NRI and Gold Investments: A must have asset

Updated on: 2021-04-18 - 5 mins read

Hello readers! I hope you are doing well. We at RemitAnalyst have decided to come up with a blog series to educate our readers about Remittance and its importance in every Indian household where at least a single person is living abroad: be it for education, business or a dream job. This is another blog from the series. Here, we talk about how an NRI can invest in Gold as an Asset.

Let’s understand how much of the money under remittance is actually going into Gold as an asset.

  • More than half of remittances received by Indian residents were used for family maintenance, i.e., consumption (59.2 per cent), followed by deposits in banks (20 per cent) and investments in landed property and shares (8.3 per cent)
  • Source: https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR36122FD7CA9D24A4E268960C275DC8845B4.PDF

    We see, we don’t have actual % of it. Even if some part of above % is going into Gold investments indirectly in later stage depending on how money is being actually used. Let’s understand how an NRI resident can invest in Gold as an asset.

    Everyone’s favorite metal is Gold. We Indians just adore it and that’s why we love to hold on to it like a privileged asset since ages. Gold is one such asset which never depreciates with time. NRI investors should consider buying Gold in digital formats via below means.

    Gold ETF

    Gold Exchange Traded Funds (ETFs) are simple investment products that combine the flexibility of stock investment and the simplicity of gold investments.

    ETFs trade on the cash market of the National Stock Exchange, like any other company stock, and can be bought and sold continuously at market prices.

  • Gold ETFs are passive investment instruments that are based on gold prices and invest in gold bullion.
  • There is a complete transparency on the holdings of an ETF.
  • Once converted to NRO, you can use it to invest in mutual funds (MFs). You will need to do a fresh MF KYC as an NRI.
  • Due to its unique structure and creation mechanism, the ETFs have much lower expenses as compared to physical gold investments.
  • Gold is the only asset after Land which still holds its value, beats the inflation with respect to time and grows exponentially in its worth when you look at it with broad time horizon.

    Below is list of active Gold ETF traded on NSE:

    AMCSchemeScriptNameTypeLaunch Year
    Axis Mutual FundAxis Gold ETFAXISGOLDGoldNov-10
    Birla Sun Life Mutual FundBirla Sun Life Gold ETFBSLGOLDETFGoldMay-11
    Canara Robeco MFCanara Robeco Gold ETFCANGOLDGoldMar-12
    HDFC Mutual FundHDFC Gold Exchange Traded FundHDFCMFGETFGoldAug-10
    ICICI Prudential Mutual FundICICI Prudential Gold Exchange Traded FundIPGETFGoldAug-10
    IDBI AMCIDBI Gold ETFIDBIGOLDGoldNov-11
    Kotak Mutual FundKotak Gold Exchange Traded FundKOTAKGOLDGoldJul-07
    Quantum Mutual FundQuantum Gold Fund (an ETF)QGOLDHALFGoldFeb-08
    Reliance Mutual FundReliance Gold Exchange Traded FundRELGOLDGoldNov-07
    Religare Mutual FundReligare Gold Exchange Traded FundRELIGAREGOGoldMar-10
    SBI Mutual FundSBI Gold Exchange Traded SchemeSBIGETSGoldApr-09
    UTI Mutual FundUTI GOLD Exchange Traded FundGOLDSHAREGoldMar-07

    Gold Mutual Funds

    Gold funds are mutual funds which invest in various forms of gold – physical gold, shares of companies engaged in the business of gold mining and gold exchange traded funds (ETFs).

    These are similar to buying of equity mutual funds.

    Calculation of capital gains for NRIs

    1. In case of equity funds, the short term capital gains (up to 1 year) will be taxed at 15.45% (15% + cess), while LTCG will be taxed at 10% flat above Rs.1 lakh of capital gains in the year.

    2. In case of debt funds, the STCG (up to 3 years) will be taxed at the peak rate of tax applicable to the NRI. In case of LTCG on debt funds, the taxation will be at 20.6% after considering the benefit of indexation.

    To help you with any queries on Mutual Fund Investments we have NISM certified Mutual Fund advisor for your help. Please find below details:

    Name: Varsha Kendre, ARN: ARN-168529

    Email: lvarsha2009@gmail.com

    Contact: +91 98902-80254

    Physical Gold

    If the Indian passport holder stays for more than 6 months outside India and he can bring physical Gold. Subject to import duty as per below scenarios:

  • Male passengers are allowed to bring in duty free gold worth Rs 50,000 into India.
  • For women the limit is Rs 1 lakh.
  • If you are carrying gold over and above these limits, you will be subject to duty.
  • You can import gold bars, coins and ornaments up to 1 kg during your trip to India, subject to payment of duty.
  • During your stay if Gold is available at low price you can buy physical Gold Jewelry and bring it back with you while returning to India adhering to import duty rules.

    Note- a non-resident or ordinarily non-resident of India cannot buy a sovereign gold bond

    Thanks for your time and reading this. Feedback is always welcomed.

    Anup Lamb