Most NRI investment guides start in the same place: get your PAN card, open an NRE or NRO account, complete your KYC, do your FATCA declaration. That’s the administrative checklist — and yes, it matters. We’ve covered “exactly how to set all of that up” in a separate guide.
But there’s a second checklist that most advisors never give you. It’s not about paperwork. It’s about the six strategic foundations that determine whether your India portfolio is genuinely safe, tax-efficient, and built to last — or whether you’re building on shaky ground and will only discover the problems years from now.
Most NRIs skip at least three of them. Some skip all six.
Here’s what they are, why each one matters, and what it costs you when it isn’t sorted.
1. Your Life Intent Is Clear — Not Just Your Investment Goal
Before you decide what to invest in or how much, you need to answer one honest question: what is India actually meant to do in your financial life?
This isn’t a philosophical exercise. The answer changes everything about how your portfolio should be structured. An NRI building a retirement corpus to return home needs a very different allocation than one who is settled abroad long-term and supporting parents in India — and both are different from someone who simply wants exposure to India’s growth story.
We’ve built a “framework for finding your India allocation based on life intent” that walks through this in detail. If you haven’t read it, do that first. Starting a SIP without this clarity is the financial equivalent of building a house without knowing which city you’re going to live in.
The cost of skipping this: Random allocation — too much, too little, or in the wrong instruments for your actual goal. It’s not a crisis. But it quietly underperforms for years before you notice.
2. Your Nominee Is Registered — And It's the Right Person
This is the one most NRIs feel the least urgency about. It’s also the one that causes the most grief to families.
Under SEBI’s updated nomination rules, effective March 2025, every mutual fund folio and demat account must either have a registered nominee or a formal opt-out on file. This applies to existing accounts and new ones. Up to 10 nominees can be registered, and transmission after death requires just two documents: a death certificate and the nominee’s updated KYC. That’s it. No court. No succession certificate. No family members travelling to India.
Without a registered nominee, the process flips entirely. Your family will need to obtain a succession certificate from an Indian civil court — a process that routinely takes months, sometimes years, and requires someone physically present in India for proceedings. And that’s assuming the family even knows which accounts exist.
Here’s the number that makes this real: an estimated ₹1.5 lakh crore worth of financial assets are lying unclaimed in India today, largely because family members either didn’t know the investments existed or couldn’t navigate the legal process to claim them.
One important rule many NRIs miss: nominees cannot be registered by a Power of Attorney holder. The investor must do it personally — online or offline. If you’ve delegated your investment setup to a family member in India, your nominee may not actually be registered.
The cost of skipping this: Your family inheriting months of legal complexity, court proceedings, and potential asset freeze at exactly the moment they’re least equipped to deal with it.
3. You Have an India-Specific Will (Even If You Have a Will Abroad)
A will in your country of residence does not automatically cover your Indian assets — and assuming it does is one of the most common and costly estate planning mistakes NRIs make.
Enforcing a foreign will on Indian assets requires it to be probated abroad first, then apostilled or attested by the Indian Consulate, then brought to an Indian civil court for a separate probate process. Each step takes time, costs money, and requires someone who can navigate the Indian legal system. The total timeline can stretch to a year or longer, especially if anyone contests the will.
Creating a separate India-specific will sidesteps all of this. India has no inheritance tax — so there’s no tax reason to delay. The will itself can be drafted simply: it needs to be in writing, signed by you in front of two witnesses (who cannot be beneficiaries), and should name an executor who is physically based in India, not a family member in Dubai or London who can’t appear in court. Registered wills, while not legally required, add a layer of protection and speed up the process for heirs.
One critical detail: if you create an India-specific will and a foreign will, they must be drafted to avoid cancelling each other. Many standard will templates include a clause that revokes all previous wills — a single sentence that can accidentally wipe out your India estate plan.
This is where getting specialist help makes a genuine difference. Our team works with will management experts who specialise in NRI estate planning — ensuring your India-specific will is correctly drafted, properly registered, and coordinated with your existing foreign estate plan so the two don’t conflict. If you’d like to get this sorted as part of your overall financial setup, it’s typically one of the first things we help new clients work through. Reach out and we’ll connect you with the right expert.
The cost of skipping this: Without a will, Indian assets are distributed under intestate succession laws, which are based on religion, not your intentions. For NRI families, this can mean distant relatives inheriting over close ones, assets getting tied up in court for years, and heirs needing to travel to India repeatedly to manage proceedings.
4. You Know Your Indian ITR Obligation — and You're Set Up to Claim Refunds
Once you start investing in India, you may have a tax filing obligation in India. Most NRIs either don’t know this or assume TDS covers everything. It doesn’t.
Here’s the actual rule: NRIs must file an ITR in India if their Indian-sourced income exceeds ₹2.5 lakh under the old tax regime, or ₹4 lakh under the new (default) tax regime for FY 2025-26. This includes interest from NRO accounts, rental income, dividends, and capital gains from investments. And capital gains from equity mutual funds or property trigger a mandatory filing regardless of the amount — even if it’s below the exemption threshold.
Critically, NRIs cannot use ITR-1 or ITR-4 forms. The correct form is ITR-2 for most investment situations.
Why does this matter as a pre-investment step? Because TDS is automatically deducted on NRI investment returns — 12.5% on equity long-term capital gains, 20% on short-term — and in many cases the actual tax owed is lower than what’s been deducted. The only way to claim that money back is to file your ITR.
The other piece to sort before investing: if your country of residence has a DTAA treaty with India — and “India has agreements with more than 90 countries” — you can use it to avoid double taxation. But claiming DTAA benefits requires specific documentation: a Tax Residency Certificate from your resident country, plus the required DTAA declarations filed with Indian tax authorities. Getting this in place before you start investing — rather than scrambling for it at tax time — is exactly the kind of thing our team sets up for clients as part of their onboarding.
The cost of skipping this: Unclaimed TDS refunds sitting with the Indian government — sometimes for years. And double taxation on the same income, paid to two countries, when a treaty would have prevented it.
5. Your Account Structure Is a Decision, Not an Accident
NRE and NRO accounts serve different purposes, have different tax treatment, and have different repatriation rules. Many NRIs end up with one or both accounts opened reactively — because a bank in India asked them to, or because a family member set it up — without fully understanding what each is for.
Here’s the short version:
Your NRE account holds money you bring from abroad. The interest is tax-free in India, and both principal and returns are fully repatriable with no cap. This is the right account for foreign earnings you plan to invest and eventually move back abroad.
Your NRO account holds Indian-source income — rent, dividends, pension, income from Indian business. Interest is taxable at 30% in India, and repatriation is capped at USD 1 million per financial year, with tax documentation required.
The implication for investing: if you invest via NRE, your returns are fully repatriable — you can take them back abroad freely. If you invest via NRO, that cap and the documentation requirement apply. For most NRIs, the NRE route is preferable for fresh investments from foreign earnings. But this decision should be made deliberately before you start, not changed later when it’s more complicated.
We cover “the full account setup process” in detail elsewhere. The point here is that your account structure should be an intentional decision, not whatever landed in your lap.
The cost of skipping this: Investments routed through the wrong account become harder or impossible to repatriate cleanly later. Fixing it retrospectively involves paperwork, potential tax complications, and time.
6. Your India-Based Dependents Have Life Insurance Coverage
This is the one that falls completely outside most investment conversations — and it shouldn’t.
If you have parents, a spouse, or children in India who depend on your income, what happens to them financially if something happens to you? Your Indian investments — mutual funds, FDs — don’t pay out immediately. They go through nominee claims or succession proceedings. And your foreign life insurance policy, if it pays out in dollars, pounds, or dirhams, reaches India as a foreign remittance that takes time to process.
A term insurance policy in India — specifically structured for NRIs — pays out directly in rupees to a nominee in India, typically within 30 days of claim settlement. India offers term coverage at significantly lower premiums than comparable policies in most Western countries, partly because the underwriting is done against Indian mortality tables. The coverage-to-premium ratio is among the most favourable in the world for the cover amounts NRI families typically need.
If you have dependents in India and you don’t have this in place, sorting it before you build your investment portfolio is the right sequence. The investment portfolio builds wealth. The insurance coverage protects it from being irrelevant when it matters most.
The cost of skipping this: Your India-based family facing a financial emergency while your assets sit locked in investment accounts or court proceedings.
The Checklist, in Order
Before your first rupee goes in:
- Life intent defined — what is India doing in your financial life? “Use this framework”
- Nominee registered — personally, not via PoA, on every folio and account
- India-specific will in place — with an India-based executor, separate from your foreign will
- ITR obligation understood — and DTAA documentation in place if your country has a treaty with India
- Account structure decided deliberately — NRE for foreign earnings, NRO for Indian income
- Dependents insured — term cover in India for family members who rely on your income
None of these take more than a few weeks to sort. All of them are significantly harder to fix retrospectively. And once they’re in place, everything that follows — your SIP, your fund selection, your allocation decisions — sits on a foundation that’s built to last.
If you’re not sure where to start, or you want our team to review your current setup against this checklist, that’s exactly the kind of conversation we have with NRI clients regularly. No obligations, no pitch. Just an honest look at what’s in place and what isn’t.
Reach out to us for a pre-investment review — we’ll work through this checklist with you.
Frequently Asked Questions
Do NRIs need to file a tax return in India if TDS is already deducted on their investments?
Yes, in most cases. TDS is deducted automatically on NRI investment returns, but it’s often deducted at the maximum rate rather than your actual tax liability. Filing an ITR is the only way to claim a refund if TDS was over-deducted. It’s also mandatory if your Indian-sourced income exceeds ₹2.5 lakh (old regime) or ₹4 lakh (new regime), or if you’ve had any capital gains from Indian equity or property.
What happens to an NRI's mutual fund investments if they die without a nominee?
Without a registered nominee, your family cannot claim the assets directly. They must obtain a succession certificate from an Indian civil court, which typically takes months and requires someone physically present in India for legal proceedings. With a registered nominee under SEBI’s March 2025 rules, transmission requires just a death certificate and updated KYC — no court process involved.
Can an NRI use their foreign will to cover assets in India?
A foreign will can technically cover Indian assets, but enforcing it in India requires a separate Indian probate process — which takes time, legal fees, and an India-based representative. Most estate planning professionals recommend NRIs create a separate India-specific will for their Indian assets, drafted to avoid conflicting with their foreign will.
How do NRIs avoid being taxed twice on the same income from India?
If your country of residence has a Double Taxation Avoidance Agreement (DTAA) with India — and India has treaties with over 90 countries — you can use it to reduce or eliminate double taxation on your Indian investment returns. Claiming those benefits requires specific documentation to be filed with Indian tax authorities, including a Tax Residency Certificate from your resident country. This is best sorted before you start investing, not at the end of the financial year when returns are already being processed. Our team handles this as part of the client onboarding process.
Should an NRI invest through NRE or NRO account?
For most NRIs investing foreign earnings, the NRE account is preferable — interest is tax-free in India and both principal and returns are fully repatriable with no annual cap. NRO accounts are better suited for Indian-source income (rent, dividends, pension). Mixing the two without a deliberate plan can create repatriation complications later. The decision should be made intentionally before the first investment is placed.
Disclaimer: This blog is for general informational and educational purposes only. It does not constitute financial, legal, or tax advice. Estate planning, will preparation, and tax filing requirements vary based on individual circumstances, country of residence, religion, and applicable laws. Tax regulations, FEMA rules, and SEBI guidelines are subject to change — always refer to the latest official sources or consult a qualified professional. Mutual fund investments are subject to market risks. Read all scheme-related documents carefully before investing. For tax laws specific to your country of residence, please consult a local tax advisor. We specialise in Indian financial products and Indian tax laws only.
