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Who is a NRI? |
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An NRI is an Indian citizen or a foreign
citizen of Indian origin who stays abroad for employment or for carrying on a business
or vocation or under circumstances indicating an intention for an uncertain duration
of stay abroad. Those who stay abroad for education, medical treatment or on business
trips, which do not indicate an intention to remain there for an indefinite period,
are not considered as NRIs. |
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Can a NRI import gold or silver? |
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Yes, a NRI can bring upto 10 kg of gold and
100 kg of silver once in 6 months into India as part of their personal baggage provided
they have stayed abroad for a continuous period of 6 months. The gold may be brought
in any form, except as ornaments studded with stones and pearls.
He will have to pay customs duty in foreign exchange at the rate of Rs 22 per gram
of gold and Rs 500 per kg of silver. Both the payment in rupees and the sale amount
will have to be routed through his NRI account. |
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Who is a foreign citizen of Indian origin? |
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A foreign citizen is deemed to be of Indian
origin, if he, at any time, was an Indian citizen or either of his parents or any
of his grandparents was a citizen of India. The spouse of an NRI is also treated
as an NRI for the purpose of opening and maintaining bank accounts and making investments
in shares/ securities in India. Citizens of Pakistan and Bangladesh are not eligible
for this status.
For investments in immovable properties, a foreign citizen (but not a citizen of
Pakistan, Bangladesh, Afghanistan, Bhutan, Nepal or Sri Lanka) is deemed to be of
Indian origin, if he, at any time, was an Indian citizen, or if his father or paternal
grandfather was an Indian citizen. |
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Can a NRI depositor avail of nomination facility ? |
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Yes. Nomination facility is available for
all types of NRI accounts. The nominee can either be an NRI or an Indian citizen.
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Can an NRI invest in immovable property? |
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Non-resident Indian citizens can freely purchase
and sell residential and commercial properties in India. Even foreign citizens of
Indian origin do not have to obtain RBI's permission to purchase and sell properties
(other than agricultural/ plantation land and farm houses), provided the purchase
price is met out of foreign exchange funds. However, they need to submit a declaration
to the RBI within 90 days of the purchase. Foreign citizens need to obtain permission
for property transactions.
The proceeds of the sale of properties can be repatriated subject to the obtaining
of RBI's permission within 90 days of the sale transaction. The amount repatriated
cannot be more than the purchase amount made with foreign exchange funds. The properties
(which cannot exceed two residential properties and any number of commercial properties)
should have been purchased on or after 25th May 1993 by NRIs with foreign exchange
funds and sold at least 3 years after their purchase date.
Giving and receiving gifts of properties are freely permitted for Indian citizens.
Similarly, a foreign citizen of Indian origin does not need to obtain RBI's permission
to acquire or dispose of by gift upto 2 residential properties from or to a relative.
However, foreign citizens would need permission to gift properties.
NRIs can freely let out their residential or commercial properties in India. The
rental income is freely repatriable from 1996-97, subject to production of form
RC1, along with a chartered accountant s certificate. The rental income should however
be routed through a non-resident ordinary (NRO) account.
Non-resident Indian citizens can also avail of housing loans from banks and housing
content institutions for acquisition of one house/ flat, subject to prescribed conditions.
At least 25% of the cost of acquisition should be met with foreign exchange funds.
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What is the tax benefits for an NRI? |
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Indian bank deposits are free from wealth
tax. Interest earned on NRE, FCNR and NRNR accounts are exempted from Indian income
tax. |
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What are the tax concessions available to a returning
NRI? |
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When an NRI permanently returns to India,
the interest which he earns on NRE/ FCNR deposits with Indian banks and on government
securities and company debentures is eligible for a flat income tax rate of 20%.
These investments should have been made out of foreign exchange funds. This concessional
tax rate will extend upto the maturity of these investments.
An NRI, on returning to India, may choose to invest the balances in his NRE/ FCNR
deposits in RFC accounts. Alternatively, he may convert these accounts into Resident
Rupee accounts. His FCNR deposits can also be continued till maturity at the contracted
rate of interest.
The income from the Resident Rupee accounts will be taxable from the date of the
NRI's return to India. He also has the option of having this income taxed at a flat
rate of 20%. In which case, he will not be able to claim any tax deductions.
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What facilities are offered to returning Indians? |
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A returning NRI is allowed to retain the
assets, which he has acquired abroad, even after he has returned to India for good.
The assets include bank deposits, shares, securities, business and immovable properties.
The only requirement is that he should have stayed abroad continuously for at least
one year.
He can also open a resident foreign currency account (RFC) with banks in India.
If he has returned in less than a year, he needs to obtain the RBI's permission
first.
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Can Indian companies grant loans to their NRI staff? |
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Yes. Under the general permission granted
by Reserve Bank properties other than agricultural land/farm house/plantation property
can be acquired by foreign citizens of Indian origin provided the purchase consideration
is met either out of inward remittances in foreign exchange through normal banking
channels or out of funds from the purchasers’ NRE/FCNR accounts maintained with
banks in India and a declaration is submitted to the Central Office of Reserve Bank
in form IPI 7 within a period of 90 days from the date of purchase of the property/final
payment of purchase consideration.
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Can sale proceeds of such property are remitted out
of India? |
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Yes. Repatriation of original investment
in respect of properties purchased by foreign citizens of Indian origin on or after
26th May 1993 will be allowed to be remitted up to the consideration amount originally
remitted from abroad provided the property is sold after a period of three years
from the date of the final purchase deed or from the date of payment of final installment
of consideration amount, whichever is later. Applications for the purpose are required
to be made to the Central Office of Reserve Bank within 90 days of the sale of property
in form IPI 8.
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Can the properties (residential/commercial) be given
on rent if not required for immediate use? |
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Yes. Reserve Bank has granted general permission
for letting out any immovable property in India. The rental income or proceeds of
any investment of such income are eligible for repatriation.
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