Overview: NRIs and their rights

Non- Resident Indian (NRI)

A Non-Resident Indian (NRI) is an Indian Citizen who resides in India for less than one hundred & eighty-two days during the course of the preceding financial year. The Citizen who stays abroad for employment or for carrying on its business or for vocational purposes or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. The officials deputed abroad by the Central/State Government or the persons posted in the United Nations Organisation, too are termed under the ‘NRI’ category.

The NRI’s are divided into the following three categories:

1. Indians who stay and work abroad or carry out their business or for a vocation or any other purpose in circumstances indicating an indefinite period of stay abroad.
2. Indians assigned with foreign government agencies like the United Nations Organisation or its affiliates such as the World Bank, International Monetary Fund (IMF)
3. Indian officials deputed outside the country by the Central or State Government on temporary assignments or posted to their offices, including Indian diplomat missions, abroad.

In India, the residential status of a person is decided under two different Acts. The Income Tax Act, 1961, ( I.T. Act) and the Foreign Exchange Regulation Act, 1973 (FERA). The concept of Non-Resident under FERA is different as compared to that under the Income Tax Act. Under Income Tax Act, the residential status of a person is determined based on the number of days he stays in India whereas, under FERA, it is the intention of a person to be in India or outside India that would be an important factor in determining his residential status.

Definition of NRI under Income Tax, 1961

Section 6 of the Income Tax Act, 1961 defines NRI as An individual whose total taxable Indian income exceeds ₹15 lakhs is considered to be a resident if the person:

visits India for a period of 120 days or more in the previous year and

has been in India for 365 days or more in the immediately preceding 4 years.

If the total taxable Indian income of a person is up to ₹15 lakhs during the financial year, those individuals will continue to remain NRI if the visit to India does not exceed 181 days.

Definition of NRI under FEMA Act, 1999

Under Foreign Exchange Management Act, 1999, an NRI is defined in terms of a person residing outside India and is a citizen of India or a person of Indian origin. The stay outside India can be for an uncertain period due to employment, business, vocation, and any other reason.

Rights of NRIs

NRIs are endowed with the same benefits as all the Indian Citizens have. They have the liberty to access all the Fundamental Rights listed in the Constitution of India.

Voting Rights

Till 2010, Section 19 of the Representation of the People’s Act, 1950, barred the NRIs from voting if for whatever reasons they remained out of the country for 6 months or more. In 2010, due to an amendment in the act Representation of People’s Act, 2010, voting rights were provided to them. However, Section 20(A) of this Act provided that the citizens should be physically present in their constituencies to cast their votes. They also have the right to contest in an election.

Other Rights

• They are exempted from paying tax on income earned abroad provided it is duly taxed in the nation where it is earned.
• They have the right to purchase agricultural land or a farmhouse but prior approval from the RBI is required
• They do not need any Visa or permission to enter the country and are entitled to the same protection before the law as an ordinary citizen is.
• Maintenance of banking accounts in India.
• They have a right to invest in the shares/securities of Indian firms and companies.
• Deposits with Indian firms and companies.
• They can invest in Immovable properties in India (certain rules are prescribed by RBI)

Conclusion

NRI is defined under the Income Tax Act, 1961 and the Foreign Exchange Management Act, 1999. A Non-Resident Indian (NRI) is an Indian Citizen who resides in India for less than one hundred & eighty-two days during the course of the preceding financial year. The Citizen who stays abroad for employment or for carrying on its business or for vocational purposes or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. The NRIs are entitled to the same rights as a normal citizen of India.

[Author Nakshatra Bhasin is a second-year law student of Amity Law School, Noida. His keen interest in research and content writing brings him to write this article.]

[Edited by- Sakshi Arya]

Definition of a Non-Resident Indian (NRI)’ (VakilNo.1, March 26, 2013) < https://www.vakilno1.com/nri/taxation/definitions.htm>accessed 13 August 2020

The Income Tax Act 1961, s 6

Foreign Exchange Management Act of 1999