Taxation & Investment Services For Non Resident Indian (NRI)

Who is a Non resident Indian or NRI ?

Generally An NRI is a person resident outside India who is a citizen of India or is a person of Indian origin. However there are different definitions of NRI under FEMA and Income Tax Act. We at SGA, help our NRI clients to understand the complex provisions of the definition of Residents, Non Residents, Residents but not Ordinarily Residents & Deemed Residency.

We, at SGA provide the following Taxation & Investment Services For Non Resident Indian (NRI):

  • NRI Tax Advisory Services and filing of Income Tax returns
  • Tax Implication on Sale of Property in India by a NRI
  • NRI Investment Consultation services
  • Certification for Form 15CB required by Residents and Non Resident Indians for remitting funds outside India.

Definition of NRI under FEMA:

Under the Foreign Exchange Management Act (FEMA), generally, a person is resident outside India if he is in India for less than 182 days during the course of the preceding financial year and also includes any person who stays abroad:

  • For the purposes of carrying out employment or any business or vocation;
  • Under circumstances indicating an intention to stay outside India for an uncertain duration;
  • Any Indian citizen deputed outside India for a temporary period in connection with employment for education

Definition of NRI or Residential Status under the Indian Income Tax Act, 1961 :

From the FY 2020-21 , an individual is resident in India if he is in India in the financial year for:

  • 182 days or more; or
  • Has been in India for 365 days of more during the 4 immediately preceding financial years and for 60 days or more during the financial year (the period of 60 days stands changed to 120 days or more for Indian citizens or persons of Indian origins on a visit to India whose total income in india is less than INR 15 lacs , and the period of 60 days stands changed to 182 days for citizens of India who leave India for employment abroad as member of a crew of an Indian ship). As amended by Finance Bill 2020.
  • Genrally, an individual who does not satisfy the above conditions is a non-resident.

    Also from FY 2020-21 , A resident is “not ordinarily resident” in India in any financial year if he:

    • Has been “non-resident” in India in any 9 out of the 10 previous years preceding that year

    OR

    • Stay in India for 729 days or less during the 7 previous years preceding the relevant previous year.
    • We at SGA, as a NRI Tax Consultant in Pune, provide various NRI Advisory Services, like Evaluation of NRI Residential Status, Applicability of New Provisions of Deemed Residency applicable from FY 2020-2021 onwards , NRI Income Tax Consultation, NRI Income Tax Returns Filing, NRI Investment Advisory Services, NRI Tax Implications on Sale of Property, 15CA CB Advisory and Certification Services for remittance of funds outside India , etc .

The Finance Bill, 2020 has proposed that an Indian citizen shall be deemed to be resident in India, if he is not liable to be taxed in any country or jurisdiction. This is an anti-abuse provision since it is noticed that some Indian citizens shift their stay in low or no tax jurisdiction to avoid payment of tax in India.

The new provision is not intended to include in tax net those Indian citizens who are bonafide workers in other countries. In some section of the media the new provision is being interpreted to create an impression that those Indians who are bonafide workers in other countries, including in Middle East, and who are not liable to tax in these countries will be taxed in India on the income that they have earned there. This interpretation is not correct.

In order to avoid any misinterpretation, it is clarified that in case of an Indian citizen who becomes deemed resident of India under this proposed provision, income earned outside India by him shall not be taxed in India unless it is derived from an Indian business or profession.

The Residential status shall be determined as per the flow chart: CLICK TO VIEW

There is one more class that is slightly different from Resident and NRI. They’re called ‘Resident and Not Ordinary Resident'(RNOR). You classify as an RNOR Indian if you satisfy below requirements.

  • Has been “non-resident” in India in any 9 out of the 10 previous years preceding that year

OR

  • Stay in India for 729 days or less during the 7 previous years preceding the relevant previous year.

In case of RNOR individuals, the foreign income (i.e., income accrued outside India) shall not be taxable in India. Foreign sources means income which accrues or arises outside India (except income derived from a business controlled in or a profession set up in India).

  • RNOR citizen has to pay tax only on income accrued / generated in India. The foreign income earned by that person is exempt from tax.
  • It is primarily used by returning NRIs.
  • A person can be classified as an RNOR for usually 2 years after their permanent relocation to India.
  • Returning NRIs must use this RNOR status to set things in order and get ready to be taxed as Indian citizens in future.
  • Non-Resident External [NRE] Rupee savings account:

    Your funds in NRE savings accounts are held in convertible rupees – principle and interest are fully repatriable. Interest income is fully exempt from tax in India. The savings account can be opened jointly with a Non-Resident individual.

  • Non-Resident External [NRE] Rupee fixed deposit:

    Fixed deposit in Indian rupees where the principle and interest are fully repatriable. All interest earned is fully exempt from tax in India. The account can also be opened jointly with a non-resident.

  • Non-Resident Ordinary [NRO] Rupee savings account:

    Your funds in Non Resident Ordinary (NRO) savings account are held in India, in Indian rupees. The NRO account can be funded through NRI income in India. Only the interest in an NRO account is repatriable. Interest income on this account is liable for Indian Income Taxes. Non-Resident Ordinary [NRO] Rupee fixed account Fixed deposit in Indian rupees where the earnings in India can be deposited. The interest is repatriable [after payment of tax].

  • Foreign current Non-residents [FCNR] deposit:

    The FCNR Deposit is a fully repatriable foreign currency deposit available in major currencies: US Dollars, Pound Sterling, Euros, Australian dollars and Canadian dollars. Your funds in FCNR Deposits are maintained in foreign currency and are fully repatriable, including the interest you earn. All interest earned is fully exempt from tax in India.

Yes, you can remit funds for opening the account in any convertible currency. The NRO / NRE accounts are maintained in rupees and the funds remitted will thus be converted into India rupees at the spot exchange rate. Foreign currency deposits can be maintained in the currency of your choice i.e. USD, GBP, EUR, AUD and CAD etc.

Yes, an NRI can invest in certain Mutual Funds subject to certain conditions. The offer document should clearly state the NRIs could invest in the scheme. Please contact us and we will be glad to assist you.

Address

Sachin Gujar & Associates,
Chartered Accountants
47/22, Erandwana, Law College Road,
Ekta Apts, 3rd Floor, Above Nirmitee Furniture,
Pune - 411004

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