FAQ's

Income Tax

FEMA/RBI Regulations

Investments

NRIs/PIOs are allowed to invest in India in following two ways:

Repatriation Basis

Non-Repatriation Basis

NRIs may, without limit, purchase on repatriation basis:

  • Government dated securities / Treasury bills
  • Units of domestic mutual funds;
  • Bonds issued by a public sector undertaking (PSU) in India.
  • Non-convertible debentures of a company incorporated in India.
  • Perpetual debt instruments and debt capital instruments issued by banks in India.
  • Shares in Public Sector Enterprises being dis-invested by the Government of India, provided the purchase is in accordance with the terms and conditions stipulated in the notice inviting bids.
  • Shares and convertible debentures of Indian companies under the FDI scheme
  • Shares and convertible debentures of Indian companies through stock exchange under Portfolio Investment Scheme.

NRI may, without limit, purchase on non-repatriation basis :

  • Government dated securities / Treasury bills
  • Units of domestic mutual funds
  • Units of Money Market Mutual Funds
  • National Plan/Savings Certificates
  • Non-convertible debentures of a company incorporated in India
  • Shares and convertible debentures of Indian companies through stock exchange under Portfolio Investment Scheme.
  • Exchange traded derivative contracts approved by the SEBI, from time to time, out of INR funds held in India on non-­repatriable basis, subject to the limits prescribed by the SEBI.
  • Direct Investment in the shares of Indian companies

Note: NRIs are not permitted to invest in small savings or Public Provident Fund (PPF).

B. Investment in Immovable Property

Note : No payment of purchase price for acquisition of immovable property shall be made either by traveller’s cheque or by foreign currency notes or by other mode other than those specifically permitted as above.

C. Facilities to returning NRIs/PIOs

Foreign Currency Account

Resident Foreign Currency Account

RFC accounts are permitted to be held jointly with the resident close relative(s) as defined in the Companies Act, 1956 as joint holder (s) in their RFC bank account on ‘former or survivor basis’. However, such resident Indian close relative, now being made eligible to become joint account holder shall not be eligible to operate the account during the life time of the resident account holder.
General facilities
Can Exchange Earners Foreign Currency (EEFC) accounts be held jointly with a -resident Indian?
Yes, EEFC account of a resident individual can be held jointly with a resident close relative on a ‘former or survivor’ basis.
However, such resident Indian close relative will not be eligible to operate the account during the life time of the resident account holder.
Can a resident individual holding a savings bank account include nonresident close relative as a joint account holder?
Yes, individuals resident in India are permitted to include non-resident close relative(s) as a joint holder(s) in their resident bank accounts on ‘former or survivor’ basis. However, such non- resident Indian close relatives shall not be eligible to operate the account during the life time of the resident account holder.
Can a resident individual gift shares/securities/convertible debentures etc to NRI close relative?
Yes, a resident individual is permitted to gift shares/securities/convertible debentures etc to NRI close relative up to USD 50,000 per financial year subject to certain conditions.
Can a resident individual give rupee gifts to his visiting NRI/PIO close relatives?
Yes, a resident individual can give rupee gifts to his visiting NRI/PIO close relatives by way of crossed cheque/electronic transfer within the overall limit of USD 200,000 per financial year for the resident individual and the gifted amount should be credited to the beneficiary’s NRO account.
What types of services can be provided by a resident individual to his / her nonresident close relatives?
A resident may make payment in rupees towards meeting expenses on account of boarding, lodging and services related thereto or travel to and from and within India of a person resident outside India who is on a visit to India. Further, where the medical expenses in respect of NRI close relative are paid by a resident individual, such a payment being in the nature of a resident to resident transaction may also be covered under the term “services”.

 

Regulation

Related To

NRI

PIO

(i) FEM (Deposit) Regulations

Bank Accounts

Non-resident Indian (NRI)’ means a person resident outside India who is a citizen of India. Eg Indians working/living abroad, and holding Indian citizenship, will qualify as NRI.

‘PIO’ means a citizen of any country other than Bangladesh or Pakistan, if he satisfies below conditions*

(ii) FEM (Borrowing and Lending In Rupees) Regulations

Loans

(iii) FEM (Investment in Firm or Proprietary Concern in India) Regulations

Setting up Proprietorship or Being Partner in Partnership Firm

PIO’ means a citizen of any country other than Bangladesh or Pakistan or Sri Lanka, if he satisfies below conditions*

(iv) FEM (Transfer or Issue of Security by a Person Resident Outside India) Regulations

Foreign Investment in India

 

(v) FEM (Remittance of Assets) Regulations:

 

Non-resident Indian (NRI)’ means a person resident outside India who is a citizen of India.

‘PIO’ means a citizen of any country other than Bangladesh or Pakistan, if he satisfies below conditions*

(vi)FEM (Acquisition and Transfer of Immovable Property In India) Regulations

Buy/Sell
Immovable Property In India

 

‘PIO’ means an individual (not being a citizen of 8 countries**) and who also satisfies the below conditions***