Following are the broad categories for FAQ's:
  General
  Income Tax
  FEMA / Investment
1. Who is an NRI?
There are two different acts in India which defines a person as resident or non-resident for the particular year. One is under the Income Tax Act, 1961 and another is under Foreign Exchange Management Act, 1999. The provisions under the two takes into account the number of days a person stayed in India to determine the residential status. Click here to know the provisions in detail.
2. Why residential status is important?
The first and foremost reason of residential status being important is that charge of income tax and the scope of taxable income varies with the factor of residence. Further, there are certain restrictions as well as certain benefits which are applicable/available only to non-residents.
3. Who is treated as person of Indian Origin (PIO)?
A. For the purposes of availing of the facilities of opening and maintenance of bank accounts and investments in shares/securities in India :
A foreign citizen (other than a citizen of Pakistan or Bangladesh) is deemed to be of Indian origin, if, he,
i. at any time, held an Indian passport, or
ii. he or either of his parents or any of his grand parents was a citizen of India.
Note : A spouse (not being a citizen of Pakistan or Bangladesh) of an Indian citizen or of a person of Indian origin is also treated as a person of Indian origin for the above purposes provided the bank accounts are opened or investments in shares/securities in India are made by such persons jointly with their NRI spouses.
B. For the purposes of acquisition and transfer of immovable property in India:
PIO's definition is further narrowed when it comes to acquisition and transfer of immovable property in India. Here definition of PIO excludes citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan.
Further, for determining the Indian origin herein a PIOs father or grand father's birthplace or Indian citizenship at any time is to be considered unlike earlier other definitions referring to parents or grand parents. Thus, for matters pertaining to immovable properties a Person of Indian Origin is defined as an individual other than citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan:
4. What are the tax provisions for Non Resident Indians as per the Indian taxation laws?
There are three categories specified under the Income Tax Act, 1961 on the basis of which tax liability is being determined. The said three categories are: Resident and Ordinarily Resident (ROR), Not Ordinarily Resident (RNOR) and Non-Resident (NR). The tax liability on the income earned by the three categories can be summarised as follows :
1. Taxpayers in all categories are chargeable on income, from whatever source derived, which is received or is deemed to be received in India by or on behalf of them or which accrues or arises or is deemed to accrue or arise to them in India other than income specified as exempt income.
2. An ROR pays tax in India on his entire world income, wherever accrued or received.
3. An NR pays tax only on his taxable Indian income and his foreign income (earned and received outside India) is totally exempt from Indian taxes.
4. An RNOR pays tax on taxable Indian income and on foreign income derived from a business controlled in or a profession set up in India
5. Are NRI's liable to Wealth Tax in India?
Wealth tax, in India, is levied under the Wealth-tax Act, 1957. NRIs are taxed for their wealth in India alone. Wealth tax is payable on the aggregate value of chargeable assets as reduced by the value of debts owed on valuation date. The valuation date is uniformly fixed as 31st March.
6. What are the exemptions available to NRI's from income tax in India?
NRI's have been given certain benefits from taxation of their income ( interest/dividend income or capital gain) on investments made in India in eligible shares, securities and any other notified assets. Flat rate would be charged on such income and further, income would be determined after considering the effect of changes in foreign exchange rates between the two currencies in consideration. Further, certain benefits are available from taxation of long term capital gain provided the amount of sale proceeds is invested in the specified assets within the stipulated time period.
Also, NRI's can claim benefits under the DTAA entered into with various countries by the Indian Government.
7. How an NRI can claim refund of the amount deducted at source by payer of income as income tax?
An NRI can claim the refund of tax deducted at source if his/her tax liability is below the actual amount deducted by filing his/her Return of Income with the department claiming refund in the said return.
8. Is it compulsory for an NRI to file his/her return of income in any year?
An NRI is required to furnish his return of income only if his/her total taxable income for the year exceeds the maximum amount which is not taxable.
Further, A non-resident Indian is not required to furnish return of income, if -
i. Total income consists only of investment income from foreign exchange assets or long-term capital gains under special tax regime or both, &
ii. Tax has been deducted at source on such income, &
iii. NRI has opted to be governed by the special tax regime.
9. What kind of Banking accounts can be opened by an NRI in India?
An NRI can open the following Bank Accounts in India:
i. Non Resident External Account (NRE)
ii. Non Resident Ordinary Account (NRO)
iii. Foreign Currency Non Resident (B) (FCNR(B))
These accounts differs in terms of denominated currency, repatriability and taxability of interest earned.
10. What are rules specified in FEMA for acquisition of immovable property in India by an NRI?
An NRI can acquire immovable property in India in any of the following manner:
1. Purchase:  General permission has been granted by the RBI for purchasing any immovable property in India (other than agricultural land, plantation or farmhouse) by an NRI. However, if the acquirer is a foreign citizen of Indian origin, the payment has to be made out of forex inward remittance or out of FCNR, NRE, or NRO accounts.
2. Gift: General permission has been granted by the RBI for acquiring any immovable property in India(other than agricultural land, plantation or farmhouse) by way of Gift. If the gift is made to the foreign citizen of Indian origin, the donor can be either a resident in India or a Non-resident ( who may be an Indian Citizen or foreign citizen of Indian origin)
3. Inheritance: General permission has been granted by RBI for acquiring any immovable property in India(including agricultural land, plantation or farmhouse) by way of inheritance from a resident or a non-resident. A non- resident can either be an Indian citizen or a foreign citizen of Indian origin provided such person had acquired said property in accordance with the provisions of Foreign Exchange Laws in force at the time of acquisition. i.e. FERA, 1973 or FEMA, 1999.
Thus agricultural land, plantation or farmhouse can be acquired by way of inheritance only.
11. What are rules specified in FEMA for transfer/sale of immovable property in India by an NRI?
An NRI who is a citizen of India can sell or transfer any immovable property (other than agricultural land, plantation & farmhouse property) to a person resident in India or an overseas Indian being an Indian citizen or a foreign citizen of Indian origin. By virtue of the definition of term "transfer", it includes sale, gift , transfer, etc.
A foreign citizen of Indian origin can sell immovable property other than agricultural land, plantation or farmhouse property only to a person who is resident in India. For transfer of property as a gift, general permission has been granted for transfer of residential or commercial property to a resident or to an NRI who is an Indian citizen or foreign citizen of Indian origin.
However, in both the cases agricultural land, plantation & farmhouse property can be transferred to a citizen of India who is aresident in India only.
Also, please note that Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan are excluded from the definition of a PIO
12. What are the provisions for repatriation of amount received by sale of immovable property in India?
The amount received on sale of immovable property in India can be repatriated provided the amount repatriated is less than the amount paid for acquiring the property in the first place. The amount paid for acquisition must be received in foreign exchange through normal banking channels. In addition, this amount must be the foreign currency equivalent as on date of payment and paid by debit to the NRI account.
13. What is the tax treatment of interest earned on NRE/NRO accounts?
Interest earned on NRO accounts is liable to be taxed in India and thus attracts deduction of income tax at source. However, interest earned on NRE account is totally exempts from income tax.
14. Can i repatriate every income earned in India to my current resident country?
Yes, all type of current income like dividend, interest, rent, profit from business or profession in India, etc. is permissible to be freely repatriable outside India. Further, there is no maximum limit on such repatriation.
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