NRI FEMA DEFINITION » NRI FEMA DEFINITION
A "Non Resident Indian", popularly known as NRI has multiple meanings popular ones being “Now Required Indian” ; “Neo Rich Indian” ; “Newly Respected Indian” and for some having a bad experience “Never Return to India” or as Om Puri used to say in a TV serial in his typical North Indian accent "Bha Bha Bha" - Bharat Se Bhagha Bharatiya.
Jokes a-part, an NRI is independently defined under Foreign Exchange Management Act (FEMA), 1999 which is based on permanent residence of an Overseas Indian who may be an Indian citizen or Person of Indian Origin i.e. foreign citizen of Indian Origin permanently settled and residing outside India for purpose of employment, profession, vocation, business or having a permanent home and family ties abroad.
On the other hand, a 'Non-Resident's definition under the Income Tax Act, 1961 (IT Act) is wedded to number of days of an individual's stay in India during a particular financial year. Normally an NRI is said to be Non-Resident under IT Act if his stay in India does not exceed 181 days in a financial year which commences on 1st April and ends on 31st March. A few simple examples may make subject-matter crystal clear.
1. .01 If Lakshminiwas Mittal of Arcelor Mittal Group, being a foreign citizen of Indian Origin visits India for personal reasons or for examining business opportunities, and stays for 360 days in a Financial Year , he will continue to be a Non-Resident technically speaking a person residing outside India under FEMA but under the IT Act he will be covered by the definition of "Resident" .
.02 For said reasons if Bill Gates of Microsoft Corporation was to visit India and stay for more than 181 days in any Financial Year begining on the 1st April and ending on ensuing 31st March he will also continue to be a Non-Resident under FEMA but under the IT Act he too will be covered by the definition of "Resident" .,
2. But if Sachin Tendulkar travels out of India and stays abroad for all the 365 days of a year, hitting out sixers and fours although a "Non-Resident" under Income Tax Act, 1961, he will continue to be a "Resident" under Foreign Exchange Management Act [FEMA], 1999.
While discussing the said definitions at length, brief notes are also presented highlighting fallacies pertaining to and revolving around the status of an NRI.