You’re an NRI. Congratulations.

Your NRI status affects your banking and investment accounts as well as Income tax.

As per Income tax act, an individual can be :

  1. Resident and ordinarily resident,
  2. Resident but not ordinarily resident, or
  3. Non- Resident

‘Non-resident Indian’ is an individual who is a citizen of India or a person of Indian origin and who is not a resident of India. You are a resident if you satisfy any of the following conditions:

  1. If he is in India for 182 days or more during the previous year (e.g. 2018-19); or
  2. If he is in India for 60 days or more during the previous year (e.g. 2018-19) and 365 days or more during 4 years  (2014-15 to 2017-18) immediately preceding the previous year.

The second condition will not apply in the following cases:

  •  If an Indian citizen leaves India during the previous year for employment outside India;
  •  If an Indian citizen leaves India during the previous year as a member of the crew of an Indian ship; or
  •  If an Indian citizen or a person of Indian origin comes on a visit to India during the previous year.

In essence, if you leave India for employment in any financial year when your stay in India (including any travel days to & from India) is 181 days or less then you’re non-resident for that financial year.

FEMA governs your banking and investment accounts.

As per FEMA (Foreign Exchange Management Act 1999) if an individual has left India for :

  1. Taking up employment outside India,
  2. Carrying on a business or vocation outside India, or
  3. Left India for any other purpose in such circumstances as would indicate his intention to stay outside India for an uncertain period,

then he becomes a person “resident outside India” immediately on leaving India for the above purposes.

 “Immediately on leaving India” for either of the above purposes, you become a Non resident Indian under FEMA.

Things to do after becoming a Non resident Indian:

  1. Income received or deemed to be received in India is fully taxable. Use your overseas account to transfer funds to your NRE account.
  2. Change the status of your savings accounts from resident to NRO (Non-resident Ordinary). Close those that are not required.
  3. Change KYC status in CKYC  from resident to Non-Resident. This will change your residential status for all future investments that you do while being a Non-Resident.
  4. Open an NRE (Non-Resident External) savings account with a close relative as a joint account holder. (The bank will open it on a “former or survivor” basis i.e. the resident relative will be a Power of attorney holder for that account).
  5. Convert resident Demat account to NRO Demat account.
  6. Open NRE PIS (Portfolio investment scheme) Demat account, if you intend to invest in shares/ trade in stocks. You cannot use the PIS linked NRE bank account for any other purpose.  Pl note – a Non-Resident cannot do intra-day trading.  NRE PIS investments are 100% repatriable. You may have to approach multiple banks since staff at certain branches may not be aware of rules regarding opening and maintaining a PIS account. You will need to be very persistent in following up once you submit the account opening forms ( Bank & Securities section) as well as copies of the required documents.
  7. Use your NRE savings account to invest in mutual funds, if you want to invest on a repatriable basis.
  8. Link the NRE/NRO/Investment accounts with an Indian mobile number, which should remain active while you are overseas.
  9. Depending on whether your family/any dependents are staying back, make sure that they have sufficient health insurance coverage. You should ideally have a base policy and a super top-up policy to cover health emergencies. You might also require term insurance.


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