Response to this Question

    The definition of a NRI is significant from the perspective of FEMA, Investment and Taxation in India (See Benefits associated with NRI status). The definition of a NRI under the Income Tax Act is different from that under FEMA.

    Under Section 115C (e) of the Income Tax Act, a NRI is defined as 'An individual being a citizen of India or a person of India origin (PIO) who is not a resident'. A person is deemed to be a PIO if he or either of his parents or any of his grandparents, was born in undivided India. Apart from various types of investments in India, which 'A' can make, there are several other advantages of the NRI status, which are outlined below:

    'A' can freely acquire immoveable properties abroad out of earnings abroad. He can invest anywhere in the world. He can start any business abroad. He can become trustee-beneficiary of a trust set up abroad. He can retain all these even on his return to India and need not even intimate RBI about his foreign assets.
    'A' can set up family trusts abroad for education of his children/ maintenance of his family members. Such trusts can also be Asset Protection Trusts where the assets held by the trust are free from attachment by the creditors.
    'A' can bring 10 kgs. of gold (on payment of duty of Rs. 250 per 10 gms.) & 100 kgs. of silver (on payment of duty of Rs. 500 per kg.) once in six months on his visit to India.
    'A's foreign income is not liable to tax in India.
    'A' can enjoy several tax concessions in India on his assets in India.
    'A' can seek Advance ruling from Advance Ruling Authority on taxability (income tax) of transactions.
    'A' can avail the benefits of the Double Tax Avoidance Agreements (DTAAs) entered into by India with several countries which attempt to minimise double tax on the same income (i.e. if tax is payable in India by NRIs on their income in India, credit for tax payable is available against tax payable in foreign country on such income). Also tax on dividends, royalty, fees for technical services earned in India by NRIs are offered concessional tax treatment under most DTAAs. Further, in few cases, tax may not be payable at all on such income if the NRI is a tax resident of a treaty country.
    There are special reserve seats for children of NRIs for Engineering/Medical/MBA courses in certain institutions in India provided the fees are paid in foreign exchange.
    Even in case of Initial Public Offerings (IPO's), there are special quotas for NRI

Date : 7-Oct-2019 

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