Residential status and itr form
This query is : Resolved
30 May 2016
Dear All,
Can NRI do proprietary business of garments in India without any approval or licence from RBI?
He comes in India very few time.He is OCI.
And if yes then in ITR shall have to select NRI or Resident in India?
Please revert me ASAP.
Thank you
Can NRI do proprietary business of garments in India without any approval or licence from RBI?
He comes in India very few time.He is OCI.
And if yes then in ITR shall have to select NRI or Resident in India?
Please revert me ASAP.
Thank you
30 May 2016
Please sir reply soon.
01 June 2016
Can anybody have answer to this question???
21 July 2025
1. Can an NRI (OCI) do proprietary business in India without RBI approval?
NRI/OCI and Proprietary Business in India:
An NRI or OCI can carry on business in India.
However, for starting a proprietary business, there is no separate RBI approval required if the business is funded from Indian sources.
If the NRI invests foreign funds or opens a business involving foreign direct investment (FDI), then RBI/ FEMA regulations may apply.
Also, to open a current account for business transactions, banks may ask for documents under FEMA guidelines.
If the NRI/OCI is running business, they must comply with all applicable laws like GST registration, Shops and Establishment Act, etc.
Summary:
Proprietary business is possible without RBI approval if funded from Indian sources. If foreign funds are involved, RBI regulations apply.
2. What residential status to select in Income Tax Return (ITR)?
Residential status depends on physical presence in India as per Section 6 of the Income Tax Act:
NRI: Person who is not resident in India in the previous year.
Resident: Person who satisfies conditions of physical presence (182 days or more in India in a FY or 60 days + 365 days in last 4 years).
If the NRI comes to India very few times and does not satisfy the physical presence criteria, then he is NRI for income tax purposes.
Accordingly, in the ITR:
If the person is NRI, file ITR for NRI (like ITR-2 or ITR-3 depending on business).
If the person qualifies as Resident (rare in case of NRI/OCI who comes few times), then file Resident ITR.
Additional Notes:
OCI card holders are treated as NRIs for tax unless their stay exceeds the limits making them resident.
For proprietary business income, if he is NRI, he needs to file ITR for NRI with business income details.
NRI/OCI and Proprietary Business in India:
An NRI or OCI can carry on business in India.
However, for starting a proprietary business, there is no separate RBI approval required if the business is funded from Indian sources.
If the NRI invests foreign funds or opens a business involving foreign direct investment (FDI), then RBI/ FEMA regulations may apply.
Also, to open a current account for business transactions, banks may ask for documents under FEMA guidelines.
If the NRI/OCI is running business, they must comply with all applicable laws like GST registration, Shops and Establishment Act, etc.
Summary:
Proprietary business is possible without RBI approval if funded from Indian sources. If foreign funds are involved, RBI regulations apply.
2. What residential status to select in Income Tax Return (ITR)?
Residential status depends on physical presence in India as per Section 6 of the Income Tax Act:
NRI: Person who is not resident in India in the previous year.
Resident: Person who satisfies conditions of physical presence (182 days or more in India in a FY or 60 days + 365 days in last 4 years).
If the NRI comes to India very few times and does not satisfy the physical presence criteria, then he is NRI for income tax purposes.
Accordingly, in the ITR:
If the person is NRI, file ITR for NRI (like ITR-2 or ITR-3 depending on business).
If the person qualifies as Resident (rare in case of NRI/OCI who comes few times), then file Resident ITR.
Additional Notes:
OCI card holders are treated as NRIs for tax unless their stay exceeds the limits making them resident.
For proprietary business income, if he is NRI, he needs to file ITR for NRI with business income details.
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