Frequently Asked Questions for NRIs

As per the Income Tax Act, 1961, a Non-Resident Indian (NRI) is an individual who is a citizen of India or a Person of Indian Origin (PIO) and who is not a resident of India.

An individual is treated as a Resident of India for a financial year (1 April to 31 March) if they satisfy any one of these conditions:

• Condition A: Stayed in India for 182 days or more during that financial year.
• Condition B: Stayed in India for 365 days or more during the 4 preceding financial years and for 60 days or more in that financial year.

Exceptions to Condition B:

• Leaving India for employment or as crew of an Indian ship: the 60-day period in Condition B is replaced by 182 days — so, in effect, only Condition A applies.
• Indian citizens / PIOs living abroad who visit India with total income (other than foreign-source income) up to ₹15 lakh: the 60-day period is replaced by 182 days.
• Indian citizens / PIOs visiting India with total income (other than foreign-source income) above ₹15 lakh: the 60-day period is reduced to 120 days. A person who becomes resident only because of this 120-day rule is treated as Resident but Not Ordinarily Resident (RNOR).

Deemed Resident (Section 6(1A)): An Indian citizen whose total income (other than foreign-source income) exceeds ₹15 lakh in the financial year is deemed to be a resident of India (as RNOR) if they are not liable to tax in any other country by reason of domicile or residence.

A Person of Indian Origin (PIO) is a citizen of any country other than Bangladesh, Pakistan, Afghanistan, Bhutan, China, Nepal, Sri Lanka or Myanmar, if:

• they held an Indian passport at any time; or
• they, either of their parents, or any of their grandparents were born in and were permanent residents of undivided India (as defined in the Government of India Act, 1935); or
• they are the spouse of an Indian citizen or of a person covered by either of the points above.

Note: The Government of India has merged the PIO card scheme with the Overseas Citizen of India (OCI) card scheme. All existing PIO cardholders are deemed to be OCI cardholders.

An OCI is a Person of Indian Origin who is a foreign national (other than a citizen of Pakistan or Bangladesh) and who was eligible to become a citizen of India on 26 January 1950, or was a citizen of India on or after that date. Eligibility criteria:

• the applicant was an Indian citizen at the time of, or at any time after, the commencement of the Constitution (26 January 1950); or
• the applicant belonged to a territory that became part of India after 15 August 1947; or
• the applicant is a child, grandchild or great-grandchild of such a citizen; or
• the applicant is a spouse of foreign origin of an Indian citizen or of an OCI cardholder, where the marriage is registered and has subsisted for a continuous period of at least 2 years immediately before the application.

• Bank accounts: Under FEMA, an NRI cannot continue to hold a regular resident savings account. Resident accounts must be re-designated as NRO accounts once your residential status changes.
• Mutual funds: Inform each fund house and update your KYC status from “Resident” to “NRI”, update your overseas address, and link your NRO (or NRE) bank account for future transactions.

Under Reserve Bank of India (RBI) guidelines, NRIs can open and maintain three main types of accounts in India:

• NRE Account — Non-Resident (External) Rupee Account
• NRO Account — Non-Resident (Ordinary) Rupee Account
• FCNR(B) Account — Foreign Currency Non-Resident (Bank) Account

• Currency: Indian Rupee (INR).
• Repatriability: Fully repatriable — both principal and interest can be transferred abroad freely.
• Taxation: Interest is exempt from income tax in India (while you remain an NRI).
• Funding: Only through inward remittances in foreign currency, or transfers from another NRE / FCNR(B) account.
• Eligibility: NRIs and OCIs (individuals/entities of Bangladesh and Pakistan need prior RBI approval).

• Currency: Indian Rupee (INR).
• Repatriability: Restricted — up to USD 1 million per financial year, after payment of applicable taxes and submission of Form 15CA / 15CB.
• Taxation: Interest is taxable in India. TDS is deducted at applicable rates, subject to Double Taxation Avoidance Agreement (DTAA) benefits.
• Purpose: Managing income earned in India — rent, dividends, pension, proceeds from sale of local assets, etc.

• Currency: Held in freely convertible foreign currencies (USD, GBP, EUR, CAD, AUD, JPY, SGD, etc.).
• Type: Term deposit only, for 1 to 5 years.
• Repatriability: Fully repatriable (principal and interest).
• Taxation: Interest is exempt from income tax in India (while you remain an NRI).

No. NRIs and OCI cardholders do not need prior RBI approval to invest in Indian mutual fund schemes, on either a repatriable or a non-repatriable basis.

No. All investments in Indian mutual funds are made in Indian Rupees (INR). Payment must be made by INR cheque / bank draft or by online debit from an NRE or NRO account held in India.

• Repatriation basis: Pay with funds remitted from abroad through normal banking channels, or from an NRE or FCNR(B) account. Redemption proceeds and income distributions can be remitted abroad freely.
• Non-repatriation basis: Pay from an NRO account (or from NRE / FCNR(B) accounts). Redemption proceeds are credited to the NRO account and are subject to the USD 1 million per financial year remittance limit.

No. Indian mutual funds can only pay redemptions and dividends into an Indian bank account (NRE or NRO). An overseas bank account cannot be registered as the primary bank account for receipts.

Redemption proceeds are paid in Indian Rupees (INR) by direct credit / NEFT / RTGS to your registered NRE or NRO account in India. The mutual fund deducts Tax Deducted at Source (TDS) before paying out the net amount.

Yes. Because of US FATCA reporting requirements and local regulations in Canada, not every Indian Asset Management Company (AMC) accepts investments from US- and Canada-based NRIs.

• Some AMCs accept US/Canada NRIs only through physical application forms, or through specific digital platforms with additional declarations.
• Other AMCs do not accept US/Canada NRIs at all.
• Always check the AMC’s US/Canada acceptance policy before applying.

• Repatriable basis (NRE): A joint holding with a resident Indian relative (as defined under the Companies Act) is possible, but the resident can only act on a “Former or Survivor” basis.
• Non-repatriable basis (NRO): A joint holding with a resident Indian is allowed on a “Jointly” or “Either or Survivor” basis.

Yes. NRIs can buy and sell Indian listed shares under the RBI’s Portfolio Investment Scheme (PIS):

• Open a dedicated PIS bank account (NRE or NRO) with a bank designated by the RBI.
• Link the PIS account to your Demat account and trading account with a registered Indian broker.

Yes. A POA holder can invest, sign documents and place transactions (purchases, switches and redemptions) on the NRI’s behalf. Requirements:

• Submit the original POA or a notarised copy.
• The POA must be signed by both the NRI investor and the POA holder.
• The POA holder must complete KYC in India.
• Redemption proceeds are paid only to the NRI investor’s registered bank account — never to the POA holder’s account.

• Nomination: Yes. NRIs and OCI cardholders can nominate a resident Indian, an NRI or an OCI cardholder.
• Transmission: On the investor’s death, units / proceeds are transmitted to the registered nominee or legal heir. If the nominee is an NRI, proceeds can be credited to their NRE or NRO account, depending on whether the original investment was repatriable or non-repatriable.

Mutual funds deduct Tax Deducted at Source (TDS) on NRI income at the rates applicable to non-residents:

Equity-oriented schemes

• Short-term capital gains (held 12 months or less): 20% plus applicable surcharge and cess.
• Long-term capital gains (held more than 12 months): gains above ₹1.25 lakh per financial year are taxed at 12.5% without indexation, plus surcharge and cess.

Non-equity / debt schemes

• Capital gains: taxed at slab rates or specified capital-gains rates, depending on the date of purchase, holding period and type of scheme under current Income Tax provisions.
• Income distributions / dividends: taxable; TDS is deducted at 20% (plus surcharge and cess) or the lower DTAA rate where eligible.

NRIs can usually claim credit for this Indian tax in their country of residence under the applicable DTAA, supported by a Tax Residency Certificate (TRC).

A TDS certificate in Form 16A is issued to the NRI investor. It shows the transaction details, the gross gain or income, and the tax withheld and deposited with the Income Tax Department. TDS can also be verified in your Form 26AS / Annual Information Statement (AIS).

Form 16A is issued quarterly — dispatched or made available for download after the mutual fund files its quarterly TDS return with the Income Tax Department.

An NRI should file an ITR in India if any of the following applies:

• Total taxable income in India (before deductions) exceeds the basic exemption limit — ₹2.5 lakh under the Old Tax Regime or ₹4 lakh under the New Tax Regime (FY 2025-26 onwards).
• You want to claim a refund of excess TDS deducted on redemptions, dividends, interest or property sales.
• You want to carry forward capital losses to set off against future capital gains.

Filing is also advisable where TDS has been deducted, so that your tax records in India are complete. See our NRI Tax Filing service.

• India has comprehensive DTAAs with more than 90 countries.
• Tax paid or withheld (TDS) in India can generally be claimed as a Foreign Tax Credit (FTC) against tax payable in your country of residence.
• NRIs can also claim lower treaty TDS rates by submitting a Tax Residency Certificate (TRC) from their home country along with Form 10F.

See our DTAA Advisory service.

To become KYC-compliant, an NRI / OCI typically submits:

• Proof of identity: passport, and OCI / PIO card where applicable.
• Proof of overseas address: utility bill, foreign bank statement or foreign driving licence.
• PAN card: mandatory for financial transactions in India.
• In-Person Verification (IPV): through video KYC, at an overseas branch of an Indian bank, or attested by the Indian Embassy / Consulate.

• FATCA (Foreign Account Tax Compliance Act): a US law requiring foreign financial institutions — including Indian banks and mutual funds — to report accounts held by US persons to the US Internal Revenue Service (IRS).
• CRS (Common Reporting Standard): an international framework covering over 100 jurisdictions (including the UK, Singapore, UAE and Canada) for the automatic exchange of financial account information.
• Requirement: Under Indian tax rules, NRIs must complete a FATCA / CRS self-declaration — giving their foreign address, country of tax residence and Tax Identification Number (TIN), e.g. SSN (US), SIN (Canada), UTR (UK) — before opening accounts or investing in mutual funds.