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Non Resident Indian (NRI)
Who is an NRI ?
An Indian citizen or a
foreign citizen of Indian origin who stays abroad for employment/carrying on
business or vocation for 6 months or more or under circumstances indicating
an intention for an uncertain duration of stay abroad is a Non-Resident
Indian (NRI).
(Those who stay abroad on business visit, medical treatment, study or
such other purposes, which do not indicate an intention to stay there for an
indefinite period, are not considered as NRI’s).
What is PAN?
Permanent Account Number
(PAN) is the Indian equivalent of the Social Security Number, and is issued
to all taxpayers of India whose income is taxable. This number is issued by
the Income Tax Office. This number is required for many activities such as
opening an account or taking a phone line. The PAN is unique to every person
and does not change with changing address or state.
What are
NRO/NRE/NRNR/FCNR Accounts?
NRO - This is non-resident ordinary Rupee account.
Any NRI may open NRO account, with authorized dealer or authorized
bank, for purpose of putting through bonafide transaction in rupees
not involving any violation of Act, rules, regulations made there
under.
NRE
- This is non-resident (External) Rupee accounts. Any NRI, overseas
corporate bodies are permitted to open and maintain these accounts
with authorized dealers and banks including co-operative banks
authorized by Reserve Bank of India to maintain such accounts. These
account should be opened by NRI himself and not by his power of
attorney holder in India.
NRNR - This is non-resident (non-repatriable)
Rupees account which may be opened by NRI with an authorized dealer.
Account should be opened in Indian Rupees out of the funds remitted
from outside India, through normal banking channels only. Interest
accrued on deposits is repatriable.
FCNR
- This is Foreign currency (non-resident) account. NRI and overseas
corporate bodies are permitted to open the account with authorized
dealer.
What is TDS?
TDS stands for Tax Deducted at Source.
NRIs have been offered a separate
concessional tax regime in respect of certain types of income under
Chapter XII A comprising section 115C to 115I. The said chapter has been
introduced in the Income tax Act with a view to encouraging and inviting
Non-residents Indian to invest their foreign earnings in India.
The rate prescribed for TDS from NRI's
income is the maximum rate of tax at which relevant Income is taxable in
India . However, in majority of the cases of NRI, the actual tax
liability is lower than this. However, the higher deduction of tax so
made is generally not claimed as refund by filing Return of Income. In
order to assist such situation, the Income-tax Act has provided
procedure under section 197 whereby a NRI can apply to the Assessing
officer (in prescribed form) to issue specific certificate authorizing
the payer of income (who normally deducts tax at highest prescribed
rate) to deduct tax at a lower rate or nil rate. The NRI should estimate
his income, tax liability and likely TDS and then apply for partial or
complete Tax Exemption Certificate.
Indian Currency: Rupee
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