Law, Legislation & Guidelines:
Law is a set of rules and regulations created by a governing body to regulate and govern the actions and behavior of its citizens. Legislation, on the other hand, is the act or process of making or enacting laws. Guidelines are not strictly enforceable, but they offer a general framework or a set of principles to guide individuals in their actions.
Understanding Law, Legislation and Guidelines for Non-Resident Indians (NRIs) in India:
Non-Resident Indians (NRIs) are Indian citizens who reside outside India. There are certain laws and regulations that specifically pertain to NRIs, primarily focusing on issues related to taxation, property rights, and investment regulations. Understanding them is crucial to ensure compliance and avoid legal issues.
1. Taxation Laws: As per the Income Tax Act, 1961, an individual’s tax liability in India is determined by their residential status during a financial year. If an NRI spends more than 182 days in India during a given financial year, they become liable to pay tax. However, income earned outside India by an NRI is not subject for taxation.
2. Property Laws: The Foreign Exchange Management Act (FEMA), 1999 regulates property transactions by NRIs in India. NRIs are allowed to purchase residential and commercial properties in India, but they can’t buy agricultural land, plantations, or farmhouses. However, they can inherit such properties from their ancestors.
3. Investment regulations: NRIs are allowed to invest in Indian financial markets under the Portfolio Investment Scheme (PIS) regulated by the Reserve Bank of India (RBI). NRIs can also invest in mutual funds, fixed deposits, and bonds. However, they need to have an NRE (Non-Residential External) or NRO (Non-Residential Ordinary) account for such investments.
4. Citizenship Laws: The Citizenship Act, 1955 and the Citizenship (Amendment) Act, 2003 govern the citizenship status of NRIs. NRIs can retain their Indian citizenship, provided they haven’t voluntarily acquired citizenship of another country.
5. Inheritance Laws: Property inheritance laws for NRIs are governed by the Indian Succession Act, 1925. An NRI, whether a citizen of India or not, can inherit property from a resident or non-resident Indian. However, certain restrictions apply when the property is agricultural land.
6. Matrimonial Laws: Laws related to marriage, divorce, child custody etc., involving NRIs are governed by their personal law applicable in India. Courts in India do have jurisdiction over matters involving NRIs if the marriage was solemnised under any of the Indian personal laws.
It’s always advisable for NRIs to consult with legal experts before making any major decisions pertaining to their assets, investments, or other legal obligations in India. This will ensure they remain compliant with laws and avoid any potential legal issues.