NRI Status and Potential Benefits to NRIs Under FEMA And Income Tax Act


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	Blog Categories All Audit and Assurance (0) COMPANY LAW (3) FEMA (2) Income Tax (3) Labour Law (0) MISC. (7) RBI (0) Startups (38) TRADEMARK (44) NRI Status and Potential Benefits to NRIs Under FEMA And Income Tax Act Category: FEMA, Posted on: 19/04/2024 , Posted By: VGC ADMIN Visitor Count:57 NRI Status and Potential Benefits to NRIs Under FEMA And Income Tax Act Do you know when you’re considered a Non-Resident Indian (NRI) under the Foreign Exchange Management Act (FEMA)? And are you aware of the benefits NRIs can enjoy in India? We Vikram Grover and company, will decode the multiple benefits to NRIs under FEMA and Income TAX Act in India. Let’s break it down in simpler terms. Are you planning to shift outside India or stay in India permanently? Then, you must know the tax laws for your income, or if you can still get tax-free interest when you come to India permanently. However, you must know the taxation services about whether you qualify as a resident or an NRI to enjoy the benefits of NRIs under FEMA and Income Tax Act. According to FEMA, NRI for this purpose is defined as a person resident outside India who is citizen of India. In terms of Regulation 2 of FEMA Notification No.13 dated May 3, 2000, Non-Resident Indian (NRI) means a person resident outside India who is a citizen of India. Person of Indian Origin (PIO) means a citizen of any country other than Bangladesh or Pakistan who had (a) at any time held Indian passport or (b) he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 or (c) the person is a spouse of an Indian citizen or a person. In simple terms, Under the Foreign Exchange Management Act (FEMA) of India, an individual is considered a Non-Resident Indian (NRI) if he/she meets the following criteria: Residential Status: An individual who has been residing outside India for more than 182 days in the preceding financial year is considered an NRI. Indian Citizenship: An Indian citizen who stays abroad for employment, business, or vocation outside India, or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad, is considered an NRI. Indian Origin: A person of Indian origin who is not a citizen of Pakistan or Bangladesh, or Sri Lanka, or Afghanistan, or China, or Iran, or Nepal, or Bhutan is considered an NRI. "Person of Indian Origin" is defined as someone who, at any time, held an Indian passport or who or either of whose parents or grandparents was a citizen of India according to the Government of India Act, 1935 or the Constitution of India. NRIs are subject to certain regulations regarding their financial transactions, investments, and income earned in India. They are eligible for various benefits and facilities under FEMA, including the ability to invest in India, repatriate funds, and hold certain types of bank accounts. However, NRIs must comply with the regulations and guidelines set forth by FEMA to avail of these benefits Let discuss — the benefits NRIs can avail themselves in India under FEMA and the Income Tax Act—information you wouldn’t want to miss. FEMA Benefits: Repatriation of Funds: NRIs can freely repatriate funds earned in India like rent, dividends, and pension after paying applicable taxes. Restrictions apply to the repatriation of the principal amount from some investments. Global Investments: NRIs have the freedom to invest in immovable property outside India with their income earned abroad. They can establish companies, purchase shares in foreign stock exchanges, enter partnerships, or set up businesses overseas without needing Reserve Bank of India (RBI) approval. Opening Accounts: NRIs can maintain various bank accounts in India under FEMA. These accounts allow them to hold foreign currency deposits and manage their finances in India. Income Tax Act Benefits: Tax Exemption: Income earned outside India by NRIs is generally not taxable in India. This can be a significant advantage for those working abroad. Tax-Friendly Accounts: Interest earned on Non-Resident (Ordinary) Rupee (NRO) accounts and Foreign Currency Non-Resident (FCNR) accounts can be tax-exempt in India under certain conditions. Lower TDS on Property Sales: NRIs can apply for a lower Tax Deducted at Source (TDS) certificate when selling property in India. This reduces the upfront tax burden if there's minimal or no capital gain from the sale. Double Taxation Avoidance Agreements (DTAAs): India has DTAAs with many countries. These agreements can help NRIs avoid paying taxes on the same income in both India and their country of residence. GST Registration: Under the GST Act, NRIs intending to conduct business in India can apply for GST registration. Other Benefits: 1. Company Setup: NRIs have the option to set up a private limited company in India. Gold and Silver Import: NRIs can import up to 1 kg of gold and 10 kgs of silver when returning to India. Important to Note: · Specific benefits and eligibility criteria may vary depending on the NRI's residential status, type of income, and the provisions of the Income Tax Act and FEMA regulations. · Consulting a tax professional specializing in NRI taxation is recommended to ensure you understand the latest regulations and maximize the benefits available to you. It's important for NRIs to stay updated with the latest regulations and consult with tax advisors to understand the specific benefits available to them based on their individual circumstances. Disclaimer: The content of the blog does not create any responsibility of the firm / its authorized persons whose website is being accessed. The blog is not for legal use. Kindly verify the correctness of data/contents from your own sources. This is only for information purpose. Add a Comment Name: Your Comment: View Comments (0)

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