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Non-Resident Indian (NRI): All the Details You Must Know Thumbnail

Non-Resident Indian (NRI): All the Details You Must Know


People of Indian descent who decide to leave their homes for an unknown amount of time to pursue work, school, or adventure must take action while in India to prepare for their life abroad. 

There are many things an NRI must do to ensure they’re not breaking laws or accruing penalties for financial oversights. So, what does NRI mean? An NRI is an Indian passport and rupee account holder who lives in another country. 

Continue reading to learn more about overseas Indians, Indian migration, NRI definitions, and tips for an NRI filing tax in India. 

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NRI Meaning

Non-resident Indians (NRIs) are people with Indian citizenship who are residents of a country outside India. 

Who Is an NRI?

The definition of NRI is a non-resident Indian citizen with an Indian passport who: 

  • Resides in India for less than 182 days over the course of the financial year
  • Has not stayed in India for more than 365 days total or 60+ days in a year over the four previous years
  • Leaves India to obtain employment 
  • Exits India for business or vocation 
  • Immigrates out of India for an unspecified length of time

Anyone meeting the above criteria who leaves their home country of India for an indefinite amount of time is eligible for NRI status. 

NRI and the Law

Understanding the laws for NRIs is essential to avoid costly fines or penalties for unknowingly breaking the law. The three main Acts pertaining to a non-resident Indian include the following: 

These three Acts decide taxable income, which accounts and investments NRIs can legally hold, and who’s eligible for an Aadhar Card. 

Income Tax Law

The Income Tax Act dictates whether an Indian citizen must pay tax on global income earned if they are no longer an Indian resident. 

The mandates to qualify for NRI status for tax purposes are listed above. For example, those who stay in India for more than 182 days in a financial year are considered Indian taxpayers, and Indian taxation rates apply. 

For tax purposes, NRI status allows non-resident Indians to visit their home country or rent property in India without breaking income tax laws, as long as the proper protocols are adhered to. 

NRE Funds

NRE accounts are not tax-free and are subject to income tax laws, but the interest earned on NRE-fixed deposits is tax-free. 

Chartered Accountant

It’s best to hire a professional and reliable chartered accountant or certified financial planner to help you navigate the tax laws of multiple countries. Be transparent with your chartered accountant to ensure you’re following all regulations for non-resident Indians. 

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The Foreign Exchange Management Act (FEMA) dictates who qualifies for NRI status. Unlike Income Tax Law, FEMA qualifies a person as an NRI the day they leave the country for an undetermined amount of time. 

Aadhar Law

Aadhar law states that information on your Aadhar Card can only get revised twice. 

It is not mandatory for NRIs to have an Aadhar Card. However, if you already own one, ensure your information is up-to-date while still in India to ensure smoother banking operations in a foreign country. 

Government Schemes

It is illegal to invest in Indian government schemes with NRI status. Some of the government schemes non-resident Indians cannot invest in include the following: 

  • Public Providence Fund (PPF) 
  • Post Office Schemes 
  • Sr. Citizen Schemes 
  • Sukanya Samriddhi Yojana 

That said, if non-resident Indian citizens have existing PPF investments, they can continue until it matures. However, they cannot extend the investment period with NRI status. 

NRI Banking

Non-resident Indians have several bank accounts they can open as a former resident of India. However, only some bank account types are in accordance with NRI laws. 


FEMA and Income Tax laws allow NRIs to have special bank accounts while living in a foreign country. These three accounts are NRE, NRO, and FCNR for non-resident Indians. 

Under FEMA law, Indian Savings Bank (SB) accounts are illegal for NRIs. Harsh penalties apply to those with NRI status who have SB accounts. 


A Non-Resident External (NRE) account is a freely repatriable bank account that allows a citizen of India to store their salary earnings in rupees while living abroad. 


Non-Resident Ordinary (NRO) accounts can process transactions from inside India. NRO accounts are suited for NRIs with business in India. For example, if you live abroad but have rental properties, your tenants will have funds deposited into your NRO account. 

Remember, income earned within India is taxable by standard Indian income tax laws.


A Foreign Currency Non-Resident Account (FCNR) account is a term deposit account where NRIs can store their money in a foreign currency or invest income earned outside of India. 

If non-resident Indian studies behavioral finance in their new country, they might prefer using an FCNR account. This account type is ideal for NRIs if they’re uncertain about the banking institutions of their current residence but also don’t want to convert their foreign currency to rupees. 

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Other Accounts to Consider

Other accounts to consider are fixed-deposit investment accounts like:

  • Term Deposit Receipt (TDR)
  • Recurring Deposit (RD)
  • Special Term Deposit Receipt (STDR)

Withdrawing and Transfers

Non-resident Indians can transfer money from their NRE to their NRO accounts. However, NRIs cannot transfer funds from an NRO to an NRE account. 

All SB accounts must be converted to NRO accounts to transfer funds from savings to your NRI bank accounts. 

The non-resident Indian community can withdraw funds from NRE accounts in a foreign country like Singapore, Canada, or the USA.  

The maximum transfer limit from your NRE to your NRO is one-million USD per financial year. Remember, interest earned on NRE-fixed deposits is 100% tax-free, while interest on NRO accounts is taxable. 

Requirements for New NRIs

New NRIs must perform the tasks below to ensure they’re in compliance with tax laws, FEMA laws, and Aadhar laws. 

Close or Convert Accounts

As Indian nationals, many NRIs have multiple SB accounts with different banking institutions. However, residential SB accounts are not permitted under FEMA laws, so you must close or convert these savings accounts to NRI-approved ones. 

Ensure Updating of Account Information

Instead of closing your SB accounts entirely, your bank may be able to convert your SB account into an NRO account. 

Most of the time, you’ll keep the same banking number, but in some cases, the NRO account may have different details than your former SB account. In that case, now is the time to update your account information and contact details so your accounts are accurate and up-to-date. 

Update SB Accounts

Once your SB accounts are converted to NRO accounts, update anyone who uses your SB account for deposits with your new account details. For example, tenants can pay rent to your NRO account instead of the SB account. 

What to Do With Accounts Upon Return

Under FEMA law, when non-resident Indians return to India, they gain residential status the moment they return.

Indian residents must close their NRE and NRO accounts upon return if they plan to stay in their home country or exceed their stay longer than stated in the Income Tax Act. 

Loan Accounts

NRIs should clear up any outstanding loan accounts upon return to India. If a non-resident Indian has settled a loan, they should get documentation to take back to their country of residence, including the following: 

  • Get loan closure letters from the bank 
  • Obtain a nil balance letter from the bank 
  • Get back collateral or documents of collateral 

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NRI Cards

People from India living abroad need to carry some NRI cards with them to take advantage of Internet banking and online services. 

PAN Cards

NRIs must have a Permanent Account Number (PAN) card. However, it is illegal to have multiple PAN cards. 

PAN Cards are easy to get at your preferred Indian bank, and they take around two weeks to arrive after you apply. While getting your PAN Card in India, apply for an E-PAN Card, a virtual version of your PAN, for storage and safety while abroad. 

Aadhar Cards

NRIs classified by the Income Tax Act are not eligible for an Aadhar Card. 

Purchasing Land as an NRI

As long as NRIs act in accordance with FEMA law, non-resident Indians can purchase residential and commercial land in India.

What NRIs Cannot Do

NRIs cannot buy, sell, inherit, or receive agricultural land as a gift under FEMA law. 

Housing and Property Accounts

There are virtually no restrictions for NRIs to own housing and property accounts in India as long as FEMA and the Reserve Bank of India (RBI) regulations are followed. However, purchases must get paid in rupees from an NRO account. 

DEMAT Account

NRIs need a DEMAT account to invest in the Indian stock market, ETFs, convertible debentures, and mutual funds in India while abroad. 

Family Factors

When a person of Indian origin visits their home country, family factors must be considered. For example, family members can share housing and property accounts with a non-resident Indian, but NRIs cannot inherit agricultural land. 

The Indian community respects their elders, so NRIs should factor in how they’ll financially care for their parents and relatives while living and working abroad. 

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Find answers to FAQs about NRIs, OCIs, and more below. 

Are the Laws the Same in Different Countries for NRIs?

The laws that affect NRIs are enforced by Indian authorities and apply to non-resident Indians regardless of their new resident country. 

Some Indian laws can affect NRIs living in different countries where those laws don’t apply, like the loss of rights to agricultural land inheritance. 

What Is an (OCI) Overseas Citizen of India?

An overseas citizen of India or OCI status gives foreign nationals the right to live and work in India. For example, with overseas citizenship in India, someone from Singapore would obtain an OCI card and reside in India. However, OCI status is not dual citizenship. 

Is Someone With an L-1, E-2, or Eb-5 Visa an NRI?

Someone with an EB-5 Visa, L-1, and E-2 visa is not typically eligible for NRI status. Speak with an Indian immigration lawyer for more details about eligibility for your circumstances. 


Now that you have all the details about non-resident Indians, you can say goodbye to your loved ones and the largest Indian population and live abroad as an NRI with peace of mind. 

Whether you are seeking a job, schooling, or a life outside of India for an undetermined amount of time, following the advice above and getting personalized advice from a certified financial planner will help NRIs stay in line with the law and feel financially prepared for their adventure.