This Free NRI guide has been compiled with the help of information available on official website of various government departments like Reserve Bank of India, Income Tax Department, various State Governments, Department of Oversea Affairs, Ministry of Home Affairs, SEBI, and other reliable website sources. I have taken adequate care to provide current and authentic information. This NRI Guide is intended to serve as a ready reference book to guide NRIs on various matters affecting their financial and other related subjects. This does not purport to be a legal document. So I am not sure that, any errors occurred while compiling this reference guide. In case of any variation between what has been stated in this NRI Guide and the relevant Act, Rules, Regulations, Policy Statements, Government Orders/Circulars etc., the latter shall prevail. Kindly note that, rules related to NRIs and tax are subject to change. Errors and omissions are expected. This free e-book is circulated with the understanding that, neither the author nor the publisher will be responsible for any action taken on the basis of contents of this book whether directly or indirectly for any error or omission to any person whether a user of this e-book or not. The persons willing to accept this disclaimer only required to read this e-book.

1. 1 | P a g e
NRI GUIDE 2013
(Ver 3.00)
(A Comprehensive Guide for Indians residing outside India)
Prepared by
Prakash Nair
Prakash@yourownadviser.com
www.yourownadviser.com
Join Kerala Syndicate Social Network Group http://groups.google.com/group/kerala-syndicate/
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2. 2 | P a g e N R I G u i d e 2 0 1 3 V e r 3 . 0 0 w w w . y o u r o w n a d v i s e r . c o m
All your Financial Planning and Investment advisory needs visit www.yourownadviser.com

3. 3 | P a g e N R I G u i d e 2 0 1 3 V e r 3 . 0 0 w w w . y o u r o w n a d v i s e r . c o m
PREFACE
This Free NRI guide has been compiled with the help of information available on official website of
various government departments like Reserve Bank of India, Income Tax Department, various State
Governments, Department of Oversea Affairs, Ministry of Home Affairs, SEBI, and other reliable website
sources. I have taken adequate care to provide current and authentic information. This NRI Guide is
intended to serve as a ready reference book to guide NRIs on various matters affecting their financial
and other related subjects. This does not purport to be a legal document. So I am not sure that, any
errors occurred while compiling this reference guide. In case of any variation between what has been
stated in this NRI Guide and the relevant Act, Rules, Regulations, Policy Statements, Government
Orders/Circulars etc., the latter shall prevail. Kindly note that, rules related to NRIs and tax are subject to
change. Errors and omissions are expected.
This free e-book is circulated with the understanding that, neither the author nor the publisher will be
responsible for any action taken on the basis of contents of this book whether directly or indirectly for any
error or omission to any person whether a user of this e-book or not. The persons willing to accept this
disclaimer only required to read this e-book.
Prakash Nair Prakash@yourownadviser.com www.yourownadviser.com
Date: 25-May-2013
The greatest reward the author can get the feedback good or bad from the readers. Any suggestions for
improvement are most welcome. In case I missed some important information or provided wrong
information, please let me know.
Your suggestions, comments, criticism may send to Prakash@yourownadviser.com or
pnair1966@yahoo.com The decision whether to reply to any query or not lies with the Author
To receive regular update on NRI related matters, please send a request and register your e-mail
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INDEX
Sl
Nos Chapters and contents Page Nos
Abbreviations 17-18
CHAPTER - 1
Residential Status
1 A Non Resident Indian (NRI) 19-23
2 A Person of Indian Origin (PIO)
3 How to Determine the Residential Status of an Indiviudal
4 Resident and ordinarily resident- ROR
5 Importance of Residential Status
6 What is India DIASPORA
7 Residential Status Changes from Resident to Non-Resident (Tax, Social Security etc)
8 List of itmes to be completed before becoming an NRI
CHAPTER - 2
Various Types of Bank Accounts - NRIs are permitted to open 24-51
1 Various Types of Bank Account - NRIs are permitted to Open
2 Non-Resident Ordinary/ Rupee Account (NRO Account)
2.1 RBI Master Circular No. 2/2012-13 related to NRO Account
2.2 RBI Circular - Condtions for Opening NRO Account by Banglades Nationality
3 Non-Resident (External) Rupee Account (NRE Account)
4 Foreign Currency Non Resident (Bank) Account – FCNR (B) Account
5 NRE Current Accounts
6 NRO Current Account
7 Resident Foreign Currency Accounts (RFS Accounts)
8 Foreign Currency Account
CHAPTER -3
Facilities Available to NRIs/PIO 52-55
1 Investment facilities for NRIs
2 NRIs are allowed, without limit, purchase on repatriation basis
3 NRIs are allowed, without limit, purchase on repatriation basis
5 An individual resident can borrow money from his close relatives outside India
6
Repayment of Housing Loan of NRI / PIOs by close relatives of the borrower in India
(RBI Circular)
7
Foreign Exchange Management (Deposit) Regulations, 2000 - Credit to Non Resident
(External) Rupee Accounts Loan given to non-resident

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CHAPTER - 4
Investment Options not Permitted for NRIs 56-59
1 NRIs are not permitted to invest in small savings or Public Provident Fund (PPF).
2 PPF (Public Provident Fund)
3 NSC (National Savings Certificate) – 5 years and 10 years
4 Senior citizens savings account
5 Tax saving infrastructure bonds under section 80CCF
6 Post office time deposits are not available for NRIs.
8 Restritctions of Investments by NRIs/PIOs residing in US and Canada
9 FEMA Circular related to restircation for NRI's for Opening Small Savings Accounts
CHAPTER - 5
NRIs Investments in Immoveable Properties 60-70
1 Investment in immovable Property
2 NRI investment norms in real estate eased
3
RBI Circular - Acquisition & Transfer of Immovable Property in India by
NRIs/PIOs/Foreign Nationals of Non-Indian Origin
4 Press Release Ministry of Finance - Acquiring land by NRIs
CHAPTER - 6
NRI Taxation 71-89
1 Expatriates Working Abroad – Tax Provisions
1 a-b Residential Status for Taxation purposes
2 Income Tax Rates proposed in Union Budget 2013 for the financial year 2013-2014
3 Budget – 2103 Income Tax Surcharge Rate Hiked for Higher Income Assessees
4 Additional Tax Rebate of Rs. 2,000.00 from Assessment Year 2014-2015
5 Particulars of Income Tax Incidence for various tax status
6 Tax Exemptions from Income Tax available for NRIs
7 Other Tax Aspects related to NRIs
8 What is tax on NSC Maturity ?
9 Special Provisions Relating to Non-Residents
10 Income Tax Clearance Certificate
11 Tax Exemption Certificate - Lower or Nil Rate of TDS:
12 Renting out of Property by an NRI in India
12a Remittance of Rent
12b Tax treatment of rental income
12c Deemed rental income

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12d Service Tax applicable to renting out of residential properties for commercial use
13 Taxability of immovable property received for Inadequate Consideration (Budget 2013)
14 NRI and Senior Citizen status for Income Tax calculation purposes
15 Tax Liabilities related to NRIs investments made in Joint basis
16 Bank Term Deposits - Tax aspects
17 Property Rental income – Tax Aspects
18 Mutual Fund/Equity Investments – Tax Aspects
19 NRI income and Applicability of TDS on the same
20 Tax Treatment of overseas Financial Assets.
21 Other Tax Aspects related to NRIs including Immovable Properties
22 Tax Treatment of selling property abroad
23 Tax Treatment of Rental Income Earned Abroad
24 Tax Treatment of Dividend on overseas Investments
25 One Time Financial Settlement
26 Capital Gains – earned abroad
27
Compulsory filing of Income tax return in relation to assts located outside India
irrespective of income
28 Section 194E of the Act – Tax deduction at source from payment to non-resident
entertainer, sports person etc
29 Tax Treatment of Interest on Bank Deposits
30
30.Savings bank interest upto Rs. 10,000.00 is exempted from tax (Section 80 TTA of
IT Act)
31
Deduction of interest paid on more than one loan borrowed for purchase or
construction of same house
CHAPTER - 7
Budget 2013 - Tax Proposals 90-98
Finance Bill 2012 - passed by Lok Sabha
CHAPTER - 8
Tax Deduction at Source (TDS) 99-103
1 Interest on Investments
2 Capital Gain on Securities (TDS)
3 TDS on salary payments to Non Residents & Expatriates
4 How NRI can claim TDS exemption
5 TDS on Transfer of Immovable Properties except Agricultural Land
6 Tax Deducted at Source related to NRIs
CHAPTER - 9
Double Taxation Avoidance Agreements (DTAA) 104-114

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1 Double Taxation in India - DTAA
2 Capital Gain tax rates under DTAA
3 The Countries with which India has DTAA
4 How to get relief in case of Double Taxation?
5 Where there is an DTAA agreement (Section 90)
6 Where there is an NO DTAA agreement (Section 91)
7 Misuse of DTAA, Treaty shopping and amendment made by Finance Act 2012
8 Tax rates applicable in India under DTAA Agreement
9 Amendments relating to DTAA provisions (Union Budget 2012)
10 Tax Residency Certificate (TRC) for Indian & Non Resident wef 01.04.2013
11 11.Finance Ministry clarification on tax residency certificate
CHAPTER -10
Form 15 G and Form 15H 115-116
From 15G & Form 15H - NRIs are not eligible to submit these forms
CHAPTER -11
Capital Gain Tax 117-131
1 Capital Asset
2 Short Term Capital Gain (STCG)
3 Long Term Capital Gain (LTCG)
4 Computation of Indexation Benefits
5 What is the indexed cost of acquisition?
6 Cost Inflation Index Form 1981 to 2013
7 Capital Gain Exemptions can be availed
8 What are the consequences if a new house is transferred within 3 years?
9 Exemption available on capital gains that arise from transfer of house property
10 How to avoid paying capital gains tax
11
Exemption of long term capital gains on transfer of residential property if invested in
plant machinery through small/medium enterprise, for 5 years (Budget 2012 proposal)
12
Relief from long-term capital gains tax on transfer of residential property if invested in a
manufacturing small or medium enterprise
13 Capital Gains Accounts Scheme
14 Who are eligible to take the advantage
15 List of Banks who can Accept Deposit
16 Opening a bank account for Capital Gains Account Scheme-
17 Capital Gain treatment of Inherited or gifted properties

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18
Please note that the long-term capital gains earned by you from inherited shares sold
on any recognized stock exchange in India by paying the applicable STT are exempt
from tax provided
CHAPTER - 12
Wealth Tax Implications of NRIs 132-136
1 What are all the assets included for Wealth Tax computation ?
2 Assets not included for Wealth Tax computation
3 No wealth tax on agriculture land
4 How Net Wealth in determinded
5 The Method of valuation of Assets
6 What are all the exceptions available
7 What about NRIs returning to India ?
8 How Should NIRs file Wealth Tax Retunrs ?
9 E- filing of annexures-less return of Wealth Tax - Budget 2013
CHAPTER - 13
Guide on filing of Income Tax Return by NRIs 137-145
1 Whi is a Non-Resient In India ?
2 Whi is liable to file Income Tax Returns
3 Are there any exemption from filing tax retuns ?
4 What is the deadline for filing Tax Returns ?
5 A guide to filing of Income Tax Retunrs online/offline
6 Detaisl required before logging into E-filing website
7 Steps to file Income Tax Return online
8 Benefits of e-filing over paper filing
9
Exemptions from filing of Income Tax Returns - Salaried Employees income upto five
lash Wh
10 Whi can't claim exemption
11 IT clarification dated 25/07/2011 - filing of tax returns - salaried employees
CHAPTER - 14
Clubbing of Incomes 146-148
CHAPTER - 15
Tax on Gifts - the facts need to know 149-150
CHAPTER -16
What is Advance Tax
151-153
CHAPTER - 17

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General Tax Deduction available for NRIs 154-160
1 NRI Tax-saving tips
2 Section 80C of Income Tax Act
2.1 Life Insurance and Retirement/Pension Plans
2.2 Tax-breaks in respect of Life Insurance Policies
2.3 Raising limit of percentage of eligibel premium for Life Insurance Polcies
2.4 Investment in House property
2.5 ELSS (Tax saving Equity Mutual Fund schemes)
3 Section 80D - Health Insurance Premium
3.1 NRIs- Deduction U/s 80D premium paid for Mediclaim Policy
4 Deductions u/s 80 G
5 Deduction under 80E
6 Bank Deposits and applicable tax - Sect 80TTA
7 Rajiv Gandhi Equity Savings Scheme
CHAPTER - 18
NRI Welfare Schemes 161-171
1 Pravasi Bharatiya Bima Yojana
2 Deserted NRI Women Welfare Scheme
3 Indian Community Welfare Fund (ICWF)
4 Facilitating investment in India
5 Know India Program (KIP)
6 Scholarship Programme for Diaspora Children
7 Migrant Resource Center, Kochi
8 NRIs - Facilities for Returning Indians
9 Investment facilitation and knowledge networking
10 Bilateral Labour Co-operation
11 Global Indian Network of Knowledge (Global Ink)
12 India Development Foundation of Overseas Indians
13 Scholarship Programme for diaspora Children (SPDC)
14 Direct Admission to Students Abroad (DASA)
15 Reservation for NRIs at Indian educational institutions
16 Assistance for problems relating to Overseas Indian Marriages
17 Voting Rights to Non-resident Indians
18 Double Taxation related maters
19 Recruitment of maid for Oman

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CHAPTER 19
State Governments Welfare Schemes 172-177
1 Government of Assam
2 Government of Bihar
3 Government of Gujarat
4 Government of Karnataka
5 Government of Kerala
5.a Pravasi Pension Scheme for Non-Resident Keralites
5.b Pravasi Identity Card
6 Government of Orissa
7 Government of Rajasthan
CHAPTER 20
NRI Investment Options 178-189
1 Investments in Shares and Securities listed in Indian Stock Market
1.a Portfolio Investment Scheme (PIS) for NRIs
1.b IPO Electronic Mode and Electronic Voting
1.c Securities Transaction Tax (STT) (2012 Budget proposal)
2 NRIs investment in Mutual Funds Schemes
3 FDI (Foreign Direct Investment) in Partnership Firm / Proprietary Concern
4 Company Fixed Deposit Investments for NRIs
5 Non-Banking Financial Company (NBFC) Deposits
6 Investment in Commercial Papers (CD) by NRIs
CHAPTER 21
National Pension System (NPS) - NRIs are eligible to invest 190-197
CHAPTER - 22
PAN ( Permanent Account Number) 198-206
1 NRIs and PAN
2 Advantages of Having a PAN
3 How to apply for PAN
4 New PAN Application From 49A and 49AA w.e.f 01/11/2011
5 INSTRUCTIONS FOR FILLING FORM 49A
6 GENERAL INFORMATION FOR PAN APPLICANTS
CHAPTER - 23
Know Your Customer (KYC) Requirements 207-212
1 Background

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2 Key Changes in KYC Norms
3 Impact on investors
4 Who can carry out uniform KYC:
5 Impact on current arrangements with CVL:
6 Due diligence in the KYC process
CHAPTER - 24
NRIs Guide to deal the inherited properties 213-216
1 Inheriting immoveable properties
2 Inheriting Financial Assets and Investments in India
3 Remittance Exchange Control Regulations
4 Inheritance and Gifting rules in India
5 Exclusions to taxing of gifts in the hands of recipient -
CHAPTER 25
How its useful for NRIs to use Power of Attorney (POA) in India 217-219
CHAPTER 26
Top 10 Home Buying tips for NRIs 220-224
NRIs Tips to buy properties
CHAPTER - 27
Facilities for Returning NRIs 228-228
CHAPTER - 28
NRI's guide to selling property in India 229-231
CHAPTER - 29
CUSTOMS AND BAGGAGE RULES REALTED TO INTERNATINAL PASSENGERS 232-267
1 Clearance of arriving passengers:
2 Green Channel or Walk through Channel
3 Red Channel
4 Passenger crossing Green Channel with Dutiable Goods
5 Clearance of arriving passengers
6 Duty free allowances and entitlements for Indian Residents and
6.a Duty Free Entitlements
6.b Tobacco, Alcoholic liquor
6.c Not Allowed Items
6.d Applicable Customs Duty
6.e 225-228
7 Import of jewellery/gold/silver:

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8 Duty free allowances and entitlements for tourists
9 Item Permitted Quantity Present Duty
10 Category of Tourist Duty Free Allowance
11 Allowances and entitlements on Transfer of Residence (TR):
12 Import of baggage of deceased person
13 Import of unaccompanied baggage
14 Aircraft Crew Members
15 Import of foreign exchange/currency
16 Import of Indian currency
17 Import of fire arms as baggage
18 Import of pet animals as baggage
19 Detained baggage
20 Mishandled baggage
21 Clearance of departing passengers
22 Export of gold jewellery as baggage
23 Export of currency
24 International Passenger Facilitation
25 Import and Export through Courier
26 Categories of goods allowed import through courier:
27 Categories of goods allowed export through courier
28 Import and export of gems and jewellery
29 Import and Export through Post
30 Procedure in case of postal exports
31 Procedure for claiming Drawback on exports through post
32 Drawback in respect of goods re-exported through post:
33 Re-export of partial consignment
CHAPTER- 30
Baggage Rules at a Glance
CHAPTER - 31
All About Indian Passport 268-317
CHAPTER - 32
Home Loans for NRIs 318-320
CHAPTER - 33
Overseas Citizenship of India (OCI) 320-329
CHAPTER - 34

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Person of India Origin (PIO) Scheme 330-332
Person of Indian Origin Card (PIO Card)
CHAPTER - 35
The General Rules the NRIs should know 333-335
1 Non-Resident Indian (NRI) Pensioners:
2
Savings Bank account maintained by residents in India – non-resident close relative
allowed as jointholder A.P. (DIR Series) Circular No.12 dated September 15, 2011
3
Account Scheme (NRE)/ Foreign Currency (Non-Resident) Account (Banks) Scheme
(FCNR(B))
4 Foreign Investments in India – increase in limit for transfer of security by way of gift
A.P. (DIR Series) Circular No.14 dated September 15, 2011
5 Gift in Rupees by Resident Individuals to NRI close relatives
6 Meeting of Medical expenses of NRIs close relatives by Resident Individuals
7 FEMA – Repayment of loans of Non-resident close relatives by residents
8
MASTER CIRCULAR ON ACQUISITION AND TRANSFER OF IMMOVABLE
PROPERTY IN INDIA BY NRIs/PIOs/FOREIGN NATIONALS OF NON-INDIAN
ORIGIN
CHAPTER -36
Emigration Clearance – Indian and foreign persons 336-355
All About Emigration
1 What is Emigration
2 Statutory Framework
3 Salient Features of the Act
4 Instructions for Indian Passengers
5 Instruction For Foreigners Coming To India
6 Requirements concerning stay of Foreigners in India
7 Guidelines for Emigration Clearance System
8 Who Needs Emigration Clearance
9 Insurance policy- Pravasi Bhartiya Bima Yojana
10 ECNR/ECR/POE
11 Employment Guidelines for Emigrants
12 List of Registered Agents
13 Abolition of ECRS
14 How can one seek employment abroad
15 Guidelines for Departure to a foreign country for employment
16 CUSTOMS FORMALITIES

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CHAPTER -37
1 Inheritance Certificate 356-363
2 International Driving Licence
3 International Passport
CHAPTER -38
Islamic Fund -Sharia Law and Investment Structures 364-366
CHAPTER - 39
Master Circular on Foreign Investment in India 367-429
CHAPTER - 40
Forex Facilities for Residents (Individuals) 430-438
CHAPTER - 41
Air Travel Tips for NRIs 439-443
CHAPTER - 42
Baggage Insurance Policy 444-445
1 Loss of Checked Baggage – Checked Baggage
2 Delay of the checked Baggage
CHAPTER - 43
Different Modes of Money Remittance - NRIs 446-449
CHAPTER - 44
P Notes (Participatory Notes) and NRIs 450
CHAPTER - 45
Passive Foreign Investment Company - PFIC 451-452
CHAPTER - 46
The Foreign Contribution (Regulation Act, 2010) 453-460
CHAPTER - 47
Will 461-466
CHAPTER 48
ADMISSION TO UNDERGRADUATE ENGINEERING PROGRAMME 467-470
CHAPTER 49
Exchange Earner's Foreign Currency (EEFC) Account 471-472
CHAPTER 50
EXIM Policies 473
CHAPTER 51
Compounding of Contraventions under FEMA, 1999 474-486
CHAPTER 52

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What is Consumer Court 487-488
CHAPTER 53
Duty Free Shops 489-490
CHAPTER 54
Import of Gold and Silver by NRIs (deleted)
CHAPTER 55
Acquisition of Indian Citizenship (IC) 491-498
CHAPTER 56
GENERAL REQUIREMENTS FOR REGISTRATION OF A FOREIGN NATIONAL 499-503
CHAPTER 57
What is AADHAAR ? 504-508
CHAPTER 58
PROCEDURE FOR THE ADOPTION OF AN INDIAN CHILD BY A FOREIGNER OR
NRI
509-511
CHAPTER 59
Employment Guidelines for Emigrants 512-513
CHAPTER 60
NRIs properties disputes settlement 514-514
CHAPTER 61
Right to Information Act 2005 515-518
CHAPTER 62
NRIs and Financial Planning 519-537
1 Ten Tips for a good Financial Planning & Investments
2 Why you need an Emergency Saving Fund
3 How to plan for your Child’s Higher Education
4 Victims of Bad Financial Advises
5 Impact of inflation in Retirement Planning
6 Why Health Insurance is important
7 How to choose the right Life Insurance Policy
8 Insurance cover for your bank deposits
9
13 Tips to avoid Investment Fraud
CHAPTER 63

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Impact of proposed Direct Tax Code on NRIs 538-578
2
Non-resident guarantee for non-fund based facilities entered between two resident
entities - RBI Circular
3 Facilities for Persons Resident outside India FIIs -RBI Circular
4 Loans to Non-Residents/Third Parties againt Security of NRE Account/FCNR Deposits-
RBI Circular
5
FDI – Allotment of Shares to person resident outside India under MoA of an Indian
company – Pricing guidelines
6 Import of gold in any form including jewellery – FEMA Clarification
7
Establishment of Liaison Offices (LO) /Branch Offices (BO) / Project Offices (PO) in
India by Foreign Entities – Reporting
8 Import of Pets as Baggage allowed only to persons transferring their residence to India
9 Form 15CA,15CB for remittance of payments to non-resident or foreign company
10
Clarification – Prior intimation to RBI to raise aggregate FII / NRI limits for investments
under PMS
11 The limit of NRIs Inward Remittance
12 Money Transfer Service Scheme – Master Circular No. 1/2012-13
13
Remittance Facilities for Non-Resident Indians/Persons of India Origin/Foreign
National

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Abbreviations
AD - Authorized Dealer
ADR- American Depository Receipts
BPO- Business Process Outsourcing
CBDT- Central Board of Direct Taxes
CBSE -Central Board of Secondary Education
CII- Confederation of Indian Industry
COC -Certificate of Coverage
DASA- Direct Admission to Students Abroad
DIN- Director Identification Number
DIPP -Department of Industrial Policy and Promotion
DMRC - Delhi Metro Rail Corporation
DP - Partner
DSC - Digital Signature Certificate
DTAA - Double Taxation Avoidance Agreement
DTC - Direct Taxes Code
ECNR - Emigration Check Not Required
ECR- Emigration Check Required
EdCIL- Education Consultants India Limited
EP -F Employees’ Provident Fund
ESIC- Employees’ State Insurance Corporation
ESOP - Employees’ Stock Option Plan
FCCB- Foreign Currency Convertible Bonds
FCNR -Foreign Currency (Non Resident) Account
FDI - Foreign Direct Investment
FEMA - Foreign Exchange Management Act
FRRO - Foreigners’ Regional Registration Office
GDR - Global Depository Receipts
ICWF - Indian Community Welfare Fund
IIM- Indian Institute of Management
IIT- Indian Institute of Technology
IPICOL -Industrial Investment Promotion Corporation of Orissa Limited
ISCE - Indian School Certificate Examination
IT - Information Technology
ITC -Industrial Training Centre
ITI - Industrial Training Institute
IW - International Worker
JV - Joint Venture
KYC - Know Your Customer
LLP - Limited Liability Partnership
LRS- Liberalized Remittance Scheme

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MCA - Ministry of Corporate Affairs
MHA - Ministry of Home Affairs
MNC - Multinational Company
MOIA - Ministry of Overseas Indian Affairs
MOU - Memorandum of Understanding
MRTS - Mass Rapid Transit System
NCR- National Capital Region
NGO - Non-Government Organization
NOR - Not Ordinarily Resident
NORKA- Non Resident Keralites Affairs Department
NR - Non Resident
NRB- Non Resident Bihari
NRE - Non Resident External account
NREGA- National Rural Employment Guarantee Act
NRG - Non Resident Gujaratis
NRGF- Non Resident Gujaratis Foundation
NRI- Non Resident Indian
NRK- Non Resident Keralites
NRO - Non Resident Ordinary Rupee account
NROFC - Non Resident Oriya Facilitation Centre
NSC - National Savings Certificate
OCI - Overseas Citizen of India
OIFC - Overseas Indian Facilitation Centre
OWRC - Overseas Workers Resource Centre
PAN- Permanent Account Number
PF- Provident Fund
PIO - Person of Indian Origin
PIS - Portfolio Investment Scheme
PPF- Public Provident Fund
PSU - Public Sector Company
RBI- Reserve Bank of India
RFC - Resident Foreign Currency
ROR - Resident and Ordinarily Resident
SEBI - Securities and Exchange Board of India
SME - Small and Medium Enterprises
SPDC - Scholarship Programme for diaspora Children
SSA - Social Security Agreement
STT - Securities Transaction Tax
TAN - Tax Deduction Account Number
VAT- Value Added Tax

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CHAPTER – 1
Residential Status
In terms of the Foreign Exchange Management Act (FEMA), 1999 a person resident outside India means
a person who is not resident in India.
1. A Non Resident Indian (NRI) - is a person resident outside India, who is a citizen of India or is a
person of Indian origin.
2. A Person of Indian Origin (PIO) - is defined in Regulation 2 of FEMA Notification as a citizen of
any country other than Bangladesh or Pakistan, if (a) he at any time held Indian passport; or (b)
he or either of his parents or any of his grandparents was a citizen of India by virtue of the
Constitution of India or the Citizenship Act, 1955 (57 of 1955); or (c) the person is a spouse of an
Indian citizen or a person referred to in sub-clause (a) or (b).
3. How to Determine the Residential Status of an Indiviudal
The residential status of a person as refered in Sec. 2(31) of the Income Tax Act for each assessment
year under consideration to determine the scope of total income chargable to tax
According to Income Tax Act, an individual is said to be resident in India, if he satisfies at least one of the
following basic conditions
 He is in India during the financial year for a period of 182 days or more
 He is in India for a period of 60 days or more during the year and 365 days or more during 4
years immediately preceding the year in question
The second condition is not applicable to the following:
 An Indian citizen who leaves India during the year for the purpose of taking employment outside
India or an Indian citizen leaving India during the year as a member of the crew of an Indian ship.
 An Indian citizen or a person of Indian origin who comes on visit to India during the year (a
person is said to be of Indian origin if either he or any of his parents or any of his grandparents
was born in undivided India).
If he satisfies any of the above conditions a. and b., then there is further categorisation of his being an
Indian resident into:
 Resident and ordinarily resident
 Resident but not ordinarily resident

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4. Resident and ordinarily resident- ROR
If a resident further satisfies the following conditions, he will be a resident and ordinarily resident:
1. He has been resident in India in at least 2 out of 10 years [according to basic condition noted
above] immediately preceeding the relevant year.
2. He has been in India for a period of 730 days or more during 7 years immediately preceeding the
relevant year.
If he doesn’t satisfy one or both of these conditions he is treated as a Resident but Not Ordinarily
Resident RBNOR.
If an individual doesn’t satisfy either of the conditions a. or b. stated in the beginning, then he is a Non-
Resident NR and since such an individual that we are talking of is Indian, he or she is a NRI Non
Resident Indian.
5. Importance of Residential Status
• Total income of an assessee cannot be determined without knowing his residential status.
• The residential status shall be determined for every person for each previous year independently.
• The onus of responsibility to prove the residential status is on the assessee.
The criteria related to determination of residential status of an individual is described in details in the later
part of this guide (more details refer Chapter 6 – NRI Taxation)
6. What is Indian DIASPORA ?
Diaspora is a word of Greek origin that means scattering or sowing of seeds. It is used to refer to
people who leave their native lands to live in other parts of the world for employment, business or
any other purpose. Indian Diaspora is a generic term used for addressing people who have
migrated from the territories that are currently within the borders of the Republic of India. It
constitutes NRIs (Non-resident Indians) and PIOs (Persons of Indian origins). The Indian
Diaspora is estimated to be over 30 million. The Government of India recognises the importance
of Indian Diaspora as it has brought economic, financial, and global benefits to India. The Indian
Diaspora today constitutes an important, and in some respects unique, force in world culture.
7. Residental status changes from Resident to Non-Resident – Manage your Taxes, Social
Security and things to complete before going aborad for employment or short visit
Before you accept a job offer from outside India, first try to undertand the terms and conditions of the
employment. The employment contact is very important; carefully study each and evey terms mnetioend
in the employment contact. Understand the tax implications on your earnings abroad, the tax bilateral
agreements between India and other country given the monetary impact they may have on you. You will
also have a clear idea about the social security benefits and other service rules. In case you are going for
a short period employment and stay in the other country is less than 182 days, you will be treated like a
resident tax payer and subject to tax in India, again this depends upon various other factors. Therefore,

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ensure to monitor carefully your physical presence in India, a single additional day here or there can
change your tax liability.
The concept of International worker (IW) was introduced in India for the first time in October 2008 and
social security contributions were made mandatory for IWs in India. Please note that you may become an
International worker if you are moving to a country with which India has a social security agreement in
place, unless you have obtained a Certificate of Coverage. This is the outcome of the new provident
fund regulation for international workers in India. India has currently entered into social security
agreements with France, Denmark, Korea, Netherlands Belgium, Germany, Switzerland and
Luxembourg. The consequence of being an international worker is — a higher contribution to the Pension
Scheme and withdrawal from your provident fund only upon reaching the age of 58 years. One of the
benefits of obtaining a Certificate of Coverage is to avoid social security contribution in your host country.
Hence, it is necessary that you plan in advance and concentrate on the essential tax and social security
regulations to avoid further complications and last minutes confussions. A cross-border worker who is
contributing to home country social security and goes to work in another country with which there is an
SSA (Social Security Agreement ) for a specified period as prescribed in the SSA can become a
“detached worker/excluded worker” by obtaining a “certificate of coverage” from the home country.
Employees Provident Fund Organisation (EPFO) has been identified as the Liaison agency to implement
the provisions of the agreement in India and has been authorized to issue “Certificate of Coverage” to the
eligible employees deputed to other countries.
8. Before you leave India to abroad for employment, please ensure to complete the following.
8.1 Term Insurance Policy - Take a Term Insurance Policy to cover your life adequeatly. This will
financaily protect your family in case of your untimely death. Term insurance plans are pure protection
plans. Most Term Insurnce Policies offered by insurance companies in India can be purchased by a Non
Resident Indian ( NRI) or a Person of Indian Origin(POI) simply by filling an additional NRI Questionnaire.
These policies are similar to the policies that are offered to resident Indians as well. However, only a few
insurance companies in Inda have actually formulated processes for issuing insurance policies to
NRIs/POIs. They will help you with documentations and other requirements for medical tests, etc. The
payment can be made from your NRO, NRE account or direct remittance from abroad. It is not
mandatory for you to presenet within the geograohical area of India while purchasing the Term policy but
some insurance companies insitit for this along with medical examination, this all again depends on the
terms and conditions of respective insurance polices. So it is better to take the Term Insurance polcies
when you are present there in India o avoid lot of complications.
8.2 Health Insurnace – It is essential to take sufficient cover which protects you and your entire family. It
is important to choose the right amount of sum insured depending on the past medical history of the
elderly family members as they would require higher health insurance coverage. Similarly, the location
where you reside should be taken into consideration. In case you are married and having children, better
opt for Family Floater. It is recommended to take health insurance at the early ages to avoid medical
check-ups and higher premiums. Even if you are getting medical benefits aborad, you can go for a
Health Insurnce plan in India. It is very important to understand the maximum acceptable age limit offered
by the health insurance company. The possibility of falling sick is much higher at an older age. Hence, it
is important that one is covered by a comprehensive health insurance plan even after retirement or return

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from abroad. Also, you should choose a policy that can be renewed after the age of 65 because at an
older age it is difficult to purchase a new insurance policy.
8.3 Public Provident Fund (PPF)- NRIs are not allowed to invest in PPF, so before becoming an NRI
open a PPF account, but once you become NRI, you can continue to contribute upto the term of 15 years.
But further extnetion is not allowed. The income received from PPF is fully exempted from income tax (as
of now, this may change in future also) and also up to Rs. 100,000 you can reduced from your total
income u/c 80C of Income Tax Act while calculating the taxable income for income earned in India.
8.4 Convert Savings Bank Account to NRO Account - NRIs are not permitted to operatate Resident
Savings Bank Account. Once they become NRI, they are required to convert the Savings Bank account
to NRO Account (Non-Resident Ordinary Account) or close the Savings Bank Account. A NRO account
allows you to make payments on dues in India and receive rental and other income from your property
here, if you own any and it also allows credit of funds from your overseas account. However, funds in this
account can be repatriated within a limit of USD 1 million in a year on paying the applicable charges to
the banker; plus this limit includes any receipts arising out of sale of property and investments. Interest on
the NRO account is taxable with tax deducted at source of 30%. If you live in a country that has a Double
Taxation Avoidance Agreement (DTAA) with India, this TDS rate would be lower, but you would need to
submit a tax residency certificate to the bank. The DTAA between India and the US lays down a TDS rate
of 15% on interest from deposits in India (to know more about DTAA refer Chapter ). These deposits
may also be taxed in the country of your residence. The US, for instance, taxes global income of its
residents and citizens. However, if tax has been deducted at source in India, the investor will get a credit
in the US for taxes paid in India.
8.5 Open Non-Resident External Account – Once you become an NRI immediately open an NRE
Account. This account will be used for crediting your remittance from abroad and also crediting of
dividend received from shares (PIS account), mutual funds (NRI status deposit) etc. . Accrued interest
income and balances held in NRE accounts are exempt from income-tax and wealth tax, respectively.
Interest on the NRE account and FCNR account are tax free in India. But if you are a resident or citizen of
the US, tax in levied on this income which will be a part of your global income. If you are a resident of the
Gulf countries, the NRE and FCNR option would be very profitable for you. For residents of the US, the
choice would depend on the tax slab applicable in the US.
8.6 Open PIS (Portfolio Investment Scheme) - Non-residents are not permitted to buy/sell shares in
their resdent share trading account. Immediately you become an NRI close all your local share trading
account and open PIS acccunt. NRIs are also not permitttd to deal in commodity market, in case you
have commodity trading account, close those accounts before you become an NRI.
8.7 Mutual Fund and other Investments – Change your residential status from Resident to Non-resednt
for all your Mutual Fund and other investments.
8.8 Online Payment Option – Activate online payment options for all your future financial commitments
realted to car loans, housing loans, investment commitments etc.
8.9 Power of Attroney - If required prepare a Power of Attroney document authorizing one of your
relatives or other trusted persons like your wife, father, mother, brother or friend to sign and execute
documents in your absence. There can be many things which require your presence in India after you
have become an NRI, like if you want to make any real estate transaction or want to operate your bank
account, investment in Mutual Funds etc. Power of attorney is a legal document giving power to someone
to act on your behalf. It is advisable to make a power of attorney which expires at certain future date. (for
more detils realted to Power of Attroney – pleaes see Chapter )

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8.10 Safe Custody Locker - Open a bank safe custody locker and keep all your valuable documents
there. If required you can add your wife or close relateives as joint holder for operating the safe custody
locker.
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CHAPTER 2
Various Types of Bank Accounts - NRIs are permitted to open

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1. Types of accounts which can be maintained by an NRI / PIO in India
If a person is NRI or PIO, she/he can, without the permission from the
Reserve Bank, open, hold and maintain the different types of accounts given below with an Authorized
Dealer in India, i.e., a bank authorized to deal in foreign exchange. NRO Savings accounts can also be
maintained with the Post Offices in India. However, individuals/ entities of Bangladesh and Pakistan
require the prior approval of the Reserve Bank.
2. Non-Resident (Ordinary) Rupee Account (NRO Account)
NRO accounts may be opened / maintained in the form of current, savings,
recurring or fixed deposit accounts.
 Savings Account - Normally maintained for crediting legitimate dues /earnings / income such as
dividends, interest etc.The interest rates on NRO Savings deposits shall be at the rate applicable
to domestic savings deposits. Currently the interest rate is 4 - 7 per cent.(varies banks to banks)
 NRO Term Deposits - Banks are free to determine the interest rates. (now banks are offering 8-
9.5% interest depending the duration of the deposit)
 Account should be denominated in Indian Rupees.
 Permissible credits to NRO account are transfers from rupee accounts of non-resident banks,
remittances received in permitted currency from outside India through normal banking channels,
permitted currency tendered by account holder during his temporary visit to India, legitimate dues
in India of the account holder like current income like rent, dividend, pension, interest, etc., sale
proceeds of assets including immovable property acquired out of rupee/foreign currency funds or
by way of legacy/ inheritance.
 Eligible debits such as all local payments in rupees including payments for investments as
specified by the Reserve Bank and remittance outside India of current income like rent, dividend,
pension, interest, etc., net of applicable taxes, of the account holder.
 NRI/PIO may remit from the balances held in NRO account an amount not exceeding USD one
million per financial year, subject to payment of applicable taxes
 The limit of USD 1 million per financial year includes sale proceeds of immovable properties held
by NRIs/PIO.
 The accounts may be held jointly with residents and / or with non-resident Indian.
 The NRO account holder may opt for nomination facility.
 NRO (current/savings) account can also be opened by a foreign national of non-Indian origin
visiting India, with funds remitted from outside India through banking channel or by sale of foreign
exchange brought by him to India.

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 Loans to non-resident account holders and to third parties may be granted in Rupees by
Authorized Dealer / bank against the security of fixed deposits subject to certain terms and
conditions.
 The interest rates offered is almost at par with resident fixed deposits
2.1 Non-Resident Ordinary Rupee (NRO) Account – RBI Master Circular No. 2/2012-13
 Non-Resident Ordinary Rupee (NRO) Account
 Master Circular No. 2/2012-13, dated 2-7-2012
 The acceptance of deposits by an Authorised Dealer/Authorised bank from persons resident
outside India are regulated by the provisions of sub-sections (1) and (2) of section 6 of
the Foreign Exchange Management Act, 1999 read with FEMA Notification No.5/2000 RB, dated
May 3, 2000, as amended from time to time.
 2. This Master Circular consolidates the existing instructions on the subject of “Non-Resident
Ordinary Rupee (NRO) Account” at one place. The list of underlying circulars/notifications
consolidated in this Master Circular is furnished in the Appendix.
 3. This Master Circular is being issued with a sunset clause of one year. This circular will stand
withdrawn on July 1, 2013 and be replaced with an updated Master Circular on the subject.
 1. Definitions
 Non-Resident Indian (NRI)
 NRI for this purpose is defined in Regulation 2 of FEMA Notification No.5 dated May 3, 2000. In
terms of this Notification, an NRI is a person resident outside India, who is a citizen of India or is a
person of Indian origin.
 Person of Indian Origin (PIO)
 PIO for this purpose is defined in Regulation 2 of FEMA Notification ibid as a citizen of any
country other than Bangladesh or Pakistan, if (a) he at any time held Indian passport; or (b) he or
either of his parents or any of his grand parents was a citizen of India by virtue of the Constitution
of India or the Citizenship Act, 1955 (57 of 1955); or (c) the person is a spouse of an Indian
citizen or a person referred to in sub-clause (a) or (b).
 2. Eligibility
 (a) Any person resident outside India (as per Section 2 of FEMA), may open and maintain NRO
account with an Authorised Dealer or an Authorised bank for the purpose of putting through
bonafide transactions denominated in Indian Rupees, not involving any violation of the provisions
of FEMA, Rules and Regulations made thereunder.

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 (b) Opening of accounts by individuals/entities of Bangladesh/Pakistan nationality/ownership
require prior approval of the Reserve Bank.
 3. Types of Accounts
 NRO accounts may be opened/maintained in the form of current, savings, recurring or fixed
deposit accounts. Rate of interest applicable to these accounts and guidelines for opening,
operating and maintenance of such accounts shall be in accordance with directives/instructions
issued by the Reserve Bank from time to time.
 4. Joint Accounts with Residents/Non- Residents
 The accounts may be held jointly with residents and/or with non-residents.
 5. Permissible Credits/Debits
 A. Credits
 (i) Proceeds of remittances from outside India through normal banking channels received in
foreign currency which is freely convertible.
 (ii) Any foreign currency, which is freely convertible, tendered by the account holder during his
temporary visit to India. Foreign currency exceeding USD 5000 or its equivalent in the form of
cash should be supported by currencydeclaration form. Rupee funds should be supported by
encashment certificate, if they represent funds brought from outside India.
 (iii) Transfers from rupee accounts of non-resident banks.
 (iv) Legitimate dues in India of the account holder. This includes current income like rent,
dividend, pension, interest, etc.
 (v) Sale proceeds of assets including immovable property acquired out of
rupee/foreign currency funds or by way of legacy/inheritance.
 (vi) Resident individual may make a rupee gift to a NRI/PIO who is a close relative of the resident
individual [closerelative as defined in Section 6 of the Companies Act, 1956] by way of crossed
cheque /electronic transfer. The amount shall be credited to the Non-Resident (Ordinary) Rupee
Account (NRO) a/c of the NRI/PIO and credit of such gift amount may be treated as an eligible
credit to NRO a/c. The gift amount would be within the overall limit of USD 200,000 per financial
year as permitted under the Liberalised Remittance Scheme (LRS) for a resident individual.
 (vii) Resident individual to lend to a Non resident Indian (NRI)/ Person of Indian Origin (PIO)
close relative [meansrelative as defined in Section 6 of the Companies Act, 1956] by way of
crossed cheque /electronic transfer, subject to conditions within the overall limit under the
Liberalised Remittance Scheme of USD 200,000 per financial year available for a resident

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individual. The loan amount should be credited to the NRO a/c of the NRI /PIO. Credit of such
loan amount may be treated as an eligible credit to NRO a/c;
 B. Debits
 (i) All local payments in rupees including payments for investments in India subject to compliance
with the relevant regulations made by the Reserve Bank.
 (ii) Remittance outside India of current income like rent, dividend, pension, interest, etc. in India
of the accountholder.
 (iii) Remittance up to USD one million, per financial year (April- March), for all bonafide purposes,
to the satisfaction of the Authorised Dealer bank.
 (iv) Transfer to NRE account of NRI within the overall ceiling of USD one million per financial
year subject to payment of tax, as applicable
 6. Remittance of Assets
 6.1 Remittance of Assets by a Foreign National of Non- Indian Origin
 A citizen of a foreign state, not being a citizen of Nepal or Bhutan or a Person of Indian Origin
(PIO), who has retired from an employment in India, or has inherited assets from a
person referred to in sub-section (5) of Section 6 of the FEMA; or is a widow resident outside
India and has inherited assets of her deceased husband who was an Indian citizen resident in
India, may remit an amount, not exceeding USD one million per financial year out of the balances
in the account, on production of documentary evidence in support of acquisition, inheritance or
legacy of assets by the remitter and an undertaking by the remitter and certificate by a
Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes vide their
circular No.10/2002, dated October 9, 2002.
 6.2 Remittance of assets by an NRI/PIO
 (a) NRI/PIO may remit an amount, not exceeding USD one million per financial year, out of the
balances held in NRO accounts/sale proceeds of assets/the assets in India acquired by him by
way of inheritance/legacy, on production of documentary evidence in support of acquisition,
inheritance or legacy of assets by the remitter, and an undertaking by the remitter
and certificate by a Chartered Accountant in the formats prescribed by the CentralBoard of Direct
Taxes vide their circular No.10/2002 dated October 9, 2002.
 (b) NRI/PIO may also, within the overall limit of USD one million, as stated above, remit sale
proceeds of assets acquired under a deed of settlement made by either of his parents or a
close relative (as defined in Section 6 of the Companies Act, 1956) and the settlement taking
effect on the death of the settler, on production of the original deed of settlement and an

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undertaking by the remitter and a certificate by a Chartered Accountant in the formats prescribed
by the Central Board of Direct Taxes vide their circular No.10/2002 dated October 9, 2002.
 6.3 Assets acquired in India out of Rupee funds
 NRI/PIO may remit sale proceeds of immovable property purchased by him as a resident or out of
Rupee funds as NRI/PIO, without any lock-in-period, subject to the above limit of USD 1 million,
per financial year.
 6.4 Restrictions
 (a) The remittance facility in respect of sale proceeds of immovable property is not available to
citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan.
 A person or his successor who has acquired immovable property in accordance with Section 6(5)
of FEMA, 1999 cannot repatriate sale proceeds of such property outside India except with prior
permission of the Reserve Bank.
 (b) The facility of remittance of sale proceeds of other financial assets is not available to citizens
of Pakistan, Bangladesh, Nepal and Bhutan.
 7. Foreign nationals of non-Indian origin on a visit to India
 NRO (current/savings) account can be opened by a foreign national of non-Indian origin visiting
India, with funds remitted from outside India through banking channel or by sale of foreign
exchange brought by him to India. The balance in the NRO account may be converted by the
Authorised Dealer bank into foreign currency for payment tothe account holder at the time of his
departure from India provided the account has been maintained for a period not exceeding six
months and the account has not been credited with any local funds, other than interest accrued
thereon. In case the account has been maintained for a period more than six months, applications
for repatriation of balance will have to be made by the account holder concerned on plain paper
to the Regional Office concerned of the Reserve Bank.
 8. Grant of loans/overdrafts by the Authorised Bank to account holders and third parties
 (a) Loans to non-resident account holders and to third parties may be granted in Rupees by
Authorized Dealer/bank against the security of fixed deposits subject to the following terms and
conditions:
 (i) The loans shall be utilised only for meeting borrower’s personal requirements and/or business
purpose and not for carrying on agricultural/plantation activities or real estate business or for re-
lending.
 (ii) Regulations relating to margin and rate of interest, as stipulated by Reserve Bank, from time
to time, shall be complied with.

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 (iii) The usual norms and considerations as applicable in the case of advances to trade/industry
shall be applicable for such loans/facilities granted to third parties.
 (b) Authorised Dealer/bank may permit overdraft in the account of the account holder subject to
their commercial judgement and in compliance with the interest rate etc. directives.
 9. Change of resident status of account holder
 (a) From Resident to Non-resident
 (i) When a person resident in India leaves India for a country (other than Nepal or Bhutan) for
taking up employment or for carrying on business or vocation outside India or for any other
purpose indicating his intention to stay outside India for an uncertain period, his existing account
should be designated as a Non-Resident (Ordinary) Account. When a person resident in India
leaves for Nepal or Bhutan for taking up employment or for carrying on business or vocation or for
any other purposes indicating his intention to stay in Nepal or Bhutan for an uncertain period, his
existing account will continue as a resident account. Such account should not be designated as
Non-Resident (Ordinary) Account (NRO).
 (ii) Foreign nationals who come to India on employment and become residents in terms of
section 2(v) of FEMA, 1999 and are eligible to open/hold a resident savings bank account are
permitted to re-designate their resident account maintained in India as NRO account on leaving
the country after their employment to enable them to receive their legitimate dues subject to
certain conditions.
 (b) From Non- resident to Resident
 NRO accounts may be re-designated as resident Rupee accounts on return of the account holder
to India for taking up employment, or for carrying on business or vocation or for any other
purpose indicating his intention to stay in India for an uncertain period. Where the account holder
is only on a temporary visit to India, the account should continue to be treated as non-resident
during such visit.
 10. Treatment of loans /overdrafts in the event of change in the resident status of the
borrower
 In case of a person who had availed of loan or overdraft facilities while resident in India and who
subsequently becomes a person resident outside India, the Authorised Dealer/bank may at their
discretion and commercial judgement allow continuance of the loan/overdraft facilities. In such
cases, payment of interest and repayment of loan may be made by inward remittance or out of
legitimate resources in India of the person concerned.
 11. Payment of funds to Non-resident/Resident nominee

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 The amount due/payable to non-resident nominee from the NRO account of a deceased account
holder shall be credited to NRO account of the nominee with an Authorised dealer/bank in India.
The amount payable to resident nominee from the NRO account of a deceased account holder
shall be credited to resident account of the nominee with a bank in India.
 12. Operation of NRO account by Power of Attorney holder
 Powers have been delegated to the authorized dealers/banks to allow operations on an NRO
account by Power of Attorney granted in favour of a resident by the non-resident individual
account holder provided such operations are restricted to:
 (i) All local payments in Rupees including payments for eligible investments subject to
compliance with relevant regulations made by the Reserve Bank; and
 (ii) Remittance outside India of current income in India of the non-resident individual account
holder, net of applicable taxes;
 (iii) The resident Power of Attorney holder is not permitted to repatriate outside India funds held
in the account other than to the non-resident individual account holder nor to make payment by
way of gift to a resident on behalf of the non-resident account holder or transfer funds from the
account to another NRO account.
 13. Facilities to a person going abroad for studies
 Persons going abroad for studies are treated as Non-Resident Indians (NRIs) and are eligible for
all the facilities available to NRIs. Educational and other loans availed of by them as residents in
India will continue to be available to them as per FEMA Regulations.
 14. International Credit Cards
 Authorised Dealer banks have been permitted to issue International Credit Cards to NRIs/PIO,
without prior approval of Reserve Bank. Such transactions may be settled by inward remittance or
out of balances held in the cardholder’s FCNR (B)/NRE/NRO Accounts.
 15. Income-Tax
 The remittances (net of applicable taxes) will be allowed to be made by the Authorised Dealer
banks on production of an undertaking by the remitter and a certificate from a Chartered
Accountant in the formats prescribed by the Central Board of Direct Taxes, Ministry of Finance,
Government of India vide their Circular No. 10/2002 dated October 9, 2002 [cf. A.P. (DIR Series)
Circular No. 56 dated November 26, 2002].
 Annex-1
 Statement/returns to be submitted to the Reserve Bank

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Particulars of statement Periodicity Relevant instructions
Facilities to NRIs/PIO and Foreign Nationals –
Liberalisation – Remittance from NRO account. Quarterly
A.P. (DIR Series) Circular No.
12 dated November 16, 2006
 Annex-2
 Operational Instructions for Authorised Dealer Banks
 1. General
 Authorised Dealer banks may carefully study the provisions of the Act/Regulations/Notifications
issued under Foreign Exchange Management Act, 1999 (the Act).
 Reserve Bank will not prescribe the documents which should be verified by the Authorised Dealer
banks while permitting remittances for various transactions.
 In terms of the provisions contained in sub-section 5 of Section 10 of the Act, before undertaking
any transaction in foreign exchange on behalf of any person, Authorised Dealer is required to
obtain a declaration and such other information from the person (applicant) on whose behalf the
transaction is being undertaken that will reasonably satisfy him that the transaction is not
designed to contravene or evade the provisions of the Act or any of the Rules or Regulations
made or Notifications or directions or orders issued under the Act. Authorised Dealer banks
should preserve the information/documents obtained by them from the applicant before
undertaking the transactions for verification by the Reserve Bank.
 In case the person on whose behalf the transaction is being undertaken refuses or does not give
satisfactory compliance of the requirements of an Authorised Dealer bank, he shall refuse in
writing to undertake the transactions. Where an Authorised Dealer bank has reasons to believe
that a contravention or evasion of the Act or the Rules or Regulations made or Notifications
issued thereunder was contemplated in the transaction that he has refused to undertake, he shall
report the matter to the Reserve Bank. With a view to maintaining uniform practices, Authorised
Dealer banks may consider requirements or documents to be obtained by their branches to
ensure compliance with the provisions of sub-section (5) of Section 10 of the Act.
 2. Opening of accounts by Bangladesh/Pakistan individuals/entities.
 Opening of accounts by individuals/entities of Bangladesh/Pakistan nationality/ownership requires
prior approval of the Reserve Bank. All such requests may be referred to the Chief General
Manager-in-Charge, Foreign Exchange Department, (Foreign Investment Division), Reserve
Bank of India, Central Office, Mumbai-400 001.
 3. Remittance of current income
 Remittance outside India of current income like rent, dividend, pension, interest, etc. in India of
the account holder is a permissible debit to the NRO account.

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 Authorised Dealer banks may allow repatriation of current income like rent, dividend, pension,
interest, etc. of NRIs who do not maintain an NRO account in India based on an appropriate
certification by a chartered accountant, certifying that the amount proposed to be remitted is
eligible for remittance and that applicable taxes have been paid/provided for.
 4. Restrictions
 (a) The remittance facility in respect of sale proceeds of immovable property is not available to
citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan.
 (b) The facility of remittance of sale proceeds of other financial assets is not available to citizens
of Pakistan, Bangladesh, Nepal and Bhutan.
 5. Tax Compliance
 Authorised Dealer banks can allow remittances to non-residents only on production of an
undertaking by the remitter and a certificate from a Chartered Accountant in the formats
prescribed by the Central Board of Direct Taxes, Ministry of Finance, Government of India vide
their Circular No. 10/2002, dated October 9, 2002. [cf. A.P. (Dir Series) Circular No. 56, dated
November 26, 2002].
 APPENDIX
 List of notifications/circulars which have been consolidated in this Master Circular – Non-
Resident Ordinary Rupee (NRO) Account
 http://www.rbi.org.in/Scripts/BS_ApCircularsDisplay.aspx
 http://www.rbi.org.in/Scripts/Bs_FemaNotifications.aspx
Sl. No. Circular No. Date
1. Notification No. FEMA 62/2002-RB May 13, 2002
2. Notification No. FEMA 97/2003-RB July 8, 2003
3. Notification No. FEMA 119/2004-RB June 29,2004
4. Notification No. FEMA 133/2005-RB April 1, 2005
5. Notification No. FEMA 156/2007-RB June 13, 2007
1. A.P. (DIR Series) Circular No.45 May 14, 2002
2. A.P. (DIR Series) Circular No.1 July 2, 2002
3. A.P. (DIR Series) Circular No.5 July 15, 2002
4. A.P. (DIR Series) Circular No.19 September 12, 2002
5. A.P. (DIR Series) Circular No.26 September 28, 2002
6. A.P. (DIR Series) Circular No.27 September 28, 2002
7. A.P. (DIR Series) Circular No.56 November 26, 2002
8. A.P. (DIR Series) Circular No.59 December 9, 2002
9. A.P. (DIR Series) Circular No.67 January 13, 2003
10. A.P. (DIR Series) Circular No.43 December 8, 2003
11. A.P. (DIR Series) Circular No.45 December 8, 2003
12. A.P. (DIR Series) Circular No.62 January 31, 2004

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13. A.P. (DIR Series) Circular No.43 May 13, 2005
14 .P. (DIR Series) Circular No.12 November 16, 2006
15. A.P. (DIR Series) Circular No.64 May 25, 2007
16. A.P. (DIR Series) Circular No.70 June 09, 2011
17. A.P. (DIR Series) Circular No.17 September 16, 2011
18. A.P. (DIR Series) Circular No.18 September 16, 2011
19. A.P. (DIR Series) Circular No.117 May 7, 2012
 NOTE
 • For the convenience of Authorised Dealers, a table of Statements/Returns to be submitted to
Reserve Bank and Operational Guidelines have been given in Annex-1 & 2, respectively.
 • It is also clarified for information of all users that the Master Circular need not necessarily be
exhaustive and a reference to the relevant A.P.(DIR Series) Circular is needed wherever further
information/ clarification is required.
2.2 Conditions for Opening of NRO accounts by individuals of Bangladesh Nationality without RBI
approval
RBI/2012-13/414
A.P.(DIR Series) Circular No. 82 February 11, 2013
To
All Authorised Dealer banks and Authorised banksMadam / Sir,
Opening of NRO accounts by individuals of Bangladesh Nationality
Attention of all the Authorised Dealer banks and Authorised banks (Authorised banks) is invited to
Paragraph 1 of Schedule-3 of Foreign Exchange Management (Deposit) Regulations, 2000 contained in
Notification No. FEMA.5/2000-RB dated May 3, 2000, as amended from time to time, in terms of which
opening of Non-Resident Ordinary Rupee (NRO) accounts by individuals/ entities of Bangladesh/
Pakistan nationality/ ownership requires approval of Reserve Bank.
2. The extant instructions have been reviewed and it has been decided that henceforth, Authorised banks
would be permitted to open NRO account of individual/s of Bangladesh nationality without the approval of
the Reserve Bank subject to the following conditions:
i. The bank concerned should satisfy itself that the individual is holding valid visa and valid
residential permit issued by Foreigner Registration Office (FRO)/Foreigner Regional Registration
Office (FRRO) concerned;
ii. The Authorised bank should put in place a system of quarterly reporting whereby each branch of the
Authorised bank shall maintain a record of the bank accounts opened by individual/s of Bangladesh
nationality and details of such account shall be forwarded to their Head Office. The Head Office of the
bank shall furnish details of such accounts on quarterly basis to the Under Secretary (Foreigners),
Ministry of Home Affairs, NDCC-II Building, Jai Singh Road, New Delhi – 110 001. E Mail.
iii. The report shall contain details of Name/s of the Individual/s, Date of arrival in India, Passport No. and
Place/Country of issue, Residential permit reference and date and place of issue, Name of the FRO/

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FRRO concerned and the Complete address and contact number of the branch where the bank
account is being maintained.
3. Opening of accounts by entities of Bangladesh ownership shall continue to require approval of Reserve
Bank, as hitherto.
4. Necessary amendments to the Notification No. FEMA.5/2000-RB dated May 3, 2000 have been issued
vide Notification No.FEMA.253/2013-RB dated January 02, 2013.
5. Authorised banks may bring the contents of this circular to the notice of their constituents and
customers concerned.
6. The directions contained in the circular have been issued under sections 10(4) and 11(1) of theForeign
Exchange Management Act, 1999 (FEMA) (42 of 1999) and are without prejudice to permissions/
approvals, if any, required under any other law.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager
3. Non-Resident (External) Rupee Account (NRE Account)
 NRE account may be in the form of savings, current, recurring or fixed
deposit accounts. Such accounts can be opened only by the non-resident himself and not through
the holder of the power of attorney.
 Account will be maintained in Indian Rupees.
 Account can be opened with resident join holder – subject to terms and conditions
 Balances held in the NRE account are freely repatriable.
 Accrued interest income and balances held in NRE accounts are exempt from Income tax and
Wealth tax, respectively.
 Authorised dealers/authorised banks may at their discretion/commercial judgement allow for a
period of not more than two weeks, overdrawing in NRE savings bank accounts, up to a limit of
Rs.50,000 subject to the condition that such overdrawings together with the interest payable
thereon are cleared/repaid within a period of two weeks, out of inward remittances through
normal banking channels or by transfer of funds from other NRE/FCNR accounts.
 Savings - The interest rates on NRE Savings deposits shall be at the rate applicable to domestic
savings deposits. Currently the interest rate above >= 4 % (varies from banks to bank)
 Term deposits – Banks are free to fix the term deposit interest rates. On 16
th
Decemer,2011
with a view to providing greater flexibility to banks in mobilizing non-resident deposits and also in
view of the prevailing market conditions, RBI has decided to deregulate interest rates on Non-
Resident (External) Rupee (NRE) Deposits and Ordinary Non-Resident (NRO) Accounts (the
interest rates on term deposits under Ordinary Non-Resident (NRO) Accounts are already
deregulated). Accordingly, banks are free to determine their interest rates on both savings
deposits and term deposits of maturity of one year and above under Non-Resident (External)

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Rupee (NRE) Deposit accounts and savings deposits under Ordinary Non-Resident (NRO)
Accounts with immediate effect. However, interest rates offered by banks on NRE and NRO
deposits cannot be higher than those offered by them on comparable domestic rupee deposits.
Now banks are competing each other to attract NRE deposits and offering annual interest in the
range of 6.50 to 9.50%., earlier is was 3.25%. RBI direction is applicable for all Commercial and
Scheduled Banks, Foreign Banks and Regional Rural Banks functioning in India with the license
of RBI
 The interest rates offered is almost at par with resident fixed deposits
 Permissible credits to NRE account are inward remittance to India in permitted currency,
proceeds of account payee cheques, demand drafts / bankers' cheques, issued against
encashment of foreign currency, where the instruments issued to the NRE account holder are
supported by encashment certificate issued by AD Category-I / Category-II, transfers from other
NRE / FCNR accounts, interest accruing on the funds held in such accounts, interest on
Government securities/dividends on units of mutual funds purchased by debit to the
NRE/FCNR(B) account of the holder, certain types of refunds, etc.
 Eligible debits are local disbursements, transfer to other NRE / FCNR accounts of person eligible
to open such accounts, remittance outside India, investments in shares / securities/commercial
paper of an Indian company, etc.
 Loans up to Rs.100 lakh can be extended against security of funds held in NRE Account either to
the depositors or third parties.
 Such accounts can be operated through power of attorney in favour of residents for limited
purpose of withdrawal of local payments or remittances through normal banking channels to the
account holder himself.


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4. Foreign Currency Non Resident (Bank) Account – FCNR (B) Account
FCNR accounts can be opened only as term deposits (fixed deposits/cash certificates).
FAQ - FCNR Account
What is an FCNR account?
An FCNR account is a term deposit account that can be maintained by NRIs and PIOs in foreign
currency. Thus, FCNRs are not savings accounts but fixed deposit accounts.
What foreign currencies can one maintain in FCNR accounts?
Prior to 2011, FCNR deposits were allowed to be maintained in six currencies: US dollar, Pound Sterling
(GBP), Euro, Japanese Yen, Australian dollar and Canadian dollar. However, in October 2011, the RBI
decided that authorised dealer banks in India may be permitted to accept FCNR deposits in any permitted
currency. 'Permitted currency' for this purpose would mean a foreign currency which is freely convertible
and popularly include Danish Krone, Swiss Frank and Swedish Krona among others.
How can one transfer funds to FCNR accounts?
The funds in an FCNR account must necessarily come from your overseas funds. There are several ways
in which you can open an FCNR account.
-You can transfer funds from your overseas bank account directly to open an FCNR account. You can do
this either as a wire transfer or a cheque transaction
-You can transfer funds from an existing NRE account
-You can open an FCNR account using foreign currency notes or travelers cheques when you visit India
What terms are available?
You can open an FCNR account for a minimum term of 1 year and maximum term of 5 years.
Is premature withdrawal available?
Yes, you can withdraw your FCNR before completion of the selected term. Premature withdrawal is

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subject to a penal interest of 1%. Moreover, no interest is payable if the deposit is closed within a year.
What is the current interest rate on FCNR account?
The interest rates vary between terms and from currency to currency. Rates may also vary between
banks. For instance, the rate for a 1 year FCNR deposit in US dollar would be in the range of 2.5-3%
while the same for a deposit in Australian dollar would be 5-6%.
It is important to note that this interest is tax free in India. However, you may be subject to tax in the
country of your residence for such interest.
Are balances in the FCNR accounts freely repatriable?
Yes, balances in FCNR can be freely repatriated outside India.
Can funds in the FCNR account be used for local India payments?
Yes, you can use the balance in FCNR account for making local payments in India.
"However, as FCNR can be maintained only as term deposits, it would be more convenient to make
payments after transferring the balance to NRE account," explains Rajesh Dhruva, a chartered
accountant and Chief Executive of Femaonline.com.
Can you hold FCNR accouns jointly?
Yes, the RBI, in 2011, permitted NRIs to hold FCNR accounts jointly with other NRIs or with residents
who are close relatives. In this case, the resident relative can operate the account as a power of attorney
holder.
Is nomination facility available?
Nomination facility is available in FCNR accounts and the nominee can be either an NRI or a resident
Indian.
"The balance in FCNR deposit of a deceased NRI can be credited to an NRI nominee's FCNR account
and such funds can be freely repatriated," Dhruva adds.
Can NRIs avail loans against FCNR deposits?
Rupee loans and foreign currency loans can be taken in India against the security of the deposit.
"Presently such loans are restricted to Rs 10 million. These loans can be repaid out of maturity proceeds

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and/or local resources. Banks may also give loans to resident individuals, firms or companies against
collateral security of FCNR deposits," says Dhruva.
What is the procedure for opening FCNR account?
You can open an FCNR deposit from overseas. You would need to submit the following documents to the
bank:
-The account opening form with the signature verified by your overseas bank or the Indian embassy/
consulate/ high commission or a notary public
-Passport size photos
-Copies of your passport and visa duly attested
-Proof of foreign address
-Initial remittance
Several other documents such as cancelled cheque, overseas bank statement, income documents may
be required. Document requirements may also vary between countries. Check with your bank for details.
5.NRE Current Accounts
Transfer and repatriate funds easily with your NRE Rupee Current Account.
Convenient banking options make your account accessible to you from anywhere in the world.
o Ideal for foreign nationals who have ESOPs Employee Stock Option Plan (ESOP) are the
shares offered to the employees of a company, wherein promoters decide to dilute their
stake. Employees are often given a share of the business after a certain length of
employment or they can buy shares at any time. issued by Indian companies
o Repatriate your principal and interest amount fully
o Remit funds easily through Quickremit, IndiaLink, Cheque LockBox, Telegraphic
Transfers and Cheque / Draft for free
o Utilise account balance for repatriable investments as well as local payments in India
o Deposit your overseas earnings in the non-interest bearing Rupee account
o Avail of free ATM Card for the mandate holder in India
o Get an International Debit Card
o Get a personalized cheque book
o Operate your account, anywhere, anytime with convenient banking channels like

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NetBanking
o
 To deposit money in your NRE Current Account, you can:
o Transfer funds from abroad in a freely convertible foreign currency These are foreign
currencies that can be exchanged easily with other currencies and are recognized by the
international market.
o Present foreign currency notes/travellers cheques brought in by you or another NRI
during a visit to India
o Directly remit the amount to us
o Transfer funds from an existing NRE/FCNR Account held in other Banks
Fees and Charges
 Normally you need to maintain an Average Quarterly Balance (AQB) of Rs.5,000 - 25,000/- (this
conditions varies from banks to bank) In case your Average Quarterly Balance (AQB) dips below
the required amount, a fee of Rs 500 - 1000 per quarter (varies from banks to bank) will be
charged.
Documents Required
o Photocopy of the pages of the passport containing passport details and personal details
of all applicants
o Copy of valid visa / work permit
o One passport photograph of each applicant
o One document confirming either the overseas or Indian address. The address on the
document has to match the address mentioned in the application form.
In case, you cannot go to bank branch for account opening and you reside in a non FATF
country, all photocopies of the above documents to be attested by Indian Embassy or by a
Notary.
In case, you cannot go to any branch for account opening and you reside in a FATF country, then
either all photocopies of the above documents to be attested by an Indian Embassy or Notary or
by a Banker overseas If the documents are not certified then all documents need to be self
signed and submitted along with one additional documents required by the respective banks
Eligibility
 You are eligible if you are a non-resident individual of Indian nationality or of Indian origin.
a) In what currency is my NRE Current Account be maintained?
 Your NRE Current Account is maintained in Indian Rupees.
b) What is the minimum amount with which I can open an NRE Current Account?
 The minimum amount required to open an NRE Current Account is INR 5,000- 25,000 or its

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equivalent in foreign currency( this minimum amount varies from banks to bank). You would be
required to maintain an Average Quarterly Balance of INR 5,000 to 25,000/- only.
c) What is the frequency of interest payment on my NRE Current Account?
 No interest is payable.
d) What do I get against my NRE Current Account?
 You will get a cheque book and an International Debit Card against your NRE Current Account.
f) Can I repatriate funds in my NRE Current Account?
 Yes. The principal and interest earned on NRE Current Account are fully repatriable.
g) What taxes am I liable to pay if I have an NRE Current Account?
 As per current guidelines, funds in NRE Current Account are exempted from income tax in India.
h) Can I transfer funds between NRE Current Accounts?
 Yes. Transfer of funds from NRE Current Accounts is allowed for bonafide personal purposes
such as personal expenses, education of children, and gifts.
i) If I am visiting India, can I use Travellers Cheques or foreign currency to open an account or credit my
existing NRE Current Account?
 Travellers Cheques can be used to credit/open the account. If the foreign currency notes brought
by you exceed USD 5,000/- or the combined value of Travellers Cheques and notes exceed USD
10,000/-, then you have to submit a Currency Declaration Form (CDF) to the customs authorities
on arrival in India. You must produce the CDF for endorsement by the Bank when you submit the
money for opening/credit to an Account.
j) Can I appoint a mandate holder for my NRE Current Account?
 Yes. You can appoint a mandate holder for NRE Current Account. You can also choose to
provide the mandate holder with an ATM Card.
k) What are the payment services available for my NRE Current Account?
 With Bank's advanced Payment Services, you can bid goodbye to queues and paper work. Our
range of payment options makes it easy for you to pay for a variety of utilities and services.
l) How do I access my NRE Current Account while I am abroad?
 You can access your NRE Current/Savings Account through NetBanking and PhoneBanking.

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6. NRO Current Account
o Remit funds easily through Quickremit, IndiaLink, Cheque LockBox, Telegraphic
Transfers and Cheque / Draft
o Deposit your Rupee earnings in the non-interest bearing Rupee account
o Open an account jointly with an Indian resident
o Utilise account balance for repatriable investments as well as local payments in India
o Operate your account, anywhere, anytime with convenient banking channels
 Transferring money to and from your account
To deposit money in your NRO Current Account, you can:
o Transfer funds from abroad in a freely convertible foreign currency These are foreign
currencies that can be exchanged easily with other currencies and are recognised by the
international market.
o Present foreign currency notes / travellers cheques brought in by you or another NRI
during a visit to India
o Directly remit the amount to us
o Transfer funds from an existing NRE/FCNR Account held in other banks
o Make local payments in India
 Documents required
o Photocopy of the pages of the passport containing passport details and personal details
of all applicants
o Copy of valid visa / work permit
o One passport photograph of each applicant
o One document confirming either the overseas or Indian address. The address on the
document has to match the address mentioned in the application form.
Incase, you cannot go to bank branch for account opening and you reside in a non FATF country,
all photocopies of the above documents to be attested by Indian Embassy or by a Notary.
In case, you cannot go to any bank branch for account opening and you reside in a FATF
country, then either all photocopies of the above documents to be attested by an Indian Embassy
or Notary or by a Banker overseas. If the documents are not certified then all documents need to
be self signed and submitted along with one additional document required by the bank.
 Eligibility
o You are eligible if you are a non-resident individual of Indian nationality or of Indian origin.
Upon change of your status from NRI to RI, you need to inform the bank immediately.

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o NRO account can be held in Rupees only
o NRO accounts can be held jointly with Residents
o In case of change of status from Resident to Non-Resident, the existing Resident
Account has to be designated as an NRO Account
 FAQs
a) In what currency is my NRO Current Account maintained?
Your NRO Current Account is maintained in Indian Rupees.
b) What is the minimum amount with which I can open an NRO Current Account?
The minimum amount required to open an NRO Current Account is INR 5,000- 25,000 or its
equivalent in foreign currency. You would be required to maintain an Average Quarterly Balance
of INR 5,000- 25,000/- only. (minimum balance requirements varies from banks to bank)
c) What is the frequency of interest payment on my NRO Current Account?
No interest is payable.
d) What do I get against my NRO Current Account?
You will get a cheque book and an ATM Card against your NRO Current Account
e) What are the permissible debits/credits to the NRO Current Account?
There are no restrictions on the debits from NRO Current Account. Credit of funds representing
legitimate dues of the account holder from local sources for e.g. current income in India like rent,
etc. and proceeds of remittances received from abroad through normal banking channels can be
freely credited.
f) Can I repatriate funds in my NRO Current Account?
You can repatriate up to USD 1 million, for bonafide purposes, per calendar year from balances in
NRO Accounts subject to payment of applicable taxes. The limit of USD 1 million per year
includes sale proceeds of immovable properties held by NRIs/PIO (Person of Indian Origin)
remittance can be made if the sale proceeds have been held by the NRI/PIO for the balance
period in eligible investments. (more details about the repatriation of money abroad is provided
in the later part of this guide)
g) Can I have joint applicant for my NRO Current Account?
Yes. You can hold the account jointly with Resident or Non-Resident Indian(s). Alternately, you
can authorise an Indian Resident to operate your account by submitting a mandate letter.
h) If I am visiting India, can I use Travellers Cheques or foreign currency to open an account or credit my
existing NRO Current Account?
Travellers Cheques can be used to credit/open the Account. If the foreign currency notes brought

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by you exceed USD 5,000/- or the combined value of Travellers Cheques and notes exceed USD
10,000/-, then you have to submit a Currency Declaration Form (CDF) to the customs authorities
on arrival in India. You must produce the CDF for endorsement by the bank when you submit the
money for opening/credit to an account.
i) How do I access my NRO Current Account while I am abroad?
You can access your NRO Savings Account through NetBanking and PhoneBanking
7. Resident Foreign Currency Accounts (RFS Accounts)
A scheme known as 'Resident Foreign Currency Accounts (RFC accounts) Scheme' has been
drawn up by Reserve Bank in pursuance of Government of India Notification No. F.10/22/90/NRI
Cell dated 17th July 1992 and Reserve Bank Notifications Nos. FERA.116, 117 and 118 /92-RB
dated 7th September 1992 to enable eligible returning Indians to open and maintain foreign
currency accounts with authorised dealers in India. Reserve Bank has also granted exemption
from the prohibition imposed under Section 24 of FERA 1973 in respect of gift of foreign
exchange held in India/abroad or of any property held abroad in certain cases referred to in its
Notification No. FERA 165/95-RB dated 28th April 1995.
Opening of RFC Accounts
(ii) RFC accounts may be maintained in the form of current, savings (without cheque facility) or
term deposit accounts and held singly or jointly only in the names of eligible persons
Note A -Persons who returned to India prior to 18th April 1992 after having been resident
outside India for a continuous period of not less than one year are also eligible to open RFC
accounts if (a) they are holding valid specific permission/licence from Reserve Bank as on
17th July 1992 to maintain foreign accounts or to hold other foreign currency assets abroad
or (b) they are in receipt of pension or other monetary benefits from their overseas
employers subsequent to their return to India even if they did not maintain foreign currency

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accounts or hold other foreign currency assets abroad
Note B - Persons holding RIFEE permits or Reconversion facility have been given option to
continue those facilities or avail of RFC account facility (cf. paragraph 12.13). These options
can be exercised at one stroke or in part amounts during the validity period of RIFEE permit
or Reconversion facility. Accordingly, holders of RIFEE permit or Reconversion facility are
also eligible to open RFC accounts
Under the scheme, persons of Indian nationality or origin, who, having been resident outside
Inida for a continuous period of not less than one year, have become persons resident in
India on or after 18th April 1992 are eligible to open and maintain the accounts with
authorised dealers in India in any freely convertible foreign currency. Authorised dealers
may, on receipt of an application in form RFC, open RFC accounts in the names of eligible
persons. Persons who returned to India after a short assignment of less than one year
abroad desiring to have RFC accounts should apply through authorised dealers to Reserve
Bank in form RFC. RFC accounts opened with the specific approval of Reserve Bank will be
governed by the conditions stipulated by Reserve Bank while granting such approval.
Note: For arriving at the period of continuous stay abroad of not less than one year, short
visits to India on personal grounds like meeting family members/relatives or on health
grounds which do not indicate the person's intention to stay in India for an indefinite period
may be ignored.

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Explanation: For the purpose of this Scheme -
A person (not being a citizen of Pakistan or Bangladesh) shall be deemed to be of Indian origin, if,
i) he at any time held an Indian passport,
or
ii) he or either of his parents or any of his grand parents was a citizen of India by virtue of the
Constitution of India or the Citizenship Act, 1955 (57 of 1955),
or
iii) that person is the spouse of an Indian citizen or of a person of Indian origin (not being a citizen
of Pakistan or Bangladesh).
Eligible Assets
Assets acquired or held otherwise than in contravention of the Act by an eligible person ,while he was
resident outside India(non-resident), in the form of deposits in banks outside India, investments in foreign
currency shares or securities or immovable properties situated outside India or investments in business etc.
outside India and include foreign exchange earnings through employment, business or vocation outside
India taken up or commenced by such person while he was resident outside India.
Credits
Undernoted credit transactions may be allowed in RFC Accounts by authorised dealers.
(a) Remittance in convertible foreign currency from outside India through normal banking channels
representing
i) Funds in bank accounts outside India forming part of eligible assets held by the
eligible person.
ii) Income such as dividend, interest, profit, rent, etc. earned on eligible assets held by
the eligible person.
iii) Sale proceeds of eligible assets.

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(b) Pension or other monetary benefits received from outside India in convertible foreign currency,
through normal banking channels, arising out of employment taken up outside India by the
eligible person prior to his returning to India.
(c) Interest earned on RFC account.
(d) Foreign currency notes/travellers cheques brought into India by the eligible person, provided
that where the amount tendered exceeds US$ 10,000 or its equivalent or where the value of
foreign currency/bank notes exceeds US$ 5,000 or its equivalent they have been declared on
the Currency Declaration Form (CDF) (cf. papragraph 7D.5).
(e) Transfers from other RFC accounts of the account holder.
(f) Balances in any NRE/FCNR Account (other than in NRE rupee accounts of persons resident in
the erstwhile Bilateral Group countries which have been funded in non-convertible rupees) in
the name of the eligible person standing to his credit at the time of his arrival in India. No
penalty would be payable for premature withdrawal of NRE/FCNR deposits in such cases.
(g) Unutilised entitlement under any valid RIFEE permit or Reconversion facility granted by
Reserve Bank
(h) Unspent foreign exchange surrendered by the RFC accountholders provided authorised dealer
is satisfied that the concerned foreign exchange/currency had in fact been released for travel
etc. abroad by debit to the same RFC accounts and the amount of foreign exchange/currency
is surrendered within the stipulated period as required under the Exchange Control regulations.

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 The funds in RFC accounts are free from all restrictions regarding utilisation of foreign currency
balances including any restriction on investment in any form outside India.
Debits
(i) The funds in the RFC account may be allowed to be freely utilised by the account
holder for any bona fide remittance outside India through normal banking channels including for investments
abroad provided the cost of such investments and/or any subsequent payments required therefor are met
out of RFC account.
(ii) Withdrawals/payments from such accounts, other than for remittances outside India, or
for payments in foreign currency authorised to be made in India by Reserve Bank, shall be permitted by the
authorised dealer only in equivalent Indian rupees.
Rate of Interest
Rate of interest payable on the funds held in RFC accounts may be decided by authorised dealers on the
basis of market rates. No interest shall be payable on balances held in the form of current accounts.
Nomination Facility
(i) RFC accounts shall have the nomination facility as in the case of resident rupee accounts.
(ii) On the death of a RFC account holder, the balance in the account may be repatriated to
nominees to the extent of his/their entitlement, if on the date of death of the account holder such nominees
are resident outside India. To the extent any nominee is a person resident in India on the date of the death
of account holder, the amount may be paid to him in equivalent Indian rupees.
Reserve Requirements
Funds held in RFC accounts are exempt from CRR/SLR requirements.
Loans/Overdrafts against the Deposits
No loan/overdraft shall be granted by authorised dealers against balances in RFC accounts.
Transfer of Balances on becoming Non-resident -
Funds held in RFC account may be freely remitted abroad or credited to fresh NRE/FCNR

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 RFC accounts can be maintained in the form of current or savings or term deposit accounts,
where the account holder is an individual and in the form of current or term deposits in all other
cases.
If the individual subsequently goes abroad to become an NRI, the balance in the RFC account can be
converted to NRE/FCNR account. Interest income from RFC is exempt from income-tax till such time the
Returning Indian maintain the status of Resident but Not Ordinarily Resident (NOR). Hence, if the
Returning NRI had been non-resident for a continuous period of 2 years, he gets exemption from income-
tax for subsequent 9 years.
Interest income on RFC deposits is taxable when the NRI loses RNOR (resident not ordinarily resident)
status and becomes an ordinary resident. The balances in NRE or FCNR account can be credited to
RFC Account on the change of the status of the NRE or FCNR Account holder from a Non-Resident to a
Resident. Under the current FEMA regulations the Non-Resident Indian is not required to satisfy a
minimum period of stay of one year. A person can maintain an RFC Account, once he becomes a
resident for any length of time as long as he remains to be a resident. If his status changes once again
from Resident to Non-Resident, the funds held in RFC account are allowed to be freely remitted abroad
or credited to fresh NRE or FCNR account. However the current regulation under FEMA is silent about
the above provision.
The treatment of deducting tax at source on interest on RFC Account is similar to Domestic Term
Deposits. However it is possible for a person, whose status under the Income Tax Provision is Resident
but not Ordinarily Resident to claim that the interest on Term deposits is not liable to tax under the
provisions of Section 10 of the Income Tax Act, 1961. The individual should furnish Form 15AA if he does
not require the bank to deduct tax at source.
FAQ – RFC Account
Who can open?
You can open an RFC account if you return to India permanently after residing abroad for a continuous
period of one year or more. In order to calculate this continuous period, any short trips to India for
personal visits would be ignored. Any authorised dealer or bank will help you open your account.
Currencies
You can open an RFC account in any freely convertible foreign currency. These are foreign currencies
that can be exchanged easily with other currencies and are recognized by the international market.
Type and form of account
RFC accounts can be opened as savings or term deposit accounts and can be held singly or jointly in the
names of those who are eligible. No loans are available against the RFC account.
Interest
Interest is credited quarterly and is taxable. However, if you are a Resident but not Ordinary Resident,
then you will be able to avail of a tax exemption on the interest on RFC accounts for the two year period
when you hold this status.
Currently RFC term deposit rates are in the range of 2.5-3.5% for terms over 1 year for the US dollar.
Interest rates vary by term and by currency.

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Deposits and withdrawals
You can deposit funds from the following sources in your RFC account:
-Any balances brought from your overseas bank account including foreign exchange earnings through
employment, business or vocation outside India taken up or commenced while you were resident outside
India.
-Any foreign currency notes you bring from abroad; however, if the value of such notes exceeds $5,000 or
the combined value of Travelers'
Cheques and notes exceed $ 10,000, then you have to submit a Currency Declaration Form (CDF) to the
customs authorities on arrival in India.
You must produce the Currency Declaration Form for endorsement by the bank when you submit the
money for opening/credit to an Account.
-Any foreign exchange that you get on sale of eligible assets abroad; eligible assets include bank
accounts, overseas shares and securities, immoveable property and investment in business outside India
-Any income that you earn from your foreign assets such as dividends, interest
-You can transfer funds from your NRE or FCNR account into the RFC account once you become a
resident Indian; in such cases, no penalty for premature withdrawal will be levied on your NRE or FCNR
accounts
-Any person received from abroad
You can use funds in the RFC account for the following purposes:
-You can use RFC funds for any remittances or investment abroad; you can also use the funds for
maintenance of dependents or any personal purposes abroad
-You can also use these funds for expenses and investments to be made in India; withdrawals can be
made in rupees and are usually credited by the bank to the resident rupee bank savings account
RFC to NRE
If you decide to go abroad again for a long term, you can either remit the RFC balance abroad or transfer
funds from your RFC account into an NRE or FCNR account.
Nomination
You can nominate either a resident or a non resident for your RFC account. In case of death of the
accountholder where the nominee is a resident, the balance in the RFC account will be paid to the
nominee in Indian rupees. If the nominee is an NRI, such balance would be remitted abroad.
Documents needed for opening RFC account
The following documents are commonly needed:
-Photocopy of the pages containing passport details and personal details of all applicants
-Copy of valid visa and immigration stamps showing evidence of foreign stay for at least 1 year
-Your passport photograph
-RFC declaration form
Note: There is also an RFC (Domestic) account that can be opened by resident Indians. The features of
the RFC (Domestic) account are slightly different from the one disscussed here

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8. Foreign Currency Account
 A person resident in India who has gone abroad for studies or who is on a visit to a foreign
country may open, hold and maintain a Foreign Currency Account with a bank outside India
during his stay outside India, provided that on his return to India, the balance in the account is
repatriated to India. However, short visits to India by the student who has gone abroad for
studies, before completion of his studies, shall not be treated as his return to India.
 A person resident in India who has gone out of India to participate in an exhibition/trade fair
outside India may open, hold and maintain a Foreign Currency Account with a bank outside India
for crediting the sale proceeds of goods on display in the exhibition/trade fair. However, the
balance in the account is repatriated to India through normal banking channels within a period of
one month from the date of closure of the exhibition/trade fair.