An NRI is an Indian citizen who has lived outside India for more than 182 days during a financial year, either for professional or personal reasons. The NRI status is defined differently under two primary regulations: the Foreign Exchange Management Act (FEMA) and the Income Tax Act, 1961. These laws outline the criteria for determining residency status, which affects financial and tax responsibilities. ...read more
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Non-Resident Indian is the NRI full form. It refers to Indian citizens who live outside India for an extended period, typically for work, study, or other personal reasons. NRIs are categorised separately from other Indian citizens based on their residence status, and they are governed by specific laws and regulations.
In addition to NRIs, there are two other related categories —
Overseas Citizens of India (OCIs)
Persons of Indian Origin (PIOs)*
Each category has distinct guidelines, helping the Indian government determine their rights, duties, and legal status.
*PIO was merged into OCI in 2015
NRI Status Under FEMA
FEMA evaluates an individual’s intent to stay abroad and governs foreign exchange transactions. Under FEMA, you are classified as an NRI if —
More than 182 days spent outside India in a financial year (April to March)
Intent to reside abroad: This includes professionals, students, seafarers, or spouses accompanying an employed person abroad
Your residency under FEMA determines your eligibility for opening NRI bank accounts and repatriating funds to India.
NRI Status Under the Income Tax Act, 1961
The Income Tax Act defines an NRI based on physical presence in India. A person is considered a non-resident if they —
Stay less than 182 days in India during the previous financial year, or
Stay less than 60 days in India in the current year and 365 days in the preceding four years. The 60-day rule changes for Indian citizens traveling for work overseas or earning less than Rs. 15 lakh through Indian sources.
The classification under the Income Tax Act directly impacts tax liabilities, determining whether the individual is a resident or non-resident for tax purposes.
India’s DTAA with several countries helps NRIs avoid being taxed twice on the same income
This is beneficial for earnings like rental income from property in India
3. Exemptions on NRE Accounts
Interest on NRE accounts is fully exempt from tax in India, which makes it easier to manage foreign earnings
Frequently Asked Questions
1. What does NRI mean?
An NRI (Non-Resident Indian) is an Indian citizen who resides outside of India for more than 182 days in a financial year. This classification is important for tax, banking, and investment purposes.
2. Who is eligible for NRI?
To be classified as an NRI, an Indian citizen must stay abroad for 183 days or more in a financial year, or stay in India for less than 365 days in the past four years and less than 60 days in the current financial year.
3. Are students NRI?
Indian students studying in foreign universities are considered NRIs, regardless of the length of their stay. They acquire NRI status typically based on their student visa and the duration of their studies abroad.
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