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FEMA Regulations for NRIs

FEMA Regulations for NRIs

The Government of India enacted the Foreign Exchange Management Act (FEMA) in 1999 to formulate rules and regulations concerning the flow of currency across international borders. Non-Resident Indians (NRIs) must be aware of the specific fundamental statutory provisions in this regard, as FEMA rules for NRIs may impact the operations and financial activities within India by NRIs. Below are few FEMA regulations every NRI must be aware of:

  • Banking Operations in India – An NRI cannot maintain a Resident Savings Account in India. As such, if he/she wishes to conduct any banking transactions, he/she is required to open NRI Account in India. FEMA regulations allow NRIs to open three types of bank accounts, namely, Non Resident External (NRE), Non Resident Ordinary (NRO) and Foreign Currency Non Resident (Bank) Accounts [FCNR (B)]. While NRE and NRO Accounts are maintained in Indian Rupees, the FCNR (B) Account stays denominated in the foreign currency itself. Different types of NRI Accounts have different features including different rules of NRI taxation, allowability of rupee credits in account, repatriability of the balance in NRI Accounts, etc. and accordingly, NRIs must make an informed decision about the type of account to be opened by them. Further, NRIs must intimate the Bank of any change in their residential status as per FEMA rules, since such change in residential status impacts the operations of the Bank Accounts. This is because you are not allowed to operate NRE/NRO Accounts as a Resident Indian and a Non-Resident is not allowed to operate a Resident Savings Account.
  • Number of Bank Accounts in India – An NRI is free to open NRI Accounts with any authorised bank. Further, there is no prohibition under FEMA regulations for NRIs to open and maintain more than one type of accounts and also more than one account within the similar category of NRI Accounts as discussed above.
  • Sending/Carrying Foreign Currency to India – An NRI can remit foreign currency into India without any limit. However, in case he/she carries currency notes, travellers' cheques and banknotes while travelling to India, a declaration is required to be made to Custom authorities on arrival in India through a specified Currency Declaration Form (CDF). Such declaration is not required; if:
    • the foreign currency notes are less than or equal to US$ <5,000>, OR  
    • total of travellers’ cheques and banknotes are less than or equal to US$ <10,000> within which the foreign currency notes are less than
  • Acquisition of immovable property – There is no restriction specifically on NRIs to purchase residential or commercial property in India. Further, besides buying such property, NRIs can also receive immovable properties through inheritance or as gifts from relatives. However, they cannot acquire agricultural land, plantations, and farmhouses, etc., (except through inheritance) as the transactions are covered under the list of prohibited transactions.



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