Foreign Exchange & Remittances for NRIs
NRI Related-Outward Remittances, 15CA & CB,
Documentations, 15CA & CB, Coordination with Banks
Liberised Remittance Scheme (LRS)
RBIs Schemes for Remittances, Limits, Documentations, 15CA & CB
Liberalised Remittance Scheme (LRS) of USD 2,50,000 for resident individuals
Under the Liberalised Remittance Scheme, Authorised Dealers may freely allow remittances by resident individuals up to USD 2, 50,000 per Financial Year (April-March) for any permitted current or capital account transaction or a combination of both. The Scheme is not available to corporates, partnership firms, HUF, Trusts, etc. Remittances under the Scheme can be consolidated in respect of family members subject to individual family members complying with its terms and conditions. Permissible capital account transactions by an individual under LRS are:
1. Opening of foreign currency account abroad with a bank,
2. Purchase of property abroad,
3. Making investments abroad- acquisition and holding shares of both listed and unlisted overseas company or debt instruments; acquisition of ESOPs (the Scheme is in addition to acquisition of ESOPs linked to ADR / GDR and acquisition of qualification shares); investment in units of Mutual Funds, Venture Capital Funds, unrated debt securities, promissory notes
4. Setting up Wholly Owned Subsidiaries and Joint Ventures outside India for bonafide business subject to the terms & conditions
5. Extending loans including loans in Indian Rupees to Non-resident Indians (NRIs) who are relatives as defined in Companies Act.
6. Private visit; gift/donation; going abroad on employment; emigration; maintenance of close relatives abroad; business trip; medical treatment abroad; studies abroad
The individual will have to designate a branch of an AD through which all the remittances under the Scheme will be made It is mandatory to have PAN card to make remittances in excess of $25,000/-
TCS on overseas Remittances @ 1%
Effective from October 1, 2020, Government has introduced 1% (0.5% for remittances for Education purpose) TCS out of foreign remittance transactions (in excess of Rs. 7 Lakhs in a financial year) under LRS by an Authorized Dealer (your Bank) who receives an amount, for remittance out of India from a buyer of Foreign Exchange will collect 1% TCS. This TCS would be available as Tax credit for person (who is remitting) and can be claimed as payment of taxes on his/her Income.
Remittances after disposal of Property
15CA & CB, Co Ordination with Banks
NRIs sale of Property in India & Remittance of net sale proceeds
If NRI is selling a property in India after holding it for more than 2 years, then it is mandatory for buyer to deduct TDS at the rate of 22.66% of sale value. However, NRIs can obtain ITO`s certificate for lower TDS Certificate by applying in Form No.13.
NRIs are allowed to remit up to $1 million from the sale proceeds of property (up to maximum two residential properties) in India from their NRO account on production of an undertaking by the remitter together with a certificate issued by a Chartered Accountant in Forms 15CA & 15CB. Remittance above $ 1 million requires RBI`s prior permission.
Documentary evidence would be required in support of acquisition or inheritance.
NRI can buy or sell any property in India without any restriction except agriculture land, plantation property or farm house.
If you buy or inherit a house, property or land in India and subsequently you sell it, you need to pay tax in India. Even if the property is inherited from your parents or other relatives, you still need to pay tax in India.
NRI to remit sale proceeds to abroad have to submit Form 15CA along with Form 15CB certified by Chartered accountant to the bank through which remittance is to be made.
Custom Rules for Inward & Outward Journeys
Free Allowances & Duty structure, Rules
Baggage Rules, 2016
CUSTOMS GUIDE FOR TRAVELLERS
Every passenger entering India has to pass through a Customs check. The passenger has to declare the contents of his baggage in the prescribed Indian Customs Declaration Form At airports the passenger has the option of seeking clearance through the Green Channel or through the Red Channel subject to the nature of goods being carried.
NRI, R&NOR, NRI in FEMA, PIO,
In India, taxability of any income in the hands of a person (NRIs or their HUF) depends on the following 2 factors:
(1) Residential status of the person as per the Income-tax Law; and
(2) Nature of income earned by him.
For the purpose of Income-tax Law, an individual or HUF can have any one of the following residential status:
(1) Resident and ordinarily resident in India (also known as Resident)
(2) Resident but not ordinarily resident in India (R&OR)
(3) Non-Resident (NRI)
Every year the residential status of the taxpayer is to be determined by applying the provisions of the Income-tax Law designed in this regard and, hence, it may so happen that in one year the individual or HUF would be a resident and ordinarily resident and in the next year he may become non-resident or resident but not ordinarily resident and again in the next year his status may change or may remain same. A person will be treated as a resident in India if he satisfies the criteria specified in this regard under the Income-tax Act.
Determination of the residential status of an Individual
To determine the residential status of an individual, the first step is to ascertain whether he is resident or non-resident. If he turns to be a resident, then the next step is to ascertain whether he is resident and ordinarily resident or is a resident but not ordinarily resident.
Step 1 given below will ascertain whether the individual is resident or non-resident and step 2 will ascertain whether he is ordinarily resident or not ordinarily resident. Step 2 is to be performed only if the individual turns to be a resident.
Step 1: Determining whether resident or non-resident Under the Income-tax Law, an individual will be treated as a resident in India for a year if he satisfies any of the following conditions (i.e. may satisfy any one or may satisfy both the conditions):
(1) He is in India for a period of 120 (earlier 182) days or more in that year; or (2) He is in India for a period of 60 days or more in the year and for a period of 365 days or more in 4 years immediately preceding the relevant year.
If an individual does not satisfy any of the above conditions he will be treated as non-resident in India. Note: Condition given in (2) above will not apply to an Indian citizen leaving India for the purpose of employment or to an Indian citizen leaving India as a member of crew of Indian ship or to an Indian citizen/person of Indian origin coming on a visit to India. A person is said to be of Indian origin, if he or any of his parents or grand-parents (maternal or paternal) were born in undivided India. Note: With effect from Assessment Year 2015-16, in the case of an individual, being a citizen of India and a member of the crew of a foreign bound ship leaving India, the period or periods of stay in India shall, in respect of such voyage, be determined in the manner and subject to such conditions as may be prescribed.
Step 2: Determining whether resident and ordinarily resident or resident but not ordinarily resident A resident individual will be treated as resident and ordinarily resident in India during the year if he satisfies following conditions: (1) He is resident in India for at least 2 years out of 10 years immediately preceding the relevant year. (2) His stay in India is for 730 days or more during 7 years immediately preceding the relevant year.
A resident individual who does not satisfy any of the aforesaid conditions or satisfies only one of the aforesaid conditions will be treated as resident but not ordinarily resident. In short, following test will determine the residential status of an individual:
If the individual satisfy any one or both the conditions specified at step 1 and satisfies both the conditions specified at step 2, then he will become resident and ordinarily resident in India.
If the individual satisfy any one or both the conditions specified at step 1 and satisfies none or one condition specified at step 2, then he will become resident but not ordinarily resident in India.
If the individual satisfy no conditions satisfied at step one, then he will become non-resident.
Tax residency rules for NRIs changed from 1st April, 2020
Government has amended the tax residency rules for NRIs. Till financial year (FY) 2019-20, an NRI who visited India would be considered a resident if they spent 182 days or more in the previous year in the country, in addition to an aggregate stay of 365 days or more in the preceding four years. Govt. has also lowered the threshold period of stay in the previous year to 120 days from 182 days.
Govt. also amended the definition of “not ordinarily resident". Till FY20, an individual was classified as a “not ordinarily resident" if he was a non-resident in India 9 out of 10 preceding years this has been reduced to 7 out of the 10 preceding years.