NRI Status

Being an NRI, or Non-Resident Indian, is a special classification for Indian citizens living outside the country due to work, education, or personal reasons. This status has legal and financial implications, influencing taxation, property ownership, and investment opportunities in India. In this concise guide, let us delve into the fundamentals of NRI status and its significance for Indians living in Singapore in specific.

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About NRI Status

Non-Resident Indian or NRI is a term that refers to Indian citizens who spend less than 182 days in India during a financial year or live abroad for employment, business, or other reasons. This status is crucial for Indians abroad, providing a framework to manage their affairs in India while residing elsewhere.

Classification of NRI Status in India: NRI, OCI, PIO, or RNOR

  1. NRI (Non-Resident Indian):

    • Resides in India for less than 182 days in the preceding financial year.

    • May have employment or businesses abroad but retain Indian citizenship.

    • Can vote in Indian elections upon returning and registering as a resident.

    • Enjoys benefits like tax advantages, investment opportunities, and banking benefits.

  2. OCI (Overseas Citizen of India)

    • For people of Indian origin living abroad.

    • Grants lifelong visa-free travel to India.

    • Allows property ownership and bank account opening in India.

    • No voting rights in Indian elections.

  3. PIO (Person of Indian Origin):

    • Individuals of Indian origin without Indian citizenship.

    • Includes foreign nationals who once held Indian passports, have an Indian citizen parent, or are married to an Indian citizen.

    • Enjoys privileges like visa-on-arrival, multiple entry visas, and exemptions under FEMA.

  4. RNOR (Resident but Not Ordinarily Resident):

    • This applies to residents not meeting regular resident criteria.

    • This includes Indian citizens who have been non-residents for 9 out of the last 10 financial years.

    • Taxed on Indian income at resident rates but exempt from foreign income tax.

Investment Plans for NRIsInvestment Plans for NRIs

What is the Eligibility Criteria for NRI Status in India?

There are two main criteria to qualify as an NRI in India; they are as follows:

  1. Physical Presence Criteria:

    You are considered an NRI if you spend less than 182 days in India during the preceding financial year. You must stay in India for at least 365 days over the past four years, with 60 days in the specific year. 

  2. Intention to Stay Criteria:

    You must reside outside India for employment, business, or any other indefinite purpose to be classified as an NRI. 

    Note: Indian citizens who leave India for employment abroad or serve as crew members on Indian ships are considered NRIs, even if they spend more than 182 days in India during the preceding financial year.

Documents Required for NRI Status

The following documents are required to apply for NRI status in India:

  • PAN Card (Form 16 in the absence of PAN Card)

  • Valid Passport

  • Employment Letter/ Student ID Card

  • Proof of Residence (Utility bills, bank statement)

Investment Plans for NRIsInvestment Plans for NRIs

Steps to Apply for NRI Status

Follow the steps mentioned below to apply for the NRI Status in India:

Step 1: Confirm eligibility based on Indian tax laws for NRI status.

Step 2: Gather necessary documents, including proof of residence abroad, valid passport, visa records, and financial statements.

Step 3: Open an NRE or NRO account with a designated bank for efficient financial management while abroad.

Step 4: Update your status to NRI with the Income Tax Department if you have a PAN card.

Step 5: Notify existing financial institutions about your NRI status to comply with regulations.

Step 6: Submit required forms for foreign remittances, depending on your financial activities.

Step 7: E-file your Income Tax Returns (ITR) in India, reporting global income as per Indian tax laws.

Step 8: Ensure your KYC records are updated with financial institutions to reflect your NRI status and foreign address.

Step 9: Explore investment options suitable for NRIs, such as ULIP plans, Money Back Plans, Child Education Plans, and Annuity Plans.

Tax Rules for NRI Status in India

Some of the essential tax rules that Non-Resident Indians (NRIs) should be aware of are mentioned below:

  • NRIs are taxed in India on income generated within the country. such as:

    • Interest income from Indian bank accounts

    • Salaries earned in India

    • Capital gains from Indian assets

    • Rental income from property in India

  • Income earned abroad by NRIs is exempt from Indian income tax, such as:

    • Earnings from foreign investments

    • Gifts received from relatives

    • Salary received from a foreign employer

  • NRIs may claim refunds for excessive TDS payments

  • Under DTAA, NRIs can seek tax credits or exemptions in their home country for taxes paid in India.

  • NRIs can open NRE and NRO accounts in India, with interest on NRE accounts not subject to taxation.

  • NRIs are subject to capital gains tax in India when selling assets.

  • NRIs are eligible for deductions and exemptions available to Indian residents.

  • NRIs must file an ITR if taxable income surpasses the threshold.

  • Foreign assets and income must be included in the Indian tax return.

  • Inherited assets and gifts received by NRIs are generally not taxed.

  • NRIs can repatriate funds earned in India, subject to RBI guidelines.

SIP Investment for NRIsSIP Investment for NRIs

Banking Services Available for NRI/ OCI/ PIOs/ RNOR Status

Various banking services are tailored to meet the needs of NRIs, OCIs, and PIOs in the USA. Some of these services include:

  1. NRE (Non-Resident External) Account:

    • Maintained in Indian rupees.

    • Funds can be freely repatriated.

    • Interest is exempt from taxation in India.

  2. NRO (Non-Resident Ordinary) Account:

    • Denominated in Indian rupees.

    • Suitable for income earned in India.

    • Funds have restricted repatriation options.

  3. FCNR (Foreign Currency Non-Resident) Account:

    • Maintained in foreign currencies.

    • Allows holding foreign earnings.

    • Full repatriation of principal and interest.

  4. RFC (Resident Foreign Currency) Account:

    • Designed for NRIs returning to India.

    • Enables holding foreign currency funds.

    • It can be in the form of savings or term deposits.

Investment Plans for NRIsInvestment Plans for NRIs

Wrapping It Up

NRI status is vital in India's economic and cultural landscape, connecting the diaspora with their homeland. It brings privileges and obligations, including tax implications and tailored banking services, fostering a strong bond between NRIs residing in Singapore and India's growth and global influence.

FAQ's

  • Who is considered an NRI in India?

    A Non-Resident Indian (NRI) is an Indian citizen who resides outside India for 182 days or more in a financial year. NRIs are considered non-residents for tax purposes in India.
  • Who is eligible for NRI status in India?

    To be eligible for NRI (Non-Resident Indian) status in India, an individual must meet the following criteria:
    • The individual must be an Indian citizen

    • The individual must stay outside India for 182 days or more during the preceding financial year

    • The individual's income tax residency is determined based on their physical presence in India and their source of income

    • An individual's domicile is the country they consider to be their permanent home

  • What is the new NRI rule in India?

    The new NRI rule in India, effective from April 1, 2022, is related to the taxation of income from foreign accounts. Under the new rule, income from foreign accounts will not be taxable on an accrual basis but rather at the time of withdrawal by the foreign country. This means that NRIs will no longer have to pay tax on their foreign income until they withdraw it from the foreign account.
  • How can I prove my NRI status in India?

    To prove your NRI status in India, you can provide the following documents:
    • Passport

    • Employment Contract Abroad

    • Overseas Address Proof

    • Foreign Tax Return

    • NRI Bank Account Statement

    • PAN Card

    • Aadhaar Card

Past 10 Year annualised returns as on 01-03-2024

^Tax benefit are for Investments made up to Rs.2.5 L/ yr and are subject to change as per tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
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