FDI Rules Relaxed For Returning NRIs To India
Posted on October 01 2020
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Residency Tests
Under Foreign Exchange Management Act (FEMA), NRI is a person who resides outside India and is either a citizen of India or a person of Indian Origin. A Person of Indian Origin (PIO) is anyone who is a citizen of a country other than Pakistan and Bangladesh who
- Hold an Indian passport at any time, or
- Was an Indian citizen or whose parents or grandparents were Indian citizens or
- Spouse of an Indian citizen.
An NRI who settled down permanently outside India is known as NRI under the FEMA and is treated as an NRI depending on the number of days that they have stayed in India. Intently, Residency under FEMA is defined. Once an NRI returns back to India with the motive of permanently settling down and that particular individual becomes a resident for FEMA purposes. The ITA calculates the days for the individual who is present in India as a residency test to determine tax residency, regardless of intent.
Under the ITA, an individual is a NRI for tax purposes as long as they spend less than 182 days during the tax year in India. Once an individual crosses 182 days present in India, that individual becomes a resident for tax purposes either as:
- A resident but not ordinarily resident (RNOR) is taxable only on the Indian sourced income; or
- A resident and ordinarily resident (ROR) is taxable on worldwide income.
A person who certifies as a resident for any tax year can be treated as RNOR if the following two conditions are met:
- The individual has been a non-resident in India for nine years of the past ten tax years, and
- The individual has been in India for a total number of 729 days or less during the seven tax years preceding the consistent tax year.
Tax Assist is a professional income tax consultancy in India for both corporate houses and individual tax payers; the latter comprising Salaried Individuals, Seafarers, Professionals and Non Resident Indians.
With the help of Tax Assist and its team of income tax professionals, taxpayers can minimize their Income Tax liability, maximize their net income and create opportunities to save for current and future needs while maintaining proper accounting standards and income tax returns which are compliant with the Law.
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