NRI or a Non-Resident Indian is basically a citizen of India who is staying in a foreign land for the purpose of employment, profession, vocation, and/or carrying out business outside India. Any citizen with such purpose and/or circumstance where the duration of stay in the foreign land is uncertain would be termed as an NRI. An NRI usually holds an Indian Passport and would include all people who are Indians by birth or by descent and are living outside India for some purpose.
How to Get NRI Status?
An Indian citizen becomes a Non-Resident Indian in case he/she fulfills the following conditions:
- He/She remains outside India for more than 182 days during the previous financial year
- He/She needs to leave India for an uncertain period of time either for one or more of the following purposes (In such a scenario, he/she would be considered an NRI from the moment he/she leaves India without even fulfilling the condition of 182 days or more)
- Staying with family (parents or children)
How to Check NRI Status?
It is easy to understand and check the status of any individual, in terms of determining whether the individual is a resident of the particular county or not. In order to check NRI status, he/she merely needs to check for documentary evidence which can satisfy the above mentioned two criteria. In case, the individuals can prove the above two conditions or either one of them, the individual is an NRI and can claim all such benefits extended to the NRI.
When Does NRI Status Expire?
Usually, once an NRI or Non-Resident Indian returns back to India after staying out of India for a specified period, the individual would have the status of being an RNOR or Resident but Not Ordinarily Resident. This individual should have ideally spent less than 729 days in the last seven years in order to obtain the RNOR status upon arriving back in India.
This status of RNOR is usually for a period of two years if all the conditions are fulfilled satisfactorily. These two years are used as the transitional stage prior to obtaining the Resident status again. In very exceptional cases, when the NRI returns back to India after five years and within those five years, the individual has not visited India even once, the RNOR status can be extended for another year. But the RNOR status can in no way be extended beyond three years.
How to Calculate NRI Status
The NRI status of any individual can be calculated easily on the basis of fulfillment of the above, said criteria as mentioned by the Government of India. However, for the benefit of the NRI’s who wish to calculate his/her NRI status and would like to avail the benefits extended to NRI’s, there are various websites which help them in calculating the NRI status, though the calculation of NRI status is pretty simple and would be done based on the individuals answers to some basic questions such as how many days the individual has stayed abroad.
NRI Status Rules
Rules regarding NRI Status are statutory and are easy to understand. Any Indian individual who leaves the country for a job or studies and happens to spend less than 182 days in India due to such reason, the individual would be considered as a Non-Resident Indian. Non-Resident Indian or NRI have different tax implications than ordinary residents of India. Thus, NRI status determination is important for determining the tax implications the individual would face in India.
NRI Status Eligibility
Some of the Tax eligibilities for individuals having the NRI status include:
- NRI need to pay tax only on income accrues or arising in India such as salary received in India or rental or interest income earned in India.
- If the income of the NRI is more than the basic exemption limit in India, the individual NRI is supposed to file a return in India.
- The NRI also needs to submit his/her return in case the individual would like to claim a refund of taxes or needs to carry forward some losses to forthcoming years.
- An NRI returning to India would not face an Income tax on his/her foreign income immediately. Usually, until the time the NRI becomes a resident of India (after completing the two years transitional period of being an RNOR as described earlier), the individual’s foreign income would not be taxed in India unless the income is accrued from a business or profession is controlled from
- Once the NRI gains back his/her resident status in India, his/her income, both earned within India and Outside India would be taxed as per the Taxation rules of India.
- According to budget 2016, the NRI’s without Permanent Account Number would not be liable to have a higher Tax Deduction at Source, if they can provide other alternative documents as specified in the notified rules.
- NRI’s returning to India and converting into ordinary residents in any particular year are supposed to disclose all details regarding their foreign income and all foreign assets. The tax would be implied as per Indian Taxation rules specified for the year on all such income for the NRI’s. Any undisclosed foreign income and the foreign asset would imply penalties under the provisions of the Undisclosed Foreign Income and Assets Bill, 2015.
- An NRI Individual cannot open a Public Provident Fund (PPF) Account. However, in case the NRI Individual already has a PPF account, the individual can continue operating the account while he/she is an NRI till the maturity of such account only. Upon maturity, the NRI individual would have the option to remit such maturity value in the country of residence of the individual at that point in time. However, there would be no extension allowed after the 15-year mandatory lock-in period of such accounts. In case such account remains unattended after the maturity period, such PPF accounts would be considered to be "extended without contribution".