• A Non-Resident Indian (NRI) is an Indian Citizen who either:

• • Resides in India for less than 182 days during the course of the preceding financial year
  • Traveled out of India or who stays outside of India for the purpose of employment
  • Traveled out of India or who stays outside of India for carrying on business/vocation outside India
  • Traveled out of India or who stays outside of India for any other purpose indicating his intention to stay outside India for an uncertain period of time.

A Person of Indian Origin (PIO) is a citizen of any country other than Bangladesh or Pakistan, if – 

• The individual at any time held an Indian passport
• The individual or either of their parents/grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955
• The individual is the spouse of an Indian citizen or a person referred to in the above categories.

You can be a Resident and Ordinarily Resident (ROR), Resident and Not Ordinarily Resident (RONR) or Non-Resident. It is determined by the number of days you’ve spent in India in that financial year. 

Click here to calculate your Residential Status.

Till the end of FY 2019-20, NRIs (covers Indian citizens and Persons of Indian Origin) included those individuals who visited India for less than 182 days in a financial year. In February 2020, Budget 2020 proposed to reduce this period to 120 days for all NRIs.

The reduced period of 120 days applies only when the total Indian income (i.e., income accruing in India) of such visiting individuals during the financial year is more than INR 15 lakhs.

If the total income (which is defined as taxable income) of the visiting NRIs is no more than INR 15 lakhs during the financial year, any individual will continue to maintain NRI status if the stay does not exceed 181 days.

An NRI can open the following bank accounts in India, however, there are certain guidelines that are issued by the Reserve Bank of India (RBI).

• Non-Resident (External) Rupee Account Scheme (NRE Account)
• Foreign Currency (Non-resident) Account (Banks) Scheme (FCNR (B) Account)
• Non-Resident Ordinary Rupee Account Scheme (NRO Account); and
• Special Non-resident Rupee Account (SNRR Account)

One of the most popular bank accounts among the NRIs. 

NRE accounts may be opened with a bank by –

• Individuals who are citizens of India but reside outside India
• Foreign citizens with Indian origin also known as Persons of Indian Origin (PIO)

Account features – 

• Can be savings, current, fixed or recurring deposit account
• Transfers with NRE accounts of self and others are also permitted. 
• Can be opened as either ‘single’ or ‘joint’ with other NRIs or PIOs.
• Can also hold a joint account with a relative who is residing in India (subject to relative holding the power of attorney from the NRI concerned).
• Allowed Credits – Remittances from abroad, Bank Interest, Income from Investments made in India
• Allowed Debits – Local payments made in India, Allowed Investments in India, Remittance abroad (under specific conditions)

• Allowed Credits – Remittances from abroad, Bank Interest, Income from Investments made in India
• Allowed Debits – Local payments made in India, Allowed Investments in India, Remittance abroad (under specific conditions)

NRO accounts are slightly different from NRE and FCNR (B) accounts.

They can be opened by – 

• Any non-resident including foreign nationals (Any foreign national coming to India for employment purposes or as a tourist can open an NRO)

Account Features – 

• NRO accounts are used to carry out bonafide INR transactions.
• Funds remitted from outside of India, or exchange brought to India, can be used to open an account.
• Can be a current, savings, fixed or recurring deposit account.
• NRIs can jointly hold an NRO Account with residents, provided the residents hold the power of attorney.
• NRIs and PIOs may hold the account jointly with other NRIs and PIOs.
• Allowed Credits – Remittances from abroad, Legitimate dues in India, Rupee gift and/or loan made to resident NRI/PIO.
• Allowed Debits – Local payments (to be) made in India, Remittance of Current Income abroad, Balance to be repatriated abroad or to an NRE account with a maximum of $1million every financial year.

The Double Tax Avoidance Agreement (DTAA) is a treaty signed by two countries.

• DTAA fixes a specific rate for a country in which taxes are deducted on income paid to the residents of that country.
• It relieves NRIs from having to pay taxes multiple times.
• Reduces tax implications on income earned in India for NRIs.
• Reduces the instances of tax evasion.

DTAA can be applied in 2 ways – Tax Credit Method & Exemption Method.

India has DTAA with over 80 countries. The major countries with which India has signed the DTAA are: United States of America (USA), United Kingdom (UK), United Arab Emirates (UAE), Canada, Australia, Saudi Arabia, Singapore and New Zealand.

If you are an NRI: Income earned and received outside of India, and money remitted back is not taxable. If your income in India (by way of interest from savings account/fixed deposits or rental income) exceeds INR 2,50,000— you must file a tax return in India.

Your filing of the tax return will depend upon your income sources in India. If you have any source of income within India that exceeds the basic exemption limit, you will have to file the tax return in India—even as a non-resident.

July 31st is the last date for filing ITR in India (for NRIs).

No. You need not be physically present to file & verify your income tax returns. You can file income tax returns online from anywhere in the world.

If your tax liability exceeds INR 10,000 in a financial year, you are required to pay advance tax.

Yes. As per the income tax laws, NRIs are entitled to claim various deductions and exemptions from their total income. Concessional tax of 20% is available in reference to investment income, and 10% in reference to long-term capital gains from the specified assets which are acquired out of convertible foreign exchange.

Specified Assets defined under section 115c(f) are as follows:

• Shares in an Indian company.
• Any security of the Central Government.
• Debentures and deposits in an Indian Company
• Any other notified asset.

Deductions Allowed – 

• Life insurance premium payment
• Tuition fee payment
• Principal repayments on loan for the purchase of house property
• ULIPS or unit-linked insurance plan
• Home Loan Interest
• Deduction under Sections: 80D, 80E, 80G and 80TTA

Deductions not allowed – 

• Investment in PPF,
• Investments made in NSCs
• Post Office 5 Year Deposit Scheme
• Senior Citizen Savings Scheme
• Deduction under Sections: 80CCG, 80DD, 80DDB and 80U

The basic exemption of Rs 3 lakhs and Rs 5 lakhs is available only for resident senior citizens and resident super senior citizens. Hence, as an NRI, even if you are a senior citizen, the moment your income in India exceeds Rs 2.5 lakhs, you will be liable to file your return of income in India.

Yes. You will be liable for capital gains tax in India upon sale of your asset. Further, the purchaser himself must deduct taxes on the quantum of gains you make. The rate of tax deduction for a long-term asset would be 20%, while taxes at slab rates would be deducted at source if the asset is a short-term asset.

Any NRI who receives an income after tax being deducted at source can apply to obtain tax exemption certificate provided his income is less than Rs. 1,50,000/- p.a. in India. The certificate is issued within 10-25 days and is valid for 1-3 years. 

Yes. If you are leaving India for good there are certain formalities you need to take care of.

• Inform the banker that the local bank accounts shall be treated as NRI accounts.
• Inform the companies concerned about the change in their status as NRI.
• Inform the income tax department about the change in the residential status within the means of the Income Tax Act.

NRIs returning to India for good should be aware of the various aspects of the Foreign Exchange Regulations Act (FEMA) as well as banking regulations. 

• Inform those related to your residential status according to income tax (i.e. banker, the companies concerned etc.)

You are not required to have a Permanent Account Number (PAN) in India for such circumstances. However, it is advisable to have a PAN in India if you have any movable / immovable assets in India, irrespective of any income from these assets.

It is mandatory to have an Aadhaar Card in India even if you have a PAN. As per the regulations, it is required for every person to link his/her PAN with the Aadhaar card.

A person residing in India may maintain a foreign currency account outside of India if the account was opened while residing outside of India or inherited it from a person residing outside of India.