Yes, NRI can open Current Account, Saving Account, Fixed Deposit, Recurring Deposit and Term Deposit account in India.
SNRR Account means “Special Non-Resident Rupee Account”. Any NRI having business interest in India can open this account with an Authorized Dealer for any bona fide transactions.
An NRO (Non-Resident Ordinary) Account can be opened by a Foreign National of non-Indian origin visiting India.
The balance in the NRO account may be paid to the account holder at the time of his departure from India provided the account has been maintained for a period not exceeding six months and the account has not been credited with any local funds, other than interest accrued thereon.
In general, prior approval is not required. However, Citizens of Pakistan and Bangladesh need to obtain permission for opening of a bank account in India.
Yes. NRI can place fixed deposits with Banks operating in India.
From one to three years, however, banks are allowed to accept NRE deposits above three years from their Asset-Liability point of view.
In NRO account, the fixed deposit can be done for any period as per the policy of the respective bank. The restriction of time period applies to NRE account only, not to NRO.
It means the Foreign Currency (Non-Resident) Account. NRI and PIO are permitted to open and maintain FCNR Account with a bank in India. The account can be held only as a fixed deposit in freely convertible foreign currency.
Yes, you can transfer the funds from NRE to NRO.
An NRI can transfer funds from NRO to NRE account within the annual limit of USD 1 million (per financial year). Additionally, there are further relaxations which are over and above the annual limit. For e.g., NRI can repatriate funds from sale of ancestral property which would be allowed notwithstanding extinguishment of annual limits.
USD 2,50,000 per person per financial year.
No. It is mandatory for the resident individual to provide his/her PAN number for all transactions made under LRS through Authorized Persons.
There are no restrictions on the frequency of remittances under LRS subject to overall limit of USD 2,50,000.
LRS applies to resident individuals only. As such, there is no restriction for NRI under LRS as they are governed by a standalone limit narrated above.
The remittances can be made in any freely convertible foreign currency.
No. Remittance for trading in foreign exchange abroad is prohibited item under the LRS.
For medical treatment abroad, if the intended foreign remittance exceedsLRS limit, then Authorized Dealers may release foreign exchange under general permission based on the estimate from the doctor in India or hospital/ doctor abroad. Likewise, for the purposes of education abroad, certain relaxations are possible.
An amount up to USD 250,000 per financial year is allowed to a person for accompanying as attendant to a patient going abroad for medical treatment.
In a sole proprietorship business, there is no legal distinction between the individual and owner given that they are functioning under a common PAN. Hence, if an individual in his own capacity remits USD 250,000 during a financial year under LRS, he cannot remit another USD 250,000 in the capacity of owner of the sole proprietorship business.
Yes. A resident individual can send remittances under the Liberalized Remittance Scheme (LRS) for purchasing an immovable property outside India.
Yes. NRI can invest in India and purchase equity shares of any Indian Company.
The Capital Instruments permitted for receiving foreign investments are equity shares, debentures, preference shares and share warrants issued by the Indian company..
No.Renunciation of rights shares is permitted under automatic route.
Any investment made by aNRI in capital instruments where such investment is (a) less than 10 percent of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company or (b) less than 10 percent of the paid up value of each series of capital instruments of a listed Indian company.
No.An Indian company whichhas issued shares by Preferential Allotment is responsible to file details of allotment of shares to RBI.
An Indian Company has to file Form FC-GPR within 30 days of the allotment of shares.
Yes, NRI can become Promoter and Director in an Indian company.
A Foreign National or a non-resident can invest in shares of an Indian Company through Preferential allotment / Private Placement / Private Arrangement / Rights / Bonus / Merger / Demerger / Amalgamation / Subscription to MOA / Conversion of Convertible Notes / Capital Instruments issued under Schedule 7 of the FEMA 20 (R) to Foreign Venture Capital Investor(s) / Shares issued upon exercise of ESOPs / Sweat Equity Shares / Issue of participating interests/rights in oil fields / Others.
No, PAN number is not required for NRI to become a Director in an Indian company, only Passport number is required.
Yes, NRI can purchase compulsory convertible debentures of an Indian company.
FC-GPR is required to be filedonline with RBI. Earlier, it was in physical form.
Yes, NRI can pay consideration for purchase of shares from NRE Bank Account.
In case of delay in filling of form FC-GPR beyond 30 days,company has to pay late submission fees.
Only NRIs/ OCIs are allowed to invest in partnership/ proprietorship concerns in India on non-repatriation basis.
Yes. NRI can invest in Government Securities, Treasury bills, Corporate Debt and other Securities.
In case of reporting delays, the person/ entity responsible for filing the reports shall be liable to payment of Late Submission Fee (LSF). The payment of LSF is an additional option for regularizing reporting delays without undergoing the compounding procedure.
Yes, Foreigner can become a partner in the LLP in India.
Yes, NRI can purchase shares from the resident Indian.
Yes, every transfer of Securities between Non-resident and Resident requires reporting to RBI in form FC-TRS.
FC-TRS shall be filed with the Authorized Dealer bank within 60 days of transfer of capital instruments of receipt or remittance of funds; whichever is earlier.
No, the responsibility of filing the form FC-TRS in on Indian Resident.
Yes, tsransfer of Capital instruments by way of Gift to a non-resident is required to be reported to RBI by filing of Form FC-TRS .
The Applicant has to do reporting for the transaction in Single Master Form at FIRMS by online mode only.
The capital instrument has to be issued by the Indian company within 60 days from the date of receipt of the consideration.
No, RBI’s approvalis not required in such a case.
In case ofa delay, in filling of form FC-TRS beyond 30 days, then Company has to pay late submission fees.
An Indian resident requires following documents for filing of the form FC-TRS with the RBI:
The PIO is a person who is a citizen of any country other than Pakistan and Bangladesh, and fall under the following categories:
Yes.In Foreign Portfolio Investment, NRI can invest in capital instruments of listed companies in India.
While executing the share transfer deed, stamp duty @ 0.25 % on the consideration amount is to be paid.
Yes. Stamp duty @ 0.25 % is required to be paid on the market value or fair value of shares.
Resident Indian who is transferor or transferee has to create a business user account on the RBI Firms Portal for Filing of the Form FC-TRS.
Yes. Indian company has to create entity master on RBI Firms Portal for any type of reporting of transactions.
Yes.An Indian company can transfer shares held in any other company to NRI.
No fees are required to be paid for registration on Firms Portal.
No. There are no annual reporting requirements prescribed by RBI for NRI. .
FLA means Annual return on Foreign Liabilities and Assets, which is required to be filed by Indian Entities, who have received foreign direct investment and/or made overseas investment.
Indian Entities have to file the FLA Return on RBI’s FLAIR (Foreign Liabilities and Assets Information Reporting) Portal.
The FLA Return is to be filed by 15th July of every year.
Yes. Resident Indian can purchase securities abroad.
ODI means Overseas Direct Investment. When an Indian Party makes investment abroad, it is considered as ODI.
An Indian Party is a company incorporated in India or a body created under an Act of Parliament or a partnership firm registered under the Indian Partnership Act, 1932 or a Limited Liability Partnership (LLP) incorporated under the LLP Act, 2008 or any other entity notified by Reserve Bank of India.
Yes. RBI’sprior approval is required for making investment in Pakistan..
No. Prior registration is not required for overseas direct investment under the automatic route.
Yes. An Indian Resident can start company or any form of entity that is permitted in such country and make investment under the ODI Scheme.
Yes. Investment in USA falls under the automatic route so it is permissible under RBI.
An Indian Party intending to make overseas direct investment under the automatic route is required to fill up the formODI along with the necessary documents.
An application for direct investment in a JV/WOS may be made in the form ODI to The Chief General Manager, Overseas Investment Division, Exchange Control Department, Reserve Bank of India, Central Office, Amar Building, Sir P.M.Road, Mumbai 400 001.
The Real estate sector is prohibited sector so specific approval is required from RBI before investment.
The Resident Indian has to receive share certificate within 60 days from the date of making investment and also has to report to the AD Category bank for such transaction.
The ‘Total Financial Commitment’ by an Indian Party in its Joint Venture company (JV) /Wholly-owned subsidiary (WOS) outside the India should not exceed 100% of net worth of the Indian Party. The ‘net worth’ should be as per the last audited balance sheet of the Indian Party.
No.A Trust is not permitted to make the overseas investment except when trusts are engaged in manufacturing/educational activities and who have set up hospitals in India.
Yes.A Resident Individual can receive professional fees and director’s remuneration from the foreign company.
Yes.An Indian Party can invest in the Mutual Funds aboard under the automatic route.
The contribution to the capital, subscription of the MoA of a foreign entity and purchasing the existing shares of a foreign entity are considered as Direct Investment outside the India.
Yes, resident entities can take a loan from the overseas entities for the purpose of business.
LLPs are not eligible to receive the FDI, so they cannot raise loan.
The Foreign Equity Holders Individual lenders from countries which do adhere to FATF guidelines on AML / CFT are eligible for ECB.
No. Mauritius is not the FATF compliant country so the ECB cannot be taken from the residents of such countries.
Yes. NRI has to take the equity holding to give the ECB to an Indian Company.The following limit is applicable:
No. It is not permitted.
Borrowers are required to report the actual ECB transactions, correctly and fully, through the duly certified Form ECB 2 through the Authorized Dealer Category-I bank by every month.
Yes, loan agreement is necessary to be executed and it is also required to be registered with the RBI.
Yes. Every amendment in clauses of the ECB loan agreement is required to be reported to RBI.
Yes,late submission fee is applicable for non-submission of each of the Form ECB 2, including nil returns.
No. When all the non-resident shareholders become resident Indians and the company does not have any outstanding investment in respect of inward and outward FDI as on end of March of the reporting year, then the company need not submit the FLA Return.
No.A Resident cannot gift to another resident in foreign currency in an account which is held abroad under the LRS.
Yes. A NRI can open HUF bank account In India.
No.A NRI cannot buy agricultural land or any plantation property of farmhouse in India.
No.A NRI cannot do Intraday Trading and short selling in India.
Yes, NRI with valid Indian passport can apply for Aadhar Card on arrival, without the 182-day waiting period.
No.If a property is purchased when you were a resident Indian, then the sale proceeds of the said property should be credited to the NRO Account.
Yes.A NRI can give a general/specific power of attorney to a person resident in India for carrying out the routine transactions.
No.Power of Attorney cannot be used to make gifts from the NRE account.
Yes, NRI can open and jointly manage a account either with a resident or a non-resident Indian.
Yes, mutual fund companies in Indiaallowthe power of attorney holders to invest on behalf of NRI.
Yes. If the agricultural land is received by NRI through the inheritance or gift then it is permissible to accept under FEMA.
No.There is no restriction on number of residential/commercial property that NRI can purchase under the general permission.
For private visits abroad, other than to Nepal and Bhutan, any resident individual can obtain foreign exchange up to an aggregate amount of USD 2,50,000 from an Authorised Dealer or FFMC, in any one financial year, irrespective of the number of visits undertaken during the year, & irrespective of the purpose of that visit – personal or business.
All tour related expenses including cost of transportation; cost of Euro Rail; passes/tickets, etc. outside India; and overseas hotel expenses shall be subsumed under the LRS limit. One can directly bear these expenses in foreign currency at the point of destination or the tour operator can collect this amount either in Indian rupees or in foreign currency from the resident traveller. All options are legal & possible.
Any resident Indian can gift a sum up to US$ 250,000 to his or her relative (as specifically defined) anywhere in the world. Such a gift has to be either to the recipient’s foreign bank account or as a credit to NRI’s bank account maintained in India, termed as NRO – Non-Resident Ordinary Account. The limit of US$ 250,000 is per donor, per financial year. This question should also be evaluated from income tax perspective. For e.g., till 2019, gifts made abroad were not taxable in India, however, post the amendment made by virtue of Finance Act 2019, gifts made by resident Indians to overseas Indians will be taxable in India in certain specified situations.
Yes, one can very well receive gifts from their overseas relatives. Such amount should have been received in India to the credit of a bank account maintained by resident Indian, in India. There is no prohibition under FEMA to receive gifts in India from relatives who are residing abroad. Further, there is no limit prescribed either, hence, one can take any amount of gift in India. Do note that gifted amount must be received in India, in an Indian bank account. Receiving gifts by resident Individuals in a foreign currency account maintained abroad outrightly violates the provisions of FEMA.
Some countries like USA have a system of taxing donors (i.e. person making the gift). These provisions have nothing to with FEMA, but should be kept in mind.
Yes, a resident Indian can open a foreign bank account in a foreign denominated currency. However, such an account must be used ONLY for the purposes specified under LRS. The credit to such accounts should be by way of LRS in lieu of funds remitted from India. Foreign bank accounts can not be used to transact foreign funds.
It doesn’t matter whether gift is from a relative or a non-relative. Either way, foreign bank account can not accept funds directly from a foreign source. Permitting such an activity would lead to severe money laundering as the Government of India would never come to know on funds that came in and funds that went out. This is outrightly prohibited under FEMA.
Yes, a resident individual can pay up to US$ 250,000 per financial year for treatments in a foreign hospital. On request, RBI would normally allow to extend this limit given the cause involved.
Yes, a resident individual can remit funds from India for investing in foreign companies. Do note that such funds should have originated from India; in other words, receiving funds overseas from an overseas source, and directly deploying them overseas would lead to money laundering. This can also lead to an offence under PMLA (Prevention of Money Laundering Act).
You can buy a house anywhere you like in the world. Do note that FEMA doesn’t contain any specific reporting of those investments as long as funds are remitted from India; however, under the provisions of the Income Tax Act, such investments must be reported on Schedule FA and income generated from such foreign assets must be reported in Schedule FI, annually.
FEMA requires the original (first) investment to be done under LRS from India. As long as the funds originated from India, and were compliant with FEMA, the income generated on such an investment need not be repatriated to India. E.g., X invests CAD 11,000 in a Canadian company which pays a dividend of 20% in the second year. In this case, the dividend amount of CAD 2,200 need not be repatriated to India, and can be kept and maintained in X’s Canadian bank account (although X is a resident Indian). However, do note that the initial investment amount of CAD 11,000 should be from India under LRS.
Yes, TCS at 5% shall be applicable on all forex transactions under LRS, exceeding INR 7 lakhs in a financial year (except for remittances towards overseas education made out of loan obtained from a financial institution, for which TCS at a reduced rate of 0.5% will be applicable). For instance, if the total foreign exchange facility availed under LRS in a financial year is INR 11,00,000, TCS at 5% will be applicable on INR 4,00,000 (INR 11,00,000 - INR 7,00,000) and tax collected will be INR 20,000.
Do note that TCS is payable on ALL foreign transactions done by resident Indians, irrespective of the end use of such a remittance.
Note: TCS was not applicable prior to Oct 2020, it was made applicable by virtue of Finance Act 2020.
Yes, as stated above, TCS is applicable @ 5% if such remitted funds are owned funds, and at 0.5% if such remitted funds are specific to an education loan.
Yes, just like any other category of TCS, this is a line item which reflects in Form 26AS. Full credit can be availed for it.
No, GST is not applicable on the amount of TCS.
The questions considered here are the outcome of queries frequently asked apropos the captioned subject. R K Doshi & Co LLP has drafted answers to these questions as an aide to preliminary understanding. None of the answers should be considered as our opinion.
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