A non-residential Indian is a person who stays outside India for 182 days or more An Indian citizen or a foreign citizen of Indian origin who has stayed abroad for employment/carrying out business or vocation for 182 days or more during the period of the foreseeing financial year.
Non-Resident Indians (NRIs) are permitted to open and operate specific types of bank accounts in India to manage their income and remittances. These accounts are designed to cater to both domestic income and foreign earnings, providing flexibility and compliance with foreign exchange regulations.
A Person of Indian Origin (PIO) is eligible to become Overseas Citizen of India (OCI), if his home country allows dual citizenship of some form or the other under their local laws.
In simple words, NRIs are Indian citizens residing in other countries. OCIs are citizens of other countries of Indian origin. They enjoy lifelong free visas and have similar rights as Indian citizens, except they can’t vote and hold public office. PIO once was a separate category but is now merged with OCI
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OVERSEAS CITIZEN OF INDIA (OCI) AND PERSON OF INDIAN ORIGIN (PIO)
Banking Facilities for Non-Resident Indians (NRIs)
Non-Resident Indians (NRIs) are permitted to open and operate specific types of bank accounts in India to manage their income and remittances. These accounts are designed to cater to both domestic income and foreign earnings, providing flexibility and compliance with foreign exchange regulations.
Non-Resident Indians (NRIs) are permitted to open and operate specific types of bank accounts in India to manage their income and remittances. These accounts are designed to cater to both domestic income and foreign earnings, providing flexibility and compliance with foreign exchange regulations.
Non-Resident External (NRE) Account: Denominated in Indian Rupees and funded through foreign earnings.
Fully repatriable, including both principal and interest. Interest earned is exempt from income tax in India.
Non-Resident Ordinary (NRO) Account: Maintained in Indian Rupees for managing income earned in India (e.g., rent, dividends, pensions). Repatriation of funds is subject to regulatory limits and tax compliance. Interest is taxable in India.
Foreign Currency Non-Resident (FCNR) Account: Denominated in foreign currency and does not involve conversion into Indian Rupees unless the depositor wishes to convert in Indian Rupees for local payments/investments. Fully repatriable.
Interest income is tax-exempt in India.
Home Loans: Home Loans: An NRI/ OCI can apply for a Home Loan from Banks in India.
Loans/Overdrafts Against NRI Deposits
Non-Resident Indian (NRI) depositors are eligible to avail loans or overdrafts in Indian Rupees against the security of their NRE, NRO, or FCNR (B) deposits. Such loans may be used for purposes including business activities, acquisition of residential property (flat/house) in India, or to meet emergency financial requirements. However, the loan proceeds shall not be used for re-lending, agricultural or plantation activities, or investment in the real estate business. Additionally, the loan amount cannot be repatriated outside India.
Loans may be granted either in Indian Rupees or in foreign currency, strictly against the security of the aforementioned deposits, and shall be extended to the depositor only. Interest shall be charged at monthly intervals, irrespective of the currency of the loan.
Premature Withdrawal of Deposits:
- In the case of NRE/FCNR (B) deposits, premature withdrawal is not permitted if a loan has been availed against the deposit.
- For NRO deposits, premature withdrawal is allowed; however, the outstanding principal and interest on the loan must be settled first.
Disclaimer:
The information provided above is intended solely for informational purposes and does not constitute financial, legal, or tax advice. While due care has been taken to ensure the accuracy of the content, the information is subject to change based on regulatory updates, judicial decisions, or policy amendments. Readers are advised to consult a qualified tax professional or financial advisor before making any financial decisions based on this information.
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