NRI Corner: Who Is An NRI?
NRI corner is a space for Indian citizens who stay abroad for jobs/ business/study/ vocation or some other circumstances. Thousands of people are stepping out of India mainly for the betterment in life. However, at some point of time, they deal with questions arising with regards to investments in their home country. Investment in equity market/ mutual funds/ forex/ SIP or also as simple as opening a bank account or buying life insurance policy.
In order to cater to such an audience, we have taken the initiative to roll-out a feature – namely NRI Corner. Under this section or a series of Blogs we discuss various topics from an NRI perspective on a weekly basis.
In today’s introductory blog, we will just cover the basics.
Starting with who is an NRI?
Non-Resident Indian (NRI) means citizen of India who resides abroad for an uncertain duration. Our Indian Income Tax Act, 1961 (IT Act) and Foreign Exchange Management Act, 1999 (FEMA) have defined NRI separately.
NRI as per IT Act: One might think why our IT Act defined NRI? That’s because liability to pay tax in India does not depend on the nationality or domicile of the Tax payer but on his residential status.
So any individual who is not satisfying the conditions of Residential status may be considered as an NRI.
In simple terms, if a person has stayed in India for a period of less than 182 days in the preceding financial year, he / she is considered as an NRI.
If a person has stayed in India for less than 60 days during current financial year and have stayed in India for a total of less than 365 days during the four previous financial years.
If you are an NRI, only your income from India will be taxed. You don’t have to pay taxes on income earned abroad, even if you remit this income to India.
NRI as per FEMA: NRI means a ‘person resident outside India’ who is a citizen of India or is a person of Indian origin.
Person of Indian origin (PIO) means a citizen of any country other than Pakistan or Bangladesh, if,
i) he, 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 by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1955)
Note: A spouse (not being a citizen of Pakistan or Bangladesh) of an Indian Citizen or of a person of Indian