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NRI Corner

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When a person is termed as NRI

If a person is not a resident based on the below conditions, he is a Non-resident
An individual will be treated as a resident in India in any previous year if he fulfills any of the following two conditions:

  • (a) he/she is in India in that year for period or periods amounting in all to 182 days or more, or
  • (b) Having within the four years preceding that year been in India for a period or periods amounting in all to 365 days or more, and has been in India for 60 days or more in that year.

Types of Bank account which an NRI can Operate:

Non-Resident External (NRE) Account Non-Resident Ordinary (NRO) Account
Held in Indian Rupee Held in Indian Rupee
Can be held as saving current or fixed account Can be held as saving current or fixed account
Features: Features:
Funds can be freely sent/received to/from another country money held in an NRO account has to be used only for local payments in Indian Rupees
Funds can be transferred/remitted to/from NRE to NRO account without any restriction funds cannot be transferred from an NRO account to an NRE account.
Interest earned from an NRE account is fully exempt from income tax. The interest earned on the money help in an NRO account is taxable
NRE account can be held jointly by more than one non-resident Indians NRE account can be held jointly by more than one non-resident Indians as well as resident
If NRI holding NRE account becomes a Resident later then NRE account can be converted into regular Resident account If NRI holding NRO account becomes a Resident later then NRO account can be converted into regular Resident account
Nominations allowed for this account Nominations allowed for this account

Investment and Tax implication on NRI:

Investments that can be made by NRIs

NRIs can invest their hard earned money in India similar to any Resident Indian in any of the below mentioned areas:

  • Investment in Equity market
  • Investment in Mutual Funds (either equity or debt or balance fund)
  • Investment in real estate

Investment in Equity market: There is no limit or cap of investment by NRIs in Equity market.
Investment in Mutual Funds: NRIs can invest or redeem in/from mutual funds with no specific approval. However, the USA/Canada NRI must check the fund house rule before investing as they might not accept deposit from NRIs based in these countries.
Investment in Real Estate: NRIs can invest in properties situated in India. They can also avail bank loans for the same.

Tax Implication on income of NRIs

General rule:
In the case of a Non Resident, only the income earned or received in India is taxed in India. Accordingly, income earned or accrued outside India would not be taxable in India.
Tax on Dividends:

  • Dividends declared by equity-oriented funds (i.e. mutual funds with more than 65% of assets in equities) are tax-free in the hands of NRI investor.
  • Dividends declared by debt-oriented mutual funds (i.e. mutual funds with less than 65% of assets in equities), are tax-free in the hands of the NRI investor. However, a distribution tax (which varies for individual and corporate investors) is to be paid by the mutual fund on the dividends declared by them.

Taxation of capital gains on mutual fund
If a unit of mutual fund is held for 12 months it is treated as short-term capital asset, else it is a long-term capital asset.
Short Term Capital Gain:
STCG is taxed @ 15% in case of Equity oriented MF and respective applicable slab rate to individual in case of debt oriented mutual funds.
Long Term Capital Gain:
LTCG is tax free in case of Equity oriented MF. In case of debt oriented mutual fund the gain is taxed @20% after allowing indexation benefit or at 10% flat without indexation benefit, whichever is less. Indexation benefit is when the cost of the investment is raised to account for inflation for the period the investment is held. This is done by using a cost inflation index number released by the tax authorities every year.

NRI home loan process in India

nri-loan

Step 1 : After identifying the property collect the list of documents required to be submitted to the bank.
(Check details below personal and financial documents required)

Step 2 : Collect format for “power of attorney” from the bank.
Please note: Every bank and builder will have a different format for power of attorney.

Step 3 : Embassy seal and notarization on GPA and KYC documents of applicant and co-applicant with Self attestation by both applicant and co-applicant

Step 4 : Collect complete of documents from the builder / seller of the party to initiate legal verification and valuation of the property.

Step 5 : In case of builder obtain below four documents :

  • NOC from the builder
  • NOC from the bank (in case builder has loan against the property)
  • Cost breakup sheet on the letter head
  • Sale agreement duly signed by the builder

Personal Documents

  • 2 photograph of each applicant (applicant & co-applicant)
  • Valid passport copies for all the applicants.
  • Valid visa copies for all the applicants + Permanent Residence Card if applicable.
  • Address proof  – Any utility bill, driving license.
  • Admin fee cheque from local NRE/NRO account.
  • Power of Attorney document as per our format duly signed by all the applicants.(The power of attorney is attached along with the instructions)
  • Age proof and Signature proof for both Applicant & Co-applicant. (Passport Copy)

Financial details documents: for salaried individuals

  • Copy of current appointment letter – (Applicant and Co -applicant)
  • Copy of relieving letter of old company.
  • Last 6months salary slip. (Applicant and Co -applicant)
  • Last 6 months bank statements clearly mentioning salary credits in the account up to date. (Applicant and Co -applicant)
  • Last 6 months bank statement from local NRE account up to date. (Applicant and Co -applicant)

NOTE: All the Individual and company KYC photocopies should be self attested and notarized. Embassy seal and notarization on GPA.

Additionally to the financial documents requesting you to take the credit report reflecting your credit score .

  • Applicant/s should sign on all income and personal documents.
  • Local GPA to submit his Id proof , Address proof (Driving License Passport copy , telephone bill,) and 1 passport size photograph.