equity exposure with the added benefit of tax savings.

You aim to invest Rs. 50,000 monthly via SIPs and build a corpus of Rs. 1 crore in 5–10 years. This target is achievable with a disciplined approach and proper allocation across diversified equity funds.

Key Recommendations for Future Investments
Diversify Beyond Sectoral Funds
Avoid concentrating too much in one sector. Diversify across large-cap, mid-cap, and flexi-cap funds. These categories balance growth and stability effectively.

Allocate Strategically
Divide your Rs. 50,000 SIP into 3-4 funds. Allocate about 40% to large-cap, 30% to mid-cap, and 30% to flexi-cap funds.

Consider Actively Managed Funds
Actively managed funds often outperform passive funds due to professional fund management. This approach can maximise your returns over the long term.

Review and Monitor Regularly
Evaluate fund performance semi-annually. Adjust allocations if funds consistently underperform compared to their benchmarks.

Tax Implications for NRIs on Mutual Funds
As an NRI, you are subject to specific tax rules on mutual fund returns:

Equity Mutual Funds: Long-term capital gains (LTCG) above Rs. 1.25 lakh are taxed at 12.5%. Short-term capital gains (STCG) are taxed at 20%.

Debt Mutual Funds: Both LTCG and STCG are taxed as per your income tax slab.

Tax is deducted at source (TDS) for NRIs. You can claim a refund if your actual tax liability is lower. Ensure compliance with these rules to avoid issues during repatriation.

Additional Steps for NRI Investors
Understand Repatriation Rules
Mutual fund investments made through NRE accounts are repatriable. Keep the documentation handy to facilitate this process.

Avoid Direct Funds
Direct plans lack advisory support. A Certified Financial Planner offers expertise in fund selection, portfolio allocation, and tax optimisation.

Choose Funds with Global Exposure
As an NRI, consider funds with international diversification. Global equity funds can help you hedge against currency risks.

Roadmap to Achieve Rs. 1 Crore Target
Stick to a Long-Term SIP Strategy
SIPs leverage rupee cost averaging, minimising market timing risks. Staying invested for at least 5-10 years amplifies compounding benefits.

Reinvest ELSS Proceeds
ELSS funds have a three-year lock-in. Once matured, consider reinvesting in diversified funds to maintain equity exposure.

Increase SIP Gradually
Increase your SIP amount by 5-10% annually. This step aligns with inflation and boosts your corpus growth.

Avoid Frequent Portfolio Churning
Stick to your asset allocation strategy. Avoid switching funds unless there's a significant reason, like a fund consistently underperforming.

Insights on Tax Deduction Limit
You are utilising Rs. 50,000 under Section 80C with ELSS funds. The remaining Rs. 1 lakh deduction can include PPF, EPF, or life insurance premiums. However, ELSS remains the most efficient choice due to its growth potential.

Final Insights
Your focus on systematic investing and diversification is commendable. Achieving Rs. 1 crore is realistic with disciplined investing and strategic fund selection. Consider working with a Certified Financial Planner for customised advice, ensuring your investments align with your NRI status and long-term goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

Latest Questions
Nayagam P

Nayagam P P  |9127 Answers  |Ask -

Career Counsellor - Answered on Jul 20, 2025

Career
Sir please tell which course is better iiit kaanchepuram btech cse or iiit kaanchepuram dual degree cse and also please give the reason
Ans: IIITDM Kancheepuram’s four-year B.Tech in Computer Science & Engineering follows an ACM-aligned curriculum emphasizing software design, algorithms, human-computer interaction and hardware-software integration, supported by specialized labs—including deep-learning engines, supercomputing clusters and embedded-systems workstations—under AICTE and UGC recognition. Its placement cell achieved a 73% offer rate for B.Tech students in 2024, with a median package of ?7.5 LPA and core recruiters across product and service sectors collaborating on internships and live projects . The five-year dual degree integrates this foundation with advanced coursework from the seventh semester onward—covering high-performance computing, big-data analytics, information security and research methodology—culminating in an M.Tech thesis under DST-funded research grants. Dual-degree cohorts (127 eligible in 2024) saw a 51% placement rate with a median package of ?11 LPA and average placements in R&D roles , while top offers rose to ?32 LPA. Both programs share faculty expertise of PhD-qualified mentors, active industry MoUs and coding clubs, yet the dual degree demands a fifth year of study, higher cumulative fees (~?9 L vs. ?7.2 L for B.Tech) and opportunity cost of delayed workforce entry .

Pursuing the integrated M.Tech pathway enhances depth in data-science, AI and systems research, offers priority access to lab-based DST–SERB projects, and leads to higher median placements and research assistantships. The additional year, however, extends academic commitment, increases tuition outlay, and postpones full-salary employment, requiring sustained academic performance and motivation to capitalize on advanced electives and thesis work.

Recommendation: Opt for the integrated dual degree CSE and M.Tech program ONLY IF you want to leverage rigorous advanced coursework, priority research mentorship and superior median placements; choose the four-year B.Tech CSE if entering industry sooner with strong foundational training and lower total fees is paramount. Pursue a BTech in CSE and secure initial job placement to gain 2–3 years of valuable industry experience. Once you have developed your skills and clarified your professional goals, consider postgraduate studies (PG/MS/PhD) in India or abroad, taking into account prevailing job market dynamics, your interests, and financial considerations. Alternatively, continue to upskill and adapt within your chosen field after graduation, allowing your career trajectory to evolve based on real-world experiences and emerging opportunities. This approach ensures both flexibility and a strong foundation for informed decisions regarding your future academic and professional development. All the BEST for a Prosperous Future!

Follow RediffGURUS to Know More on 'Careers | Money | Health | Relationships'.

...Read more

Nayagam P

Nayagam P P  |9127 Answers  |Ask -

Career Counsellor - Answered on Jul 20, 2025

Asked by Anonymous - Jul 19, 2025Hindi
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x