Laws related to NRIs in India

12 POINTS TO KNOW FOR NRIS/TO BE NRIs

1. NRIs whose taxable Indian Income exceeds basic exemption limit or who have earned short-term or long-term capital gains from sale of any investments or assets are liable to file income tax return in India, even if the gains are less than the basic exemption limit.

2. Exception: If taxable income consisted only of investment income (interest) and/or capital gains income and if tax has been deducted at source from such income, there is no need to file tax return.

3. But please remember, for claiming refund of excess TDS, filing tax return is compulsory.

4. Types of bank accounts for NRIs: NRE, NRO and FCNR.

5. Funds in NRE savings accounts are held in convertible rupees - principle and interest are fully repatriable. Interest is fully exempt from tax in India.

6. Funds in 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.

7. Funds in FCNR Deposits are maintained in foreign currency and are fully repatriable, including the interest. All interest earned is fully exempt from tax in India. Foreign currency deposit is available in major currencies.

8. Any person, after becoming an NRI is required to inform the change in his residential status to the:

a) banks where he has savings or term deposits,                     

b) companies where he has shareholdings and

c) MFs whose units he holds.

9. It is advisable to give a Power of Attorney or Letter of Authority to someone of your choice for ease of operations of the bank accounts and investments.

10. After becoming NRI-One can continue holding investments in mutual funds, further invest in mutual funds even through SIP route, keep insurance policies taken earlier in force and pay further premiums, keep active one's PPF A/c. and invest further as well,

11. Transactions in equity shares can also be done, although on delivery basis only, through one designated bank branch,

12. One can buy immovable property other than agricultural land or farmhouses in India without any permission of RBI.

CA. Brijesh Baranwal

Note: The above write up is only for awareness purpose and should not be considered as expert opinion.