Q1) What type of bank account/s can a NRI maintain in India ? A) Basically, there are four types of bank accounts, you as an NRI can maintain in Indian banks. Non Resident External (NRE): These can be in the form of Savings/Current Accounts (with cheques book facility) or Fixed Deposits for a minimum period of 6 months. The balances in these accounts and accretion thereof are fully repatriable and exempted from income-tax and wealth tax in India. These accounts are maintained in Indian Rupees. Foreign Currency Non Resident (FCNR): These are necessarily fixed deposit accounts which can be maintained only in US Dollars, Pound Sterling, Deutsche Marks, Japanese Yen and Euro currency. The tenure of these deposits ranges from a minimum period of 1 year to a maximum period of 3 years. These deposits and the interest thereon are fully repatriable and exempt from income-tax and wealth tax. Non Resident Ordinary Account (NRO): These can be maintained in the form of Savings/Current Accounts, with cheques book facility or as fixed deposit accounts. All the legitimate dues accruing to the NRI in India can be credited to this account, viz. terminal benefits, house rents, income on investment, etc. After a person acquires NRI status, his Resident Bank account/s in India must be redesignated as NRO account/s, by informing the banks to that effect. The balances/interest in this account are non-repatriable and they are subject to income tax and wealth tax. Non Resident - Non Repatriable Account (NRNR): This is necessarily a fixed deposit account for a minimum period of 6 months and maximum 3 years. The initial deposit amount should be brought in through inward remittance or out of NRE/FCNR funds. The principal amount in this account, is non-repatriable; while the interest accruing on these deposits is fully repatriable. The fixed deposit is maintained in Indian rupees. The principal amount of deposit is exempted from Gift Tax for one time gifting (in case of NRIs only). Interest on deposits will be free from Income Tax. Non Resident (Special) Rupee Account (NRSR): With effect from April 15, 1999 Reserve Bank of India has introduced the scheme of opening Non Resident (Special) Rupee accounts for NRIs/PIOs for putting through financial transactions in India. Overseas Corporate Bodies cannot avail this facility. These accounts will have the same facilities and restrictions as are applicable to rupee accounts maintained in India by Residents with regard to repatriation of funds held in these accounts and/or income/interest earned on them. The procedure for opening these accounts will be the same as in the case of domestic accounts of Resident individuals. The Salient features of these accounts are as follows :- Status : These accounts (which can be maintained in the form of Current, Savings or Fixed Deposits) will be at par with the rupee accounts maintained by Resident/s and the funds held in these accounts and income/interest earned there on are Non-Repatriable. An underwriting to this effect has to be furnished by the account holders which forms an integral part of the account opening form, specifically prescribed by RBI. Joint Holdings: These accounts can be held jointly with residents. Operations: All financial transactions will be allowed freely by Authorized Dealers without verifying the details of credits / purpose of debits. Exception - Investment in shares / securities and immovable property in India, will be governed by the extant exchange control regulations applicable to such investment. Transferability of funds: Funds received out of inward remittances or held in NRE/FCNR/NRO accounts can be transferred to NRSR accounts. However, funds held in NRSR accounts, irrespective of source, can not be transferred to NRO accounts. Nomination: Nomination facility is also available, However, Non-Resident nominee cannot seek repatriation of the funds held in these accounts. The existing facilities for NRIs/PIOs to maintain and operate Non Resident Ordinary / Non Resident External and Foreign Currency Non Resident accounts will also continue. Q2) Can an NRI operate a bank account through a Power of Attorney ? A)   Yes. NRIs can give Power of Attorney in favor of a resident for the convenience of operating the account for local disbursements or making investments in India. However, the holder of such Power of Attorney cannot conduct the following transactions: Opening an Account on behalf of a Non Resident Crediting proceeds of foreign currency notes and travelers cheques. Making gifts from NRE accounts Seeking repatriation of funds outside India.   Q3) What are the rules of governing the credit of proceeds of foreign currency notes, travelers cheques to NRE accounts? A) During your temporary visits to India as an NRI, you can tender foreign currency notes, travelers cheques brought in by you for crediting your bank accounts. It has been advised by RBI that there will be no limits placed on tenders of Foreign Currency / TCs where the proceeds are to be credited to the resident or non resident account of the tenderer. No further documentary evidence or enquiry into the source of instrument has to be called for in these cases, by the banks. However, the NRI account holder has to tender the foreign exchange in person during his temporary visit to India. Q4) What are the rates of interest offered on various NRI deposit schemes? A) You get 4.5% as rate of interest on your savings balance in NRE and NRO accounts For deposits under NRE and NRNR scheme, banks in India have been given liberty to offer their own rates (SELECT ? INTEREST Calculator) For deposits in FCNR Accounts, banks have been given the freedom to offer their own rates of interest but subject to the following ceilings: * On deposit of 6 months and above, but less than one year - the interest rate ceiling has been reduced by 25 basis points w.r.t the LABOR rate prevailing on the preceding Friday for that particular currency. * On deposits of one year and above - the interest rates have been increased by 50% basis points w.r.t the LABOR rate prevailing on the preceding Friday for that particular currency. Q5) Is a nomination facility available in respect to NRI Bank accounts in India? A) Yes, the Nomination facility was introduced in 1985. You can nominate a single person in case of your bank accounts and fixed deposits. You can also appoint a minor person as your nominee however, you will have to appoint a major person to receive the money on behalf of the minor nominee. Nomination can be altered, cancelled, amended during the lifetime of the deposit/bank account with the consent of all the account holders/depositors. Nomination facility also can be availed for Safe Deposit Lockers, hired by you in any Indian bank. Q6) How do I avoid or guard against Exchange risk attendant to my deposits? A) No Problem! you can avail the facility of booking a forward cover to hedge your FCNR / NRE deposits including interest payable on them, subject to:- The value & the maturity date of the forward contract should not exceed the value & maturity date of the deposits which are being covered by forward contract. The cost of hedge should be paid out of repatriable funds or inward remittance. Outward remittance incidental to hedge is allowed, subject to payment of tax if any Q1) Am I required to liquidate all my assets abroad, if I return to India or can I continue to hold them ? A) The Government of India has provided a number of exemptions to NRIs. Effective July 17, 1992, NRIs have been allowed to retain their Foreign Currency assets, including immovable properties and Bank accounts, provided the assets have been acquired out of foreign currency earned through employment/business or vocation carried out outside India while the individual was resident outside India and no contravention of any rules under Foreign Exchange Regulation Act 1973 should be involved. The individual should have stayed abroad for at least one year before his return to India. The NRIs have complete freedom of utilizing these assets and the income earned thereon subsequently. Q2) If a returning Indian repatriates his assets from abroad, how can he deal with them ? A) If a returning Indian decides to repatriate his assets from abroad to India, he can hold money in RFC (Resident Foreign Currency) accounts maintained with any Indian Bank. Q3) Who can open an RFC account ? A) RFC accounts can be opened by persons of Indian nationality or origin who have returned to India on or after April 18, 1992 for permanent settlement after being resident outside India for a continuous period of not less than 1 year. RFC accounts can be maintained in any convertible currency. Q4) What moneys can be deposited in an RFC account ? A) The entire amount of foreign exchange brought to India as well as the balance standing to the credit of NRE/FCNR can be credited to RFC accounts. Foreign currency notes/travelers cheques can also be credited to RFC accounts provided the quantum of exchange has been declared to customs at the time of arrival on the Currency Declaration Form (CDF) if the exchange exceeds USD 10,000/- or its equivalent. Q5) Are there any rules governing the use of funds deposited in an RFC account? A) Funds in an RFC account can be freely utilized for : Local disbursement in Indian Rupees in India. Bonafide purposes of the account holder or his dependent, e.g. travel/tours, medicine, education, etc. Repatriation for the purpose of servicing assets abroad. To open NRE/FCNR accounts, if the returning NRI goes abroad again - for employment/business/vocation. Q1) As an NRI, what gift tax exemptions are available to me ? A) You are not liable to pay Gift Tax for the following gifts made by you: * Gift from NRE/NRNR/FCNR account to any person * Gift of Convertible foreign exchange to any relative * Gift of foreign exchange assets: Shares in Indian companies Debentures issued by an Indian Public Limited Company. Deposits in an Indian Public Limited Company Any security of the Central Government Any other notified assets. * Gift of special Bearer Bonds, 1991 to any person * Gift of immovable property situated outside India to any person. UPDATE !! In major post-budget change, the government of India has withdrawn the proposal to tax gifts as income of the recipient. Since he had already abolished gift tax on the donor of gifts as part of his budget proposals, this withdrawal effectively means that gifts made on or after October 1,1998 shall be free from any tax either on the donor or donee. Q2) What is the procedure of gifting moveable property to any person ? A) The donor should ensure that the gift is located outside India at the time of gifting. It is further advised that the donee should receive the gift in India or through his agent outside India. If the gift is a cheques sent by post or through any other agent, the donor should do so at the request of the donee receiving the gift in India. A written request to this effect should be taken from the donee. Q3) What is the threshold limit for gifts other than exempt gifts ? A) The threshold limits for gift tax is Rs.30,000/- for each financial year. If the gift exceeds that amount, the donor has to pay gift tax at the rate of 30% for the amount in excess. Q1) I am a foreign citizen of Indian origin. Can I acquire commercial property in India ? A) RBI has granted general permission to acquire properties (Other than agricultural land, farmhouse, plantation) provided the purchase consideration is paid out of inward remittance through banking channels or out of funds from purchaser's NRE/FCNR accounts. Simultaneously, a declaration in the form of IPI 7 within a period of 90 days from the date of purchase of the property/final payment has to be submitted to RBI, Bombay. Q2) Can I sell and dispose off such properties ? A) Repatriation of original investment in respect of properties acquired by foreign citizen of Indian origin on or after May 26, 1993 is allowed provided the property is sold after a period of 3 years from the date of final purchase or from the date of payment of final installment of the consideration amount whichever is later. Form IPI 8 has to be lodged with RBI within 90 days of the sale of property. Q3) Can I rent out my property ? A) RBI has granted general permission to let immovable property on rent. However, such rental income can be credited to only NRO account. Q4) Am I eligible for a loan for buying a house/flat for my residential purposes ? A) Yes. Certain financial institutions (like HDFC Ltd, LIC Housing Finance) have been permitted by the RBI to grant housing loans to NRIs for acquiring house/flats for self-occupation. The borrower is required to bring at least 25% of the cost through foreign inward remittances or out of his funds held in NRE/FCNR accounts. Q5) Can Banks grant me a loan for this purpose ? A) So far, Authorized Dealers were permitted to grant housing loans to NRIs against the security of immovable property proposed to be acquired and the requests for allowing residents as co-obligants/guarantors were considered by the Reserve bank on a case to case basis. But now, Authorized Dealers can now grant Housing Loans to Non-resident Indians (NRIs), without reference to the Reserve Bank. In such cases, the NRI may be a principal borrower with a resident close relative as a co-obligant/guarantor or the land may be owned jointly by the NRI borrower with the resident close relative. In such cases, the payment of margin money and repayment of the loan installments should be made by the NRI borrower. There is also scope for Authorized Dealers granting housing loans to residents with an NRI as a co-obligant. Q6) Do I need to take permissions from Exchange Control Authorities in India for acquiring residential/commercial property in India ? A) Non Resident Indian citizens do not require RBI permission. RBI has granted general permission to foreign citizens of Indian origin to purchase immovable property in India for their bonafide residential purpose. Q7) What is the mode of payment of purchase consideration ? A) Foreign citizens of Indian origin should remit the purchase consideration out of their NRE/FCNR accounts maintained with Banks in India or through foreign exchange inward remittances. Q8) I am a foreign citizen of Indian origin. Do I need to inform RBI at the time of purchase of property ? A) Yes. You need to file a declaration in form IPI 7 with the Central office of RBI at Bombay within a period of 90 days from the date of purchase of immovable property, along with the certified copy of the document evidencing the purchase transaction and the bank's certificate regarding the origin of funds for payment of consideration. Q9) I want to sell my property, does that need separate permission from RBI ? A) RBI has granted general permission to sell such properties. However, if the new buyer is another foreign citizen of Indian origin, the purchase consideration should be paid out of NRE/FCNR accounts or through inward remittances. Q10) Can I remit sale proceeds of such property out of India ? What is the procedure for repatriation of money ? A) In case of sale of residential properties purchased on or after May 26 1993, repatriation is allowed only to the extent of original consideration paid out of foreign exchange source for two of such properties. The balance amount of the sale proceeds will have to be credited to Non-Resident Ordinary Rupee account of the owner. In case of properties purchased prior to May 26, 1993, the sale proceeds cannot be remitted outside India and these proceeds have to be credited to NRO accounts of the owner. Form IPI 8 has to be submitted to RBI at Bombay within 90 days of the sale of property to seek repatriation of sale proceeds. Application for the same is considered provided the sale takes place after 3 years from the date of final purchase deal or from the date of payment of final installment whichever is later.