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5.11

When Does A Resident Indian Become A NRI? 

You have decided to take a world tour for a few months. Will this impact your residential status in India? Read to know the answer…

When does a resident Indian become a Non-Resident Indian (NRI)? Well, there are 2 definitions defining a NRI – one under India’s Foreign Exchange Management Act 1999 (FEMA) and the other under the Income Tax Act 1961.As per FEMA, if you reside outside India for more than 183 days during the previous financial year, you are considered an NRI.  The reason for your stay outside Indian can range from work to education to vacation or business, as long as the intention to stay overseas is for an indefinite period of time.

As per the Income Tax Act 1961, you are a resident of India in any particular year, if you have stayed for 182 days or more in the country. Alternately, you could have stayed for 60 days or more during the relevant year and 365 days or more during the four years preceding to the relevant year. If none of these conditions are met, then you are considered as an NRI. Note that the stay of 182 days or 60 days many not be a continuous stay.Now, you may have also come across the term ‘Person of Indian Origin’ (PIO), while reading on NRIs. Well, a PIO is a person who is not an Indian citizen  but is deemed to be of Indian origin provided he/she is not a citizen of Pakistan or Bangladesh and:

a. He/she at any time has held an Indian passport. OR

b. He/she or either of his/her parents or his/her grandparents were a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955.

c. He/she is a spouse of an Indian citizen.

d. He/she is a spouse of a person covered under (a) or (b).

Once you have become an NRI, you are legally bound to inform all your banks and also all the companies where you have investments about the change in your status within a reasonable time also you should be well aware of income tax rules and regulations. Also, if you return to India on a temporary visit without any intention to stay in the country for an uncertain period of time, you continue to hold onto the NRI status…

After being deemed as an ‘NRI’, your Indian nationality or citizenship does not get affected. The Indian citizenship can only be renounced after acquiring a foreign nationality and does not terminate automatically after becoming an ‘NRI’.

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