Who Is an Indian Resident?
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Individual living in India since birth
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Individual living for 182 days in the preceding financial year in India
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Individual living for 60 days in that year specifically
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Or been here for 365 days straight for the last four years
The above mentioned are the criteria for ‘Indian Resident' and a person who does not fulfill them is a Non-resident Indian and is treated as an NRI for paying the income tax.
Who is Non Resident Indian (NRI)?
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NRIs maintain strong ties to India, including financial, cultural, and family connections and can also benefit from insurance policies offered by various insurers in India.
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A non-residential Indian is a person who stays in India for less than 182 days during the period of the foreseeing financial year.
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An NRI can also refer to someone who has left the country for work. A person residing overseas for business-related reasons is also considered an NRI.
The people living abroad are classified into three major categories, namely Non-resident Indians (NRIs), Overseas Citizens of India (OCIs), and Persons of Indian Origin (now not applicable).
NRI Definition as per the Income Tax Act of India
Under Section 6 of the IT Act, 1961, an individual who is an Indian Citizen or is of Indian origin, is considered to be an NRI. An individual is deemed to be a resident in India in a particular previous year if any of the following conditions are met:
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If the individual stays in India for a period of 182 days or more during the previous year.
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If the individual stays in India for a period of 60 days or more during the previous year and 365 days or more during the four years immediately preceding the previous year.
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Who are PIOs?
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A Person of Indian Origin (PIO) refers to an individual who has foreign citizenship (except of Pakistan, Afghanistan Bangladesh, China, Iran, Bhutan, Sri Lanka and Nepal) or residency but has ancestral roots or family connections to India.
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PIOs are individuals of Indian origin or descent who may have migrated to other countries, such as the United States, Canada, the United Kingdom, Australia, or elsewhere
Important Note: The Government of India discontinued accepting PIO cards at immigration check posts after December 31, 2025. Airlines will deny boarding if you attempt to travel with a PIO card. If you hold an old PIO card, you must either apply for a new OCI card or get a regular Indian visa/e-Visa before travelling.
Who are OCIs?
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OCIs, or Overseas Citizens of India, refer to individuals who have foreign citizenship (except for Pakistan and Bangladesh) but have a special status that provides them with certain privileges and rights in India.
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The OCI status was introduced by the Indian government to establish a more formal and secure connection between the Indian diaspora and their country of origin.
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The OCI status grants several benefits, such as multiple-entry, multi-purpose lifelong visas to visit India etc.
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What is the Citizenship criteria for NRIs?
There are eligibility criteria for the NRIs and OCI cardholders before proceeding with India's legal activities. The proof of identity for any NRI is an essential document. Here is the criteria list:
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Indian Passport: NRIs should possess a valid Indian passport as proof of Indian citizenship. The passport must not have expired and should be duly stamped with the necessary visas and immigration stamps.
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Citizenship: As a Non-Resident Indian (NRI), you must hold Indian citizenship as per the Citizenship Act of 1955. This means that either you, your parents, or your grandparents need to be citizens of India.
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Spouse: You must be the husband or wife of an Indian citizen or meet the requirements mentioned above.
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Residency Requirement: To qualify as an NRI, an individual must reside outside India for a minimum period of 182 days or more in the preceding financial year.
NRO, NRE and FCNR Accounts for NRIs
NRIs can choose between different accounts as per their source of income, currency preferences and repatriation needs. Let’s look at the details of the accounts.
Non-Resident External (NRE) Account
- The main purpose of an NRE account is to manage the income earned from overseas. It is a rupee-dominated account, which means that the earnings from overseas are converted into rupees and then managed until repatriation.
- The interest earned on an NRE account is fully exempted from tax in India.
- Both your deposit amount and the interest earned are also fully repatriable.
Non Resident Ordinary (NRO) Account
- The key purpose of an NRO account is to deposit and manage the income earned from India in a rupee-denominated account.
- The interest earned is completely taxable in India with 30% TDS on the interest.
- You can transfer up to ₹1 million annually to the overseas account in your country of residency.
Foreign Currency Non-Resident (FCNR) Account
- The main purpose of an FCNR account is to manage your overseas income in a foreign currency. This protects depositors from currency fluctuations and conversion losses.
- Any interest earned on an FCNR account is completely tax-free in India
- You can transfer any amount of money from an FCNR account.
How can NRIs get Insurance in India?
Along with Indian citizens, Non-Residential Indians can also apply for the same. One can appeal to the policies in two ways.
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You have the option to purchase the insurance policy when you visit India. Once the necessary legal procedures for the insurance policy's approval are completed, your policy will be treated like any other policies held by Indian citizens.
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You have the option to purchase an insurance plan directly from your current location through a Mail Order Business. The policy will be authenticated by a notary, an official from the Indian Embassy, and an Indian diplomat. Students can also contact their dean to get the policy verified.
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What are the Policies and Features of NRI Insurance Plans?
Many insurance companies in India offer their investment plans for NRIs as well. However, their terms and conditions may be slightly different from those of regular Indian residents.
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Policy Term
The duration of an insurance policy for Non-Resident Indians (NRIs) can vary from 6 months to as long as 25 years. NRIs can obtain insurance coverage starting from the age of 18 up to the age of 60. The specific length of the policy is determined by the terms and conditions specified in the policy document.
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Premium
The NRI insurance policy doesn't have a set amount for the premium. The initial payment, known as the premium, will vary based on different factors such as the policy terms, the assured coverage amount, the premium payment regulations, and the selected options for additional coverage, if applicable.
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Sum Assured
The amount of coverage for an NRI policy can range from hundreds of thousands as the minimum amount to millions as the maximum amount. This coverage amount will be paid to the nominee of the insured's NRE account in the event of the insured's passing during the policy term.
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Grace Period
An advantage of NRI policies is that you are provided with a grace period in case you have missed the date to pay your premium amount. If you can pay the remaining premium amount within this period, your policy will not be terminated.
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Policy Renewal
As an NRI, you have access to insurance policies that provide options to renew your policy when it reaches maturity. To qualify for renewal, you'll need to undergo various health tests to meet the necessary requirements. Additionally, it's important to maintain a clean record by making premium payments on time without any delays or outstanding dues.
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Payment of Premium Amount
As a Non-Residential Indian, you have the privilege to pay the premium amount using Internet banking. To proceed with this process, the policyholder needs to hold an account in any approved bank that allows access to internet transactions to the insurance company where you purchase your policy. The online payment modes include – settlement in foreign currency, an NRE/FCNR bank account, and an NRO bank account.
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Tax Benefits
Just like Indian residents, NRIs can get tax benefits under Sec 80D or 10(10D) of the Income Tax in India. However, some countries may charge tax on maturity earnings.
What are the Documents Required to Buy a Policy?
Insurance company may require various documents for the procedure, including:
Additional documents that may be needed for Mail Order Business policy, such as:
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Application form
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Passport copy
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Proof of income
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Proof of age and address
To submit a report on health conditions, you can choose between two options, which are:
**Premium and coverage amount determined by insurance companies based on individual classification. It’s suggested that you consult insurer for any additional document requirements
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Conclusion
NRIs are individuals who live abroad; this status is also defined by the specific residency rules under the Income Tax Act. An NRI status doesn't close you off to the Indian market and allows you to buy insurance and invest in certain products. Before buying any insurance or investment plan, it is advised to go through the specific terms of the insurer along with NRI taxation and paperwork accompanying such transactions. You can check out NRI investment plans and choose a plan that might fit your financial needs and goals for the future.
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