Well an NRI, and for that reason every NRI, has a twin identity, one under Foreign Exchange Laws and another one as defined under the I. T. Act, 1961. Do excuse if this sounds like a bollywood movie hero playing twin role," Ram Aur Shyam".

NRIs residential status under the Income Tax Act, 1961 is defined by the virtue of the number of days of his stay in India as discussed under the chapter of "NRI- Definitions”

NRIs are granted certain tax exemptions if they are defined as or fulfill the criteria of "NON RESIDENT" under the Income Tax Act, 1961. These tax free incomes are:

1.     Interest earned on Saving Certificates etc.

2.     Interest earned on Non Resident (Non Repatriable) [NRNR] Deposit.

** Note - w.e.f. 1st April, 2002 banks cannot accept fresh or renew NRNR deposits. Upon maturity Interest on NRNR deposits and principal amount can be transferred to Non Resident (External) [NRE] account at the option of account holder.

3.     Interest earned on Non-Resident (External) Account [NRE] Deposit is exempt under Section 10(4)(ii) in case of  a " Non Resident " as per the provisions of Income Tax Act, 1961.

4.    Interest earned on Foreign Currency Non Resident (Bank) [FCNR(B)] Deposit is exempt under Section 10(15)(fa) in case of a "Non-Resident" and "Resident but Not Ordinarily Resident" as per the provisions of Income Tax Act, 1961 

5.    Interest earned on Foreign Currency Non Resident (Bank)  [FCNR(B)] Deposit continued until maturity by a Non Resident Indian (NRI) who has returned to India for taking up employment , business, vocation i.e. for permanent settlement provided he is a " Non Resident " or "Resident but Not Ordinarily Resident" as per the provisions of Income Tax Act, 1961.

6.    Long-term capital gains arising on transfer of Equity Shares Traded on Recognized Stock Exchange and Units of Equity Schemes of Mutual Fund is exempt from tax at par  with Residents  upto Rs. 1 lakh 25 thousand, provided Security Transaction Tax is paid. LTCG will be taxed at: 

.01 10% on Capital Gains exceeding Rs. 1 Lakh 25 thousand for any transfer which takes place before 23rd July, 2024 and

.02 12.5% on Capital Gains exceeding Rs. 1 Lakh 25 thousand for any transfer which takes place on or after 23rd July, 2024