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? Let’s break it down in simpler terms.
According to FEMA, an NRI is someone living outside India while still holding Indian citizenship. This includes individuals abroad for employment, business, or any other reason that suggests a unintentional period of stay outside India. Being an NRI doesn’t mean you lose out on the benefits of India. Our country, known for its freedom and opportunities, extends its advantages to NRIs and foreigners, preserving the rich Indian culture.
Today, we’re discussing the benefits NRIs can avail themselves in India under FEMA and the Income Tax Act—information you wouldn’t want to miss.
- Global Investments: Did you know NRIs can invest in immovable property outside India with income earned abroad? They can establish companies, purchase shares in foreign stock exchanges, enter partnerships, or even set up businesses abroad. The best part? No need to inform the Reserve Bank of India (RBI) about these overseas assets, allowing NRIs to maintain these holdings even after returning to India.
- Lower TDS on Property Sales: NRIs can apply for a Lower TDS (Tax Deducted at Source) deduction certificate when selling property in India. If there’s no significant gain or no gain at all, Indian tax laws offer NRIs the option to apply for a certificate that reduces TDS.
- DTAA Benefits: NRIs can take advantage of Double Taxation Avoidance Agreements (DTAA). This means if an NRI earns income in India, they can credit the tax paid in India against the tax payable in their country of residence. Some DTAAs even provide lower tax rates on specific types of income like dividends, interest, technical service fees, or royalties. It’s essential to carefully analyze the DTAA provisions to ensure eligibility for these benefits.
- Tax-Free Foreign Income: Income earned outside India remains tax-free for NRIs, offering a significant financial benefit.
- Advance Rulings: NRIs can seek advance rulings under the Income Tax Act for any tax-related issues, providing clarity on their tax liabilities.
- Gold and Silver Import: NRIs can import up to 1 kg of gold and 10 kgs of silver when returning to India.
- Company Setup: NRIs have the option to set up a private limited company in India.
- GST Registration: Under the GST Act, NRIs intending to conduct business in India can apply for GST registration.
These are just a few of the numerous benefits NRIs can enjoy in India. Others include education for their children in Indian schools and colleges, access to medical treatment, and more. The key is to stay informed and make the most of the provisions that align with your situation, whether under the Income Tax Act or the DTAA, ensuring you save on income tax while enjoying the best of both worlds.
