WHO IS AN NRI?
Definition for NRI is available under India’s Foreign Exchange Management Act 1999 (FEMA) and Indian Income Tax Act.
Under FEMA NRI is an Indian citizen or Foreign National of Indian Origin resident outside India for purposes of employment, carrying on business or vocation in circumstances as would indicate an intention to stay outside India for an indefinite period. An individual will be considered as NRI if his stay in India is for less than 182 days during the preceding financial year.
As per the provisions of Indian Income Tax Act, an individual will be considered as NRI if his stay in India is less than 182 days during the preceding financial year. NRI is an individual who is a citizen of India or a person of Indian origin and who is not a resident of India. Thus, in order to determine whether an Individual is a non-resident Indian or not, his residential status is required to be determined under Section 6 of Income-Tax Act. As per section 6 of the Income-tax Act, an individual is said to be non-resident in India if he is not a resident in India and an individual is deemed to be resident in India in any previous year if he satisfies any of the following conditions:
1. If he is in India for a period of 182 days or more during the previous year; or
2. If he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.
However, condition No. 2 does not apply where a an individual being citizen of India or a person of Indian origin, who being outside India, comes on a visit to India during the previous year.
WHAT HAPPENS WHEN TAX PAID IN INDIA AND ABROAD?
Claim relief in respect of income which is charged to tax both in India as well as abroad. Relief is either granted as per the provisions of double taxation avoidance agreement entered into with that country (if any) by the Government of India or by allowing relief as per section 91 of the Act in respect of tax paid in the foreign country.
PPF ACCOUNT BY NRI?
Any Individual (whether Salaried or Self-Employed or any other category) can invest in PPF.
NRI’s are not allowed to subscribe to PPF Account. However, if someone opens a PPF Account while he is a Resident of India but subsequently becomes a NRI, he shall be allowed to continue investing in his account. An NRI can invest up to Rs 1,00,000 per financial year in an existing account, that is, an account that he opened prior to becoming an NRI. If someone inadvertently opened an account after becoming an NRI, it is best to close it before it comes to the attention of the concerned authorities in India.
HUFs are not allowed to open PPF account.
Very useful information shared by Mr A Sreecharan:
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