Generally, An NRI is a person resident outside India who is a citizen of India or is a person of Indian origin. However, there are different definitions of NRI under FEMA and Income Tax Act.
Definition of NRI under FEMA:
Under the Foreign Exchange Management Act (FEMA), generally, a person is resident outside India if he is in India for less than 182 days during the course of the preceding financial year and also includes any person who stays abroad:
If you have gone out of India for any of the following purposes, you qualify to open a Non-Resident Account
Non-Resident Indians become Indian residents only when they come back to India for employment or for carrying-on any business in India or vocation or for any other purpose indicating an indefinite period of stay in India. They are not regarded as Resident Indians during their short visits to India on holiday, leave etc.
You are a Person of Indian origin [PIO] if you are a citizen of a foreign country (other than a citizen of Bangladesh or Pakistan) and:
The Income Tax Act of 1961 defines a resident as follows:
Exceptions to the above:
The 60-day period mentioned above will be substituted for 182 days in case of the following persons:-
If you satisfy either of above definition, then you’re an Ordinary resident of India for that financial year and must pay taxes in India. As per Section 6 of the Income Tax Act, If you don’t satisfy above conditions for a resident, then you’re an NRI- Non-Resident Indian.
Non-Resident External [NRE] Rupee savings account
Your funds in NRE savings accounts are held in convertible rupees – principle and interest are fully repatriable. Interest income is fully exempt from tax in India. The savings account can be opened jointly with a Non-Resident individual.
Non-Resident External [NRE] Rupee fixed deposit
Fixed deposit in Indian rupees where the principle and interest are fully repatriable. All interest earned is fully exempt from tax in India. The account can also be opened jointly with a non-resident.
Non-Resident Ordinary [NRO] Rupee savings account
Your funds in Non Resident Ordinary (NRO) savings account are held in India, in Indian rupees. The NRO account can be funded through NRI income in India. Only the interest in an NRO account is repatriable. Interest income on this account is liable for Indian Income Taxes. Non-Resident Ordinary [NRO] Rupee fixed account. Fixed deposit in Indian rupees where the earnings in India can be deposited. The interest is repatriable [after payment of tax].
Foreign current Non-residents [FCNR] deposit
The FCNR Deposit is a fully repatriable foreign currency deposit available in major currencies: US Dollars, Pound Sterling, Euros, Australian dollars and Canadian dollars. Your funds in FCNR Deposits are maintained in foreign currency and are fully repatriable, including the interest you earn. All interest earned is fully exempt from tax in India.
Yes, you can remit funds for opening the account in any convertible currency.
The NRO / NRE accounts are maintained in rupees and the funds remitted will thus be converted into India rupees at the spot exchange rate.
Deposits can be maintained in the currency of your choice i.e. USD, GBP, EUR, AUD, and CAD etc.
Yes, an NRI can invest in Mutual Funds without any prior permission from RBI. The offer document should clearly state the NRIs could invest in the scheme. Please contact us and we will be glad to assist you.
You can invest by issuing a cheque against your NRO/NRE Accounts. If you invest from funds in your NRE/FCNR Accounts then you will be able to repatriate income on Mutual Fund earnings abroad.
Under the general permission available, the following categories can purchase immovable property in India:
The general permission, however, covers only purchase of residential and commercial property and is not available for the purchase of agricultural land/plantation property/farm house in India.
No NRI/PIO cannot purchase a agricultural land in India. However, they are allowed to inherit a agricultural land which has to be sold as they cannot pass it to their next of kin.
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