Post on 07-Apr-2018
transcript
8/3/2019 Presentation _ NRI
1/50
To be or notto be..Presenta tion on Non
resident Indians
Institute of Chartered Ac countants of India
Dahisar Study Circ le
Presenta tion by :CA. Sudha G. Bhushan
8/3/2019 Presentation _ NRI
2/50
Definition
Regulators
Releva nt definition
Deposits
Investment
By : CA. Sud ha G. Bhusha n
8/3/2019 Presentation _ NRI
3/50
Regulators
Regula
tors
Reserve Bank of Ind ia
Sec urities andExc hange Boa rd of
India
Authority for Ad vanceRuling
Sec reta riat for Ind ustria lAssista nc e
Foreign InvestmentImplementation
authority
8/3/2019 Presentation _ NRI
4/50
Person resident inIndiaSec tion 2(v) o f FEMA
8/3/2019 Presentation _ NRI
5/50
Person resident outside Ind ia
person resident outside Ind ia means aperson who is not resident in Ind ia ; [As per
FEMA Sec 2(w)]
8/3/2019 Presentation _ NRI
6/50
A person (Ind ividua l) resident inIndia
A person (being an ind ividua l) residing in Ind ia for morethan one hundred and eighty-two days during the c ourseof the prec ed ing financ ial year but does not inc lude
(A) A p erson who has gone out o f Ind ia or who sta ys outsideInd ia , in e ithe r c ase
(a)for or on taking up em ployment outside Ind ia , or
(b)for carrying on outside India a business or vocationoutside Ind ia , or(c)for any other purpose, in suc h c irc umsta nc es as
would ind ic a te his intention to sta y outside Ind ia foran uncerta in pe riod ;
8/3/2019 Presentation _ NRI
7/50
(B) A person who has come to or stays in India,in e ithe r case, otherwise than
(a) for or on taking up emp loyment in Ind ia ,
(b) for carrying on in India a business orvoc a tion in Ind ia ,
(c ) for any other purpose, in suc hcircumstances as would indicate his intentionto sta y in Ind ia for an uncerta in period ;
8/3/2019 Presentation _ NRI
8/50
Two Cond itions must-Resident
He should be resid ing in Ind ia for a t lea st 183days during the p rec ed ing financ ia l yea r
He should have c ome to Ind ia or is sta ying inInd ia eithe r for taking up employment or c arrying on business or voc a tion in Ind ia or for any other purpose, that would ind ic a te his
intention to sta y in Ind ia for an unc erta in period .
8/3/2019 Presentation _ NRI
9/50
An Examp le
Mr. Paul c ame to Ind ia on 1 Sep 07 fortaking up an employment in Ind ia .
Financ ial Year 2006-07Financ ial Year 2007-08
8/3/2019 Presentation _ NRI
10/50
For the Financial Year 2006-2007, he wasnot in India. As such, for the financial year
2007-2008 he is no t resident of Ind ia .
For the Fina nc ia l Year 2007-2008, he was inIndia for more than 182 days. As such, he is
resident of Ind ia for the financ ia l yea r 2008-2009.
8/3/2019 Presentation _ NRI
11/50
An Examp le
Mr. Eberha rd t c ame to Ind ia on 1 Sep 07as a tourist and since then he is in India till
today.
8/3/2019 Presentation _ NRI
12/50
For the Financial Year 2006-2007, he wasnot in India. As such, for the financial year
2007-2008 he is no t resident of Ind ia . For the Fina nc ia l Year 2007-2008, he was in
India for more than 182 days. However, heis not in India for any of the purposes listedin the sec ond c ond ition. As suc h, he is not a
resident of Ind ia for the financ ia l yea r 2008-2009 too.
8/3/2019 Presentation _ NRI
13/50
An Examp le
Mr. Ashok, born and brought up in India,goes to the USA for taking up an
employment on 15-5-2007. Determine hisresidentia l sta tus und er the Ac t fo r the F.Y.2007-2008.
8/3/2019 Presentation _ NRI
14/50
An Examp le
Mr. Bharat, born and brought up in India,goes to USA on 10-4-2007 to look after his
mother, who is suffering from a chronicdisease , with the intention to stay in theUSA till his mother rec overs. Dete rmine hisresidential status under the Act for the
financ ia l year 2007-2008 and 2008-2009.
8/3/2019 Presentation _ NRI
15/50
Mr. Ashok sha ll be trea ted a Resident o f Ind ia till 14-5-2007.
With e ffec t from 15-5-2007, he sha ll be trea ted aNon-Resident as he is c overed by one of the
exc ep tions listed in sub -clause (A) to sec tion 2(v).
8/3/2019 Presentation _ NRI
16/50
An Examp le Mr. Bharat is going to USA (on 10.04.07) neither for
employment nor for business nor for any purposeswhich indicate his intention to stay there for anunc erta in period . Thus, his physic a l p resenc e inIndia during the preceding F. Y.; i.e., 2006-2007sha ll have to b e c onsidered and as he was in Ind iafor 365 days during the F. Y. 2006-2007 he wouldbe treated Resident of India for the financial year2007-2008.
If he c ont inues to sta y in USA, say, till 31-3-2009, hisstay in India during the preceding financial year;
i.e., 2007-2008 would be less than 183 days andhence he would be treated Non-Resident for thefinancial year 2008-2009 as the first condition ofthe p hysic a l sta y in Ind ia is no t fulfilled .
8/3/2019 Presentation _ NRI
17/50
Not Permanently Resident
Means a person resident in India for theemployment of a specified duration
(irrespective of length thereof) or for aspec ific job or assignment, the d uration o fwhich does not exc eed three years.
8/3/2019 Presentation _ NRI
18/50
Not Permanently Resident
(NPR)- Fac ilities enjoyed Remittance for maintenance of close
relatives abroad, exceeding net salary (afterdeduction of taxes, contribution to provident fundand other deduc tions).
Can acquire or sale any foreign security without anyprocedures or formalities or permission out of hisforeign c urrenc y resources outside Ind ia
He can possess without limit, foreign currency in theform of currency notes, bank notes and travellersc heq ues, if suc h foreign c urrency wa s ac quired , heldor owned by him w hen he was resident outside Ind iaand ha s been brought into Ind ia in ac c ordance withthe reg ula tions ma de under the Ac t.
8/3/2019 Presentation _ NRI
19/50
Restric tions on dea ling in Foreign
Exchange
Sec tion 3 of FEMA p rovides for a b lanketrestric tion on d ea ling in foreign exc hange
by any p erson unless it is permitted Und er the p rovisions of the Ac t
Und er the p rovisions of the Rules madeunder the Ac t
Und er the p rovisions of the Regula tions
framed under the Ac t By Genera l or spec ial permission of RBI
8/3/2019 Presentation _ NRI
20/50
Restric tions on dea ling in ForeignExchange
Clause (a ) p rohib its any person
To dea l in foreign exc hange or foreign
security To transfer any foreign excha nge sec urity to
any person other tha n an authorised person.
Clause (b ) p rohibits every person for making
any payment to or to the c red it of a personresident outside Ind ia in any manner.
8/3/2019 Presentation _ NRI
21/50
Illustra tions: Restric tions on d ea ling inForeign Exc ha nge
(1) Ca n Mr. Pandya, a resident of Ca nada,instruc t his b rother sta ying in Mumba i to make apayment of Rs. 5,000 to Mr. Joshi, his c lose friend .
Ans: No. Suc h payment is not permitted underc lause (b) of sec tion 3 of the Ac t
(2) Mr. Rakesh, a resident of UK asks his Cha rteredAc c ountant in Ind ia to form a Pvt. Ltd . Co . andproposes to reimburse a ll the expenses a fte r theforma tion o f the c ompany. Whether, the Ind ian
Chartered Acc ountant, c an spend for the abovepurpose on b eha lf of Mr. Rakesh ?Ans: No, as suc h payment is not permitted underc lause (b) of sec tion 3 of the Ac t.
8/3/2019 Presentation _ NRI
22/50
Restric tions on dea ling in ForeignExchange
Clause (c ) prohib its every person forrec eiving a ny pa yment from or on b eha lfof a person resident outside Ind ia exc ep t
by wa y of an inwa rd remittance, from ap lac e outside Ind ia through an authorisedperson.Clause (d) p rohib its a person to enter intoany financ ia l transac tion in Ind ia asc onsidera tion for ac quisition, c rea tion or
transfer of a right to ac quire any assetoutside Ind ia by any person. The c lausewould affec t a transac tion in the na ture o f Hawa la Transac tion .
8/3/2019 Presentation _ NRI
23/50
Restric tions on Ind ian Resident
Sec tion 4 provides for a b lanketp rohib ition on a person resident in Ind ia to
ac quire, ho ld , own, possess or transfer anyforeign exc hange, foreign sec urity or anyimmovab le p roperty situa ted outsideIndia except as permitted under the Ac t,
Rules or Regula tions made thereund er Exc eptions to sec tion 4..
8/3/2019 Presentation _ NRI
24/50
Exc ep tions to sec tion 4.. Sec tion 6(4) of the Ac t p ermits a person resident in
India to hold, own, transfer or invest in foreigncurrency, foreign security or any immovable
property situated outside India if such currency,security or property was acquired, held or ownedby suc h person when he was resident outside Ind iaor inhe rited from a person resident outside India .IllustrationMr. Pa te l, who was resident of USA fo r many years,
now permanently returns to Ind ia . He c ontinues tohold some immovable property, foreign securityand othe r foreign exc hange assets in USA. Ca n heho ld suc h a ssets outside Ind ia?
8/3/2019 Presentation _ NRI
25/50
Bank Ac c ountsThe FEM ( Deposit) Regula tions,2000
www.taxper tpro.com
8/3/2019 Presentation _ NRI
26/50
Rupee Ac c ount
Foreign Currenc yAccount
By : CA. Sud ha G. Bhusha n
8/3/2019 Presentation _ NRI
27/50
Rupee Ac c ount
Non resident (Externa l) Rupee Ac c ounts(NRE Ac c ounts)
Ord ina ry Non resident Rupee Ac c ount(NRO Ac c ounts)
By : CA. Sud ha G. Bhusha n
http://ca%20presentation%20_%202102011/fema-anoverview-apresentationbysudha-110523141147-phpapp02.pdfhttp://ca%20presentation%20_%202102011/fema-anoverview-apresentationbysudha-110523141147-phpapp02.pdfhttp://ca%20presentation%20_%202102011/fema-anoverview-apresentationbysudha-110523141147-phpapp02.pdfhttp://ca%20presentation%20_%202102011/fema-anoverview-apresentationbysudha-110523141147-phpapp02.pdf8/3/2019 Presentation _ NRI
28/50
Differenc e between NRO
NRE Accounts
Interest rate on NRO account is muchhigher than NRE acc ount.
NRE accounts are tax free whereas NROaccounts are not.
Up to a Million Dollars is repatriab le in NROAccount.
8/3/2019 Presentation _ NRI
29/50
GeneralPermissions
8/3/2019 Presentation _ NRI
30/50
Resident individuals,pa rtnership/ proprietorship
can ava il interest bearing rupee loa ns fromNRIs/ PIOs out o f funds rem itted by them
from abroad or out of funds held in theirbank accounts in India, on non repa triation
basis.
NRIs/ PIOs to transfer b y way o f g ift sha res
held by them in Indian compa nies andto transfer by way o f gift immovab le
property held by them in India subjec t to
c omp lianc e w ith other app lic ab lerules/ reg ulations includ ing the p rovisions of
Foreign Co ntribution Reg ulations Ac t, 1976by the c haritab le trust/ organisation
concerned.
Domestic public/private sector mutual fundsc an issue Units to NRIs/ PIOs on b oth
rep a tria tion as we ll as non-rep a tria tion basis
8/3/2019 Presentation _ NRI
31/50
NRIs/ PIOs to p lac e deposits withIndian firms, on non-repatriationbasis and with Ind ian com paniesinc lud ing Non-ba nking financ ia lc ompanies on non-rep a tria tion
basis out o f domestic sourc es.
NRIs/ PIOs fo r sa le of sha resac quired unde r d irec t
investment Sc hemes on stoc k
excha nges in Ind ia .
NRIs/ PIOs fo r sa le of sha resac quired unde r d irec t
investment Sc hemes on stoc kexcha nges in Ind ia .
NRIs / PIOs fo r transfer of sha res,by wa y of sa le und er priva te
a rrange ment toanother NRI or to a resident
8/3/2019 Presentation _ NRI
32/50
InvestmentOpportunities
http://pictorial%20presentation.pdf/http://pictorial%20presentation.pdf/http://pictorial%20presentation.pdf/http://pictorial%20presentation.pdf/8/3/2019 Presentation _ NRI
33/50
Investment in Immovable Property
Investment in Proprietary and PartnershipFirm
Portfolio Investment (PIS)
Foreign Direct Investment (FDI)
Lending in Rupees
Lending in Foreign Currencies (ECB)
8/3/2019 Presentation _ NRI
34/50
CA Sud ha G. Bhusha n
Investment in Immovable Property (IP) inIndia
NRI who is either a citizen of India or a Person of IndianOrigin can purchase or sell IP in India under automaticroute.
A citizen of Pakistan or Bangladesh or Sri Lanka orAfghanistan or China or Iran or Nepal or Bhutan cannotacquire IP in India other than lease not exceeding 5 years.
Citizen of foreign countries who are not PIO cannotacquire any IP in India without RBI Permission.
Permitted Immovable Property can be residential orcommercial other than an agricultural property, plantation,or a farm house.
8/3/2019 Presentation _ NRI
35/50
CA. Sud ha G. Bhusha n
Repatriation of sale proceeds
Sale of IP other than agricultural land/farm house/plantation property in India -repatriation of the saleproceeds permitted subject to conditions as under:
The IP was acquired as per Exchange Laws The amount to be repatriated does not exceed the
original amount invested (i.e. capital gain if anycannot be repatriated).
In case of residential houses, the repatriation isrestricted to two such houses.
US$ 1 million scheme-for IP held in India
8/3/2019 Presentation _ NRI
36/50
Investment in Firm or Proprietary Concern
Permitted to NRIs/PIOs
PIOs who are not citizen of Bangladesh,Pakistan or Sri Lanka
Firm should not undertake- Print Media,Agricultural/ Plantation & dealing in land andimmovable property
Capital invested cannot be repatriated
Income can however be repatriated
8/3/2019 Presentation _ NRI
37/50
8/3/2019 Presentation _ NRI
38/50
Sectors/activities where FDI is prohibited.
Approval from Govt.- Approval Route
Automatic Route of RBI
8/3/2019 Presentation _ NRI
39/50
DirectInvestment
Portfolio
Investment
8/3/2019 Presentation _ NRI
40/50
India
RepatriationBasis
Non rep atriationBasis
8/3/2019 Presentation _ NRI
41/50
CA Sud ha G. Bhusha n
Foreign Direct InvestmentInvestment in Capital - equity, preference,
convertible preference, Convertible debentures.
Automatic RouteGovernment Approval Route
Investment on repatriation basis- sale proceeds net
of taxes eligible for repatriation out of India
8/3/2019 Presentation _ NRI
42/50
FE(Transfer or issue of sec urity by a
person resident outsideIndia)regulations, 2000
Sc hedule III
Purchase/sale ofshares and /orc onvertib le deb enturesby a NRI on a stockexchange in India onrepatriation and/or
non repatriation basisunder portfolioinvestment Sc heme
Sc hedule IV
Purchase and sale ofSha res/ c onvertibledebentures by a NRIon non repatriation
basis
8/3/2019 Presentation _ NRI
43/50
CA Sud ha G. Bhusha n
Portfolio Investment by NRIs
Limit of 5% by single NRI, 10% by all NRIs (can beincreased to 24%) to be maintained
Payment to come from NRE/FCNR or NRO (in caseof non repatriable investment)
Delivery based purchase and sale permitted
OCBs are not permitted after 29/11/2001 to invest inPIS
8/3/2019 Presentation _ NRI
44/50
Sc hedule IV
Chit Fund or a Nidhicomp any or
Agricultural/plantationac tivities or real e sta te
business orconstruction of farmhouses or dealing in
Transfer ofDeve lopm ent Rights.
rea l esta te b usinessshall not inc ludedevelopment of
tow nship, constructionof resident ial/
commercial premises,road s, bridg es, etc .
by way of inwardremittanc e through
normal b ankingc hannels or out o f
funds held inNRE/ FCNR /NRO
ac co unt maintained
with a n authoriseddealer
The am ount investedin sha res or c onvertibledeb entures under this
Sc heme a nd theca pital ap preciationthereon sha ll not b e
allowed to b erepa triated ab road .
8/3/2019 Presentation _ NRI
45/50
Business of c hit fund , or ii) Nidhi c ompany, or iii) Ag ric ultural or p lanta tion ac tivities, or
iv) Rea l esta te business* or c onstruc tion o f farmhouses, or
v) Trad ing in Transferab le Deve lopment Rights (TDRs).
* Rea l esta te business" does not inc lude c onstruc tion o fhousing / c ommerc ia l p remises, educ a tiona l institutions,rec rea tiona l fac ilities, c ity and reg iona l levelinfrastructure,townships
8/3/2019 Presentation _ NRI
46/50
CA Sud ha G. Bhusha n
Investment in Shares/CDs on
non-repatriation basis by NRIs
Scheme applies to investment other than PI
NRIs may acquire without any limit, shares underpublic issue, private placement or right issue
The Condition of Central Govt., approval if investorhas previous JV or technical collaboration or trademark agreement in the same or allied field has beendone away with
Not permitted- investment in companies engaged inchit fund/nidhi, agricultural/plantation or real estatebusiness or construction of farm house or dealing inTDRs
8/3/2019 Presentation _ NRI
47/50
Investment in securities other than
shares or CDs by Non Resident
Investment onrepatriation basis in
Dated Govt.,securities/treasury bills,
NCD and Units ofDomestic MF
Bonds issued by Publicsector undertaking
Investment on NonRepatriation basis by
NRIs in units of moneymarket funds in India orNational Plan/SavingCertificates.
8/3/2019 Presentation _ NRI
48/50
CA Sud ha G. Bhusha n
Lending in Indian Rupees by NRI
Non Corporate entity can borrow from NRI orPIO on non-repatriation basis subject tofollowing conditions:
The period of loan should not exceed 3 years
the rate of interest on the loan shall not
exceed 2% over the Bank rate prevailing onthe date of availment of loan;
8/3/2019 Presentation _ NRI
49/50
CA Sud ha G. Bhusha n
Lending in Foreign Currency by NRI
An individual resident in India may borrow a sumnot exceeding US $ 250,000/- form his closerelatives outside India, subject to the conditions that the minimum maturity period of the loan is one
year the loan is free of interest; and 'Close relative' means relative as defined in
Section 6 of the Companies Act, 1956At the end of the term loan amount can be
repatriated.
8/3/2019 Presentation _ NRI
50/50
THANKS..
CA. Sud ha G. Bhusha n
Taxpert Professiona ls Priva te Limitedwww.taxpertpro.com
09769033172
sudha g999@gmail.c omsudha@ta xpertp ro.c om
http://www.taxpertpro.com/mailto:sudhag999@gmail.commailto:sudha@taxpertpro.commailto:sudha@taxpertpro.commailto:sudhag999@gmail.comhttp://www.taxpertpro.com/