NRI Gide 2012 Ver 2.00

580 Pages·2013·4.73 MB·English

NRI GUIDE 2013
(Ver 3.00)

(A Comprehensive Guide for Indians residing outside India)

Prepared by

Prakash Nair
All your Financial Planning and Investment advisory needs visit www.yourownadviser.com

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PREFACE

This Free NRI guide has been compiled with the help of information available on official website of
various government departments like Reserve Bank of India, Income Tax Department, various State
Governments, Department of Oversea Affairs, Ministry of Home Affairs, SEBI, and other reliable website
sources. I have taken adequate care to provide current and authentic information. This NRI Guide is
intended to serve as a ready reference book to guide NRIs on various matters affecting their financial
and other related subjects. This does not purport to be a legal document. So I am not sure that, any
errors occurred while compiling this reference guide. In case of any variation between what has been
stated in this NRI Guide and the relevant Act, Rules, Regulations, Policy Statements, Government
Orders/Circulars etc., the latter shall prevail. Kindly note that, rules related to NRIs and tax are subject to
change. Errors and omissions are expected.

This free e-book is circulated with the understanding that, neither the author nor the publisher will be
responsible for any action taken on the basis of contents of this book whether directly or indirectly for any
error or omission to any person whether a user of this e-book or not. The persons willing to accept this
disclaimer only required to read this e-book.

Prakash Nair
INDEX
Sl
Chapters and contents Page Nos
Nos
Abbreviations 17-18
CHAPTER - 1
Residential Status
1 A Non Resident Indian (NRI) 19-23

2 A Person of Indian Origin (PIO)
3 How to Determine the Residential Status of an Indiviudal
4 Resident and ordinarily resident - ROR
5 Importance of Residential Status
6 What is India DIASPORA
7 Residential Status Changes from Resident to Non -Resident (Tax, Social Security etc)
8 List of itmes to be completed before becoming an NRI
CHAPTER - 2
Various Types of Bank Accounts - NRIs are permitted to open 24-51
1 Various Types of Bank Account - NRIs are permitted to Open
2 Non-Resident Ordinary/ Rupee Account (NRO Account)
2.1 RBI Master Circular No. 2/2012 -13 related to NRO Account
2.2 RBI Circular - Condtions for Opening NRO Account by Banglades Nationality
3 Non-Resident (External) Rupee Account (NRE Account)
4 Foreign Currency Non Resident (Bank) Account – FCNR (B) Account
5 NRE Current Accounts
6 NRO Current Account
7 Resident Foreign Currency Accounts (RFS Accounts)
8 Foreign Currency Account
CHAPTER -3
Facilities Available to NRIs/PIO 52-55
1 Investment facilities for NRIs
2 NRIs are allowed, without limit, purchase on repatriation basis
3 NRIs are allowed, without limit, purchase on repatriation basis
5 An individual resident can borrow money from his close relatives outside India
Repayment of Housing Loan of NRI / PIOs by close relatives of the borrower in India
6
(RBI Circular)
Foreign Exchange Management (Deposit) Regulations, 2000 - Credit to Non Resident
7
(External) Rupee Accounts Loan given to non-resident
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CHAPTER - 4
Investment Options not Permitted for NRIs 56-59
1 NRIs are not permitted to invest in small savings or Public Provident Fund (PPF) .
2 PPF (Public Provident Fund)
3 NSC (National Savings Certificate) – 5 years and 10 years
4 Senior citizens savings account
5 Tax saving infrastructure bonds under section 80CCF
6 Post office time deposits are not available for NRIs .
8 Restritctions of Investments by NRIs/PIOs residing in US and Canada
9 FEMA Circular related to restircation for NRI's for Opening Small Savings Account s
CHAPTER - 5
NRIs Investments in Immoveable Properties 60-70
1 Investment in immovable Property
2 NRI investment norms in real estate eased

RBI Circular - Acquisition & Transfer of Immovable Property in India by
3
NRIs/PIOs/Foreign Nationals of Non-Indian Origin
4 Press Release Ministry of Finance - Acquiring land by NRIs
CHAPTER - 6
NRI Taxation 71-89
1 Expatriates Working Abroad – Tax Provisions
1 a-b Residential Status for Taxation purposes
2 Income Tax Rates proposed in Union Budget 2013 for the financial year 2013-2014
3 Budget – 2103 Income Tax Surcharge Rate Hiked for Higher Income Assessees
4 Additional Tax Rebate of Rs. 2,000.00 from Assessment Year 2014 -2015
5 Particulars of Income Tax Incidence for various tax status
6 Tax Exemptions from Income Tax available for NRIs
7 Other Tax Aspects related to NRIs
8 What is tax on NSC Maturity ?
9 Special Provisions Relating to Non -Residents
10 Income Tax Clearance Certificate
11 Tax Exemption Certificate - Lower or Nil Rate of TDS:
12 Renting out of Property by an NRI in India
12a Remittance of Rent
12b Tax treatment of rental income
12c Deemed rental income
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12d Service Tax applicable to renting out of residential properties for commercial use
13 Taxability of immovable property received for Inadequate Consideration (Budget 2013)
14 NRI and Senior Citizen status for Income Tax calculation purposes
15 Tax Liabilities related to NRIs investments made in Joint basis
16 Bank Term Deposits - Tax aspects
17 Property Rental income – Tax Aspects
18 Mutual Fund/Equity Investments – Tax Aspects
19 NRI income and Applicability of TDS on the same
20 Tax Treatment of overseas Financial Assets.
21 Other Tax Aspects related to NRIs including Immovable Properties
22 Tax Treatment of selling property abroad
23 Tax Treatment of Rental Income Earned Abroad
24 Tax Treatment of Dividend on overseas Investments
25 One Time Financial Settlement
26 Capital Gains – earned abroad
Compulsory filing of Income tax return in relation to assts located outside India
27
irrespective of income
28 Section 194E of the Act – Tax deduction at source from payment to non -resident
entertainer, sports person etc
29
Tax Treatment of Interest on Bank Deposits
30.Savings bank interest upto Rs. 10,000.00 is exempted from tax (Section 80 TTA of
30
IT Act)
Deduction of interest paid on more than one loan borrowed for purchase or
31
construction of same house
CHAPTER - 7
Budget 2013 - Tax Proposals 90-98
Finance Bill 2012- passed by Lok Sabh a
CHAPTER - 8
Tax Deduction at Source (TDS) 99-103
1 Interest on Investments
2 Capital Gain on Securities (TDS)
3 TDS on salary payments to Non Residents & Expatriates
4 How NRI can claim TDS exemption
5 TDS on Transfer of Immovable Properties except Agricultural Land
6 Tax Deducted at Source related to NRIs
CHAPTER - 9
Double Taxation Avoidance Agreements (DTAA) 104-114
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1 Double Taxation in India - DTAA
2 Capital Gain tax rates under DTAA
3
The Countries with which India has DTAA
4 How to get relief in case of Double Taxation?
5 Where there is an DTAA agreement (Section 90)
6 Where there is an NO DTAA agreement (Section 91)
7 Misuse of DTAA, Treaty shopping and amendment made by Finance Act 2012
8 Tax rates applicable in India under DTAA Agreement
9
Amendments relating to DTAA provisions (Union Budget 2012)
10
Tax Residency Certificate (TRC) for Indian & Non Resident wef 01.04.2013
11 11.Finance Ministry clarification on tax residency certificate
CHAPTER -10
Form 15 G and Form 15H 115-116
From 15G & Form 15H - NRIs are not eligible to submit these forms
CHAPTER -11
Capital Gain Tax 117-131
1 Capital Asset
2 Short Term Capital Gain (STCG)
3 Long Term Capital Gain (LTCG)
4 Computation of Indexation Benefits
5 What is the indexed cost of acquisition?
6 Cost Inflation Index Form 1981 to 2013
7 Capital Gain Exemptions can be availed
8 What are the consequences if a new house is transferred within 3 years?
9 Exemption available on capital gains that arise from transfer of house property
10 How to avoid paying capital gains tax
Exemption of long term capital gains on transfer of residential property if invested in
11
plant machinery through small/medium enterprise , for 5 years (Budget 2012 proposal)
Relief from long-term capital gains tax on transfer of residential property if invested in a
12
manufacturing small or medium enterprise
13 Capital Gains Accounts Scheme
14 Who are eligible to take the advantage
15 List of Banks who can Accept Deposit
16 Opening a bank account for Capital Gains Account Scheme -
17 Capital Gain treatment of Inherited or gifted properties
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Please note that the long -term capital gains earned by you from inherited shares sold
18 on any recognized stock exchange in India by paying the applicable STT are exempt
from tax provided

CHAPTER - 12
132-136
Wealth Tax Implications of NRIs
1 What are all the assets included for Wealth Tax computation ?
2 Assets not included for Wealth Tax computation
3
No wealth tax on agriculture land
4 How Net Wealth in determinded
5 The Method of valuation of Assets
6 What are all the exceptions available
7 What about NRIs returning to India ?
8 How Should NIRs file Wealth Tax Retunrs ?
9 E- filing of annexures -less return of Wealth Tax - Budget 2013
CHAPTER - 13
Guide on filing of Income Tax Return by NRIs 137-145
1 Whi is a Non-Resient In India ?
2 Whi is liable to file Income Tax Returns
3 Are there any exemption from filing tax retuns ?
4 What is the deadline for filing Tax Returns ?
5 A guide to filing of Income Tax Retunrs online/offline
6 Detaisl required before logging into E -filing website
7 Steps to file Income Tax Return online
8 Benefits of e-filing over paper filing
Exemptions from filing of Income Tax Returns - Salaried Employees income upto five
9
lash Wh
10 Whi can't claim exemption
11 IT clarification dated 25/07/2011 - filing of tax returns - salaried employees
CHAPTER - 14
Clubbing of Incomes 146-148
CHAPTER - 15
Tax on Gifts - the facts need to know 149-150
CHAPTER -16

151-153
What is Advance Tax
CHAPTER - 17
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General Tax Deduction available for NRIs 154-160
1 NRI Tax-saving tips
2 Section 80C of Income Tax Act
2.1 Life Insurance and Retirement/Pension Plans
2.2 Tax-breaks in respect of Life Insurance Policies
2.3 Raising limit of percentage of eligibel premium for Life Insurance Polcies
2.4 Investment in House property
2.5 ELSS (Tax saving Equity Mutual Fund schemes)
3 Section 80D - Health Insurance Premium
3.1 NRIs- Deduction U/s 80D premium paid for Mediclaim Policy
4 Deductions u/s 80 G
5 Deduction under 80E
6 Bank Deposits and applicable tax - Sect 80TTA
7 Rajiv Gandhi Equity Savings Scheme
CHAPTER - 18
NRI Welfare Schemes 161-171
1 Pravasi Bharatiya Bima Yojana
2 Deserted NRI Women Welfare Scheme
3 Indian Community Welfare Fund (ICWF)
4 Facilitating investment in India
5 Know India Program (KIP)
6 Scholarship Programme for Diaspora Children
7 Migrant Resource Center, Kochi
8 NRIs - Facilities for Returning Indians
9 Investment facilitation and knowledge networking
10 Bilateral Labour Co -operation
11 Global Indian Network of Knowledge (Global Ink)
12 India Development Foundation of Overseas Indians
13 Scholarship Programme for diaspora Children (SPDC)
14 Direct Admission to Students Abroad (DASA)
15 Reservation for NRIs at Indian educational institutions
16 Assistance for problems relating to Overseas Indian Marriages
17 Voting Rights to Non-resident Indians
18 Double Taxation related maters
19 Recruitment of maid for Oman
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CHAPTER 19
State Governments Welfare Schemes 172-177
1 Government of Assam
2 Government of Bihar
3 Government of Gujarat
4 Government of Karnataka
5 Government of Kerala
5.a Pravasi Pension Scheme for Non -Resident Keralites
5.b Pravasi Identity Card
6 Government of Orissa
7 Government of Rajasthan
CHAPTER 20
NRI Investment Options 178-189
1 Investments in Shares and Securities listed in Indian Stock Market
1.a Portfolio Investment Scheme (PIS) for NRIs
1.b IPO Electronic Mode and Electronic Voting
1.c Securities Transaction Tax (STT) (2012 Budget proposal)
2 NRIs investment in Mutual Funds Schemes
3 FDI (Foreign Direct Investment) in Partnership Firm / Proprietary Concern
4 Company Fixed Deposit Investments for NRIs
5 Non-Banking Financial Company (NBFC) Deposits
6 Investment in Commercial Papers (CD) by NRIs
CHAPTER 21
National Pension System (NPS) - NRIs are eligible to invest 190-197
CHAPTER - 22
PAN ( Permanent Account Number) 198-206
1 NRIs and PAN
2 Advantages of Having a PAN
3 How to apply for PAN
4 New PAN Application From 49A and 49AA w.e.f 01/11/2011
5 INSTRUCTIONS FOR FILLING FORM 49A
6 GENERAL INFORMATION FOR PAN APPLICANTS
CHAPTER - 23
Know Your Customer (KYC) Requirements 207-212
1 Background
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