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PKP Consult - NRI Related Services in India

Not just to the local client base, PRAKASH K. PRAKASH offers a whole spectrum of NRI related Services in India for foreign clients also. From handling NRI investment related queries, to providing excellent solutions to NRIs regarding how to form a company in India to NRI Banking Solutions to assisting returning/emigrating Indians- our NRI services in India involves all these aspects & many more. Being an experienced NRI Legal Consultant, Our dedicated team has successfully provided effective solutions to many foreign clients over the years.

We have creditable experience of providing multitude of services to a diverse client profile. Non-Resident Indians comprise a substantial portion of our client base.

We provide a range of NRI Related Services in India to our NRI clients.

  • Non resident Indians who have/intend to have investments in India
  • Non resident Indians who inherit assets in India
  • Non resident Indians/Non-residents who have/intend to set up a business in India
  • Returning NRI
  • Emigrating Indian/New NRI
  • NRI Intending to remit funds from India to Abroad.
  • But foremost, It is very important to understand that who is considered NON-RESIDENT in India ?
  • WHO IS NRI
  • An Indian residing abroad is popularly known as Non-Resident Indian (NRI). The NRI status is legally defined under the Foreign Exchange Management Act, 1999 and the Income Tax Act, 1961 for applicability of respective laws.
  • Non Resident under FEMA 1999 :
  • Person resident outside India means a person who is not resident in India and Non Resident Indian is a person of Indian origin resident outside India who is either a Citizen of India or a person of Indian Origin.
  • RBI has further clarified that students studying abroad are also to be treated as NRIs under FEMA and accordingly will be eligible for Foreign Investment and FCNR accounts.

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Person resident in India means:

  • A person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include—
  • (A)    A person who has gone out of India or who stays outside India, in either case—       
              (a) For or on taking up employment outside India, or       
              (b) For carrying on outside India a business or vocation outside India, or       
              (c) For any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
           
     (B)    A person who has come to or stays in India, in either case, otherwise than—   
              (a) For or on taking up employment in India, or       
              (b) For carrying on in India a business or vocation in India, or       
              (c) For any other purpose, In such circumstances as would indicate his intention to stay in India for an uncertain period;       
  • Any person or body corporate registered or incorporated in India,
  • An office, Branch or agency in India owned or controlled by a person resident outside India,
  • An office, Branch or agency outside India owned or controlled by a person resident in India.

Non resident under income-tax act, 1961/wealth tax

The term non-resident is negatively defined under section 6 of the Income-tax Act. An individual who is not a resident under the Income-tax Act is a non-resident (generally, termed NRI). Thus, One should know the definition of a resident and if he is not a resident then he is a non-resident. The status of a person as a resident or non-resident depends on his period of stay in India. The period of stay is counted in number of days for each financial year beginning from 1st April to 31st March (known as previous year under the Income-tax Act).

*Not applicable to a resident going outside India for employment, A resident who leaves India as a member of crew of an Indian ship, An Indian citizen or person of Indian origin who is abroad and comes to India for a visit i.e. If such a person stays in India for less than 182 days, he would be a non-resident.

In the case of a ROR, His global income is taxed in India while in case of a Non-resident, Only the income earned or received in India is taxed in India.

A returning NRI would generally be assessed as a R but NOR on his return to India. Up to financial year 2002-03, In a given specific situation, A returning NRI was assessed as a R but NOR on his return to India for nine years i.e. income earned on overseas assets or income accruing outside India (unless it is derived from a business controlled in or a profession set up in India) was not taxed in India for 9 years. However, With effect from financial year 2003-04, this particular benefit has been curtailed from nine years to two years i.e. income earned on overseas assets or income accruing outside India (unless it is derived from a business controlled in or a profession set up in India) would now be taxable in India from the third year itself. Accordingly, ‘A’ would now pay tax on his world income sooner than he would have hitherto done.

The impact of R but NOR status is that foreign passive incomes likes interest, dividend, royalty etc. Would not be taxable in India in respect of a person who is R but NOR. Even share of profit of a partnership firm or any other business income would not be taxable in India, If the business in respect of which such income arises is not controlled from India. In other words, All foreign sourced income of a R but NOR is not normally taxable in India unless it is derived from a business controlled in or a profession set up in India.

Income accruing outside India would be taxed outside India as well in most cases in accordance with the tax laws of the foreign country and the Double Tax Avoidance Agreement (DTAA) signed between India and the foreign country. He would be entitled to seek relief under the relevant DTAA i.e. avail credit for foreign taxes paid against income tax paid in India. However there are certain practical difficulties associated with the availing credit for foreign taxes paid such as a possible difference in accounting year of the foreign country and India.

Immaculate planning of income tax implications in advance i.e. prior to return to India holds paramount significance for NRIs intending to return to India. An individual who is non-resident for 9 consecutive years, Shall remain RNOR for 2 subsequent years and as such his foreign income is not taxable in India while his status is that of RNOR. The status of RNOR renders certain income of such individual non-taxable as explained in Tax liability of NRIs

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