Definitions of an NRI under FEMA and the Income Tax Act


Income Tax , nrihelp.info, Tax benefits to NRIs

Residential Status of a person under Foreign Exchange Management Act, 1999 and Indian Income Tax Act, 1961

There are two different basic definitions of a Non-Resident Indian (NRI) under FEMA and the Income Tax Act

  1. The Foreign Exchange Management Act, 1999 (FEMA):

Section 2(w) – “person resident in outside India” implies an individual who is not resident in India.

Section 2(v) – “person resident in India” implies

  1. an individual residing in India for more than 182 days during the preceding financial year but does not involve
  2. an individual who stays in abroad or who has gone out of India, in either case-
  •  for or on carrying on employment outside India, or
  •  for taking up business in overseas or vocation in abroad, or
  •  for any other purpose, in such situations, as would indicate his purpose to stay in the outside country for an uncertain period of time;
  1. a person who has stayed or come to in India, in either case, otherwise than-
  • for or on taking up employment in India, or
  • for carrying on in India business or vocation in India, or
  • for any other purpose, in such situations, as would indicate his goal to stay in India for an uncertain period;
  1. any individual or body corporate registered or incorporated in India,
  2. an office, branch or agency in India owned or controlled by an individual resident of an outside country,
  3. an office, department or agency outside India held or controlled by a person resident in India;

Under the Income Tax Act,1961: The definition of “Residence in India” under Section 6 of the Income Tax Act is as follow:

  1. An individual is supposed to be resident in India in any previous year if he—
  • is in India in that particular year for a period amounting in all 182 days or more; or
  • having within the 4 years preceding that year been in India for a period amounting in all to 365 days or more that is in India for a period or periods totalling in all to 60 days or more than that in that specific year.
  1. A Hindu undivided family (HUF), firm or any other association of persons is supposed to be resident in India in any earlier year in every case except where during that year the management, as well as control of its affairs, are situated wholly outside India.
  2. A company or firm is said to be a citizen in India in any previous year, if—
  • it is an Indian company; or
  • during that year, the control and management of its affairs are situated wholly in India.
  1. Every other person is supposed to be the native in India in any previous year in every case, except where during that particular year the control and management of his affairs are situated wholly outside India.

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Definitions of an NRI under FEMA and the Income Tax Act

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