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Learn about important FEMA rules before moving abroad. Know FEMA rules and compliances for NRIs in this blog. Read now.

FEMA Rules Every NRI Should Understand: Blog Poster

As many people who do business overseas or travel abroad know, the government wants to control the money taken outside India. This control limits the outflow of foreign exchange, and ensures financial stability. The Government of India passed the Foreign Exchange Management Act (FEMA) in 1999.

This law was enacted to govern and monitor the flow of money into and out of India from other nations. This enactment marked the replacement of Foreign Exchange Regulation Act (FERA), aligning with the economic reforms started in the early 1990s. The goal of FEMA is to facilitate trade with other countries and to ensure a stable flow of money into and out of India. It describes all of the procedures and rules for dealing with foreign currency in India. Fema compliance is necessary for all non-resident to ensure a smooth transaction within India. 

Hence, It is important for Indians who work in other countries to grasp the FEMA laws for NRIs (non-resident Indians). This is because the FEMA regulations affect how people can send and receive foreign currency or foreign money to and from India. Being a reputed chartered accountant firm in India, we are here to share our knowledge on FEMA rules for NRI to make the transaction process easy for non-resident Indian.

Here is a breakdown of some important fema regulations that you must stay compliant with -

How To Maintain An NRI Account In India?

When you change your status from resident Indian to Non-Resident Indian (NRI), there are certain steps you need to take regarding your Savings Accounts. The regulations under FEMA regulations for NRIs restrict holding a regular bank account in India. As a non resident in India, you must open either an NRO (Non-Resident Ordinary) or an NRE (Non-Resident External) account with the Reserve Bank of India (RBI).
NRO Account are types of bank accounts that can be held jointly by several non-resident account holder. It accepts lawful dues in India, remittances received in accepted foreign currencies, and permissible currencies used during your temporary visit to India. Transfers from rupee accounts of nonresident banks can also be attributed to this account. However, it is important to note that any transfer or issue of funds to an NRO Account is non-repatriable to another nation.

An NRE Account, or Non-Resident (External) Rupee Account may enable easy money transfers from abroad, and the full balance within this account is freely repatriable to your present country of residency.

If you're thinking about making a foreign currency deposit, you can also open an FCNR (Foreign Currency Non-Resident) Account. According to FEMA regulations, every Nri can deposit any currency in this account, which has fixed or term deposit choices ranging from one to five years. The important thing to note here is that there are no tax implications associated with this type of account, and the money is completely repatriable upon maturity.
Every NRI account has different features. Hence, every Nri must make an informed decision while opening a Nri account in India. However, if you are facing difficulties to open nre or nro accounts, you can consult our tax consultant in Gurgaon. Also, keep in mind that Nris can also open and maintain multiple types of accounts without any restrictions. This flexibility provides NRIs with convenient choices to suit their financial needs and preferences.

Read This: The Ultimate Fema Compliance Checklist For Startups To Ignite Growth & Ensure Future Safety

Making Investments In Immovable Properties

If you are an NRI or a person of Indian origin and are interested in the Indian real estate market, you can invest in residential and commercial property in India. As per FEMA rules, a person resident in India or outside India is permitted to purchase a wide range of immovable properties, such as houses and shops. However, it is vital to note that regulations relating to FEMA laws prohibit NRIs from purchasing agricultural land, plantation areas, or farmhouses.

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Where You Can Make Investments?

As an NRI, you have several investment options, including stocks, mutual funds, and real estate property in India under certain conditions. However, certain areas or industries may be subject to restrictions under new regulations where foreign investment is not permissible without prior authorization from appropriate authorities. RBI has not prescribed saving schemes like NSC, PPF, and Chit funds.

Source Of Income For NRI Students

When you go abroad to study, you're considered an NRI student, and you get access to special benefits meant for NRIs under FEMA. One of these advantages is receiving money from India via the Liberalised Remittance Scheme. This includes money sent by your family to help you with your expenditures while studying abroad. However, the total money received by inward remittance is limited to up to USD I million from nre and nro accounts per financial year.

Sending Or Receiving Foreign Currency To India

If you are a person resident outside India, you can simply send money to India by using NRE or FCNR accounts or by using special money transfer services. According to FEMA rules for Nris, you are allowed to send up to USD 1 million every year. However, if you are carrying foreign currency directly to India, then as per FEMA regulations every nri must fill up a form known as the Currency Declaration document. This is usually done when you have more than USD 5,000 in foreign currency or when the total worth of your money and trade certificates exceeds USD 10,000.

Remember that staying updated with changes in FEMA guidelines is essential for the smooth financial transaction while your stay in India. It is best to seek personalized advice from a professional advisor who specializes in NRI and tax-related matters.

Frequently Asked Questions

FAQs On FEMA Rules For NRI

The top questions asked to us about FEMA rules for NRI have been mentioned here for you. Read on.

Does the FEMA Act apply to non-resident Indians?

Yes, the Foreign Exchange Management Act applies to Non-Resident Indians (NRIs) as well as other persons and companies doing foreign exchange operations in India.

What are the FEMA rules for NRI money transfers?

FEMA guidelines govern NRI money transfers, which allow NRIs to send money to India via NRE/NRO accounts or remittance services up to a maximum of USD 1 million per financial year.

What are the exemptions under the FEMA Act?

In the previous tax regime, the primary exemption of Rs 3 lakh and Rs 5 lakh was only available to resident senior people and resident super senior citizens. Therefore, as an NRI, even if you belong to the senior citizen category when your earnings in India surpass Rs 2.5 lakh, you are required to file your income return in India.

How much cash can NRI carry with them?

A citizen of India who has traveled to another nation can bring back Rs.25,000 cash with them.

How much money a non-resident Indian can gift in India?

Gifts given by NRIs to resident Indians are tax-free if the value does not exceed INR 50,000. However, if the value of NRI presents to RI friends exceeds INR 50,000, the revenue is taxable.

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