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Definition Under IT ACT 1961
DEFINITION OF AN NRI
The commonly used nomenclature "Non Resident Indian" actually covers three types of invdividuals/entitities. They are defined as:
Non Resident Indian
Person of Indian Origin
Overseas Corporate Bodies
Non Resident Indian
Non-resident Indian nationals generally fall under
any one of the following categories :
- Indian citizens who stay abroad for
employment or for carrying on any business
or vocation or for any other purpose in
circumstances indicating an indefinite period
of stay outside India.
- Indian Citizens working abroad on assignments
with foreign Governments or regional/
international agencies like the World Bank,
International Monetary Fund,World Health
Organization and Economic and Social
Commission for Asia and the Pacific etc.
- Officials of Central and State Governments
and Public sector undertakings deputed
abroad on temporary assignments with
foreign Governments/agencies/organisations or
posted to their branches or offices abroad.
Non-residents defined above and coming to India
for short visits viz., holidays, business visits
etc. would not lose their non-resident status.
Indian citizens who take up jobs on completion of
their higher studies abroad would be regarded as
Non-residents from the time of taking up such
jobs.
Non-resident Indians become resident in India
when they come back to India for employment or
for carrying on in India any business or
vocation or for any other purpose indicating an
indefinite period of stay in India. They are not
regarded as persons resident in India during
their short visits to India, say, on holiday,
leave, etc.
Persons of Indian Origin
A person is deemed to be of Indian origin if he at any time held an Indian passport or he or either of his parents or any of his grandparents was an Indian and a permanent resident in undiveded India at any time. A wife of citizen of Indian or of a person of indian origin is also deemed ot be of Indian origin even though she may be of non-Indian parentage. For the purpose of the facility of opening and maintenance of various types of bank accounts and making investment in shares and securities in India, a foreign citizen (not being a citizen of Pakistan or Bangladesh) is deemed to be a person of Indian origing if -
i) he, at nay time, held an Indian passport; or
ii) he, or either of his parents or any of his grandparents was a citizen of India by virtue of the constitution of India or Citizenship Act, 1955.
A spouse (not being of citizen of Pakestan or Bangladesh) of an Indian citizen or of a person of Indian origin is also treated as a person of Indian origin for the above purpose provided the bank accounts are opened or investments in shares and securities in India are made by such persons jointly with their NRI spouses only.
Overseas Corporate Bodies
Overseas corporate bodies predominantly owned by
individuals of Indian nationality or origin,
corporate bodies, which are owned, directly or
indirectly, to the extent of at least 60% by
individuals of Indian nationality or origin
resident outside India as also overseas trusts
in which at least 60% of the beneficial interest
is irrevocably held by such persons. The
various facilities granted to NRIs are also
available, with certain exemptions, to OCBs so
long as the ownership /beneficial interest held
in them by persons of Indian nationality/
origin resident outside India continues to be at
or above the level of 60%. In order to
establish that the ownership interest of or
beneficial interest in any OCB held by
individuals of Indian nationality/origin resident
outside India is not less than 60%, the concerned
corporate body/trust should obtain and
furnishing at the time of applying for the
facility for the first time and thereafter as
and when required by Reserve Bank/authorized
dealer, a certificate from an overseas
auditor/chartered accountant/certified public
accountant in Form OAC where the
ownership/beneficial interest is directly held
by NRIs, and in Form OAC 1 where it is held
indirectly by NRIs.
UNDER INCOME TAX ACT 1961
Non-Resident Indian has been defined to mean an
individual being a citizen of India or a person
of Indian origin, who is not a resident. A person
shall be deemed to be of Indian origin if he or
either of his parents or any of his grand
parents was born in undivided India. A
concessional rate of tax is charged on
- Investment income, and
- long-term capital gains derived from a
"foreign exchange asset" i.e. any
"specific asset" which the assessee had
acquired with or subscribed to in "
convertible foreign exchange."
An individual will be "Resident" in India in a
previous year if he satisfies one of the
following three conditions :
- he is in India that year for a period or
periods amounting in all to 182 days or
more ;
or
- he has been in India
(i) for a total
period of 365 days in four years
preceding the previous year and
(ii) for
60 days or more in that previous year.
However, in the case of following
categories of persons, the limit of 60
days will be increased ;
(i) to 182 days in the case of a citizen of
India who leaves India in any year for the
purpose of employment outside India or as a
member of a crew of an Indian ship; and
(ii) to 150 days in the case of a citizen of
India or a person of Indian origin who
resides outside India and comes for a visit
to India.
Non Resident Indian
An individual is Non Resident for income tax purpose, when he is "not a resident" as per above definition or who is "not ordinarily resident". A person is treated as "not ordinarily resident" when any of the following conditions is satisfied:
- if he has not been resident in India in nine out of ten preceding years; or
- . if he has not been in India for a period of 730 dyas or more during the preceding seven years.
A person who is Non Resident in India or Not Ordinarily Resident, is taxed in India only for his income in India. Hes is not taxed in India for income abroad.
In case of an incorporated body, it will be
treated as Non-Resident' if it is incorporated
outside India.In case of partnership or
association of persons established outside
India, it will be treated as `Non-Resident' as
long as the entire control of such partnership
or association is held outside India.
Source: Indian Investment Centre
Last Update: August 31, 1998
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