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New NNRI Financial Changes

New NRI Financial Changes

The abbreviation NRI stands for Non-Resident Indian. An NRI is a person who has an Indian passport but is neither an Indian citizen nor a resident of India. NRIs can apply for visas to travel to their country of origin and have the same rights as other Indian citizens. Being an NRI has several advantages, including larger deductions from taxable income at source under Section 80C in the 2018–19 Budget address and tax exemption on income generated outside of India.

What is financial NRI?

An NRI financial (NRI credit card) is a credit card given to non-resident Indians by banks and other financial institutions. It can be used to send money home or overseas. To use your NRI credit card abroad, you must have an overseas account with the bank that issued it.

Because they are issued by Indian banks with offices outside of India and offer services like ATMs, foreign exchange facilities, and other things, NRI financials are also called “overseas” or cards. Debit cards, prepaid cards, and credit cards are the three types of these cards.

Changing Residential Status for NRIs: What else needs to Change?

  • NRI status is not a permanent status
  • Renew your NRI status every year
  • Residential address in India
  • A valid passport and proof of identity such as a PAN card/ Aadhaar card
  • Driver’s license and other helpful other government services like obtaining foreign exchange certificates from banks or certifying documents like birth certificates issued by Indian Consulates abroad.
  • It also needs an account opened; these accounts should be maintained at least six months before the expiry date stated on the passbook along with proof of residence.

Change NRI Status and your Finances

  • You need to change your address, and bank account as well as gets a PAN card and a bank account.
  • You will also need to change the address on all your documents such as your passport, and birth certificate which includes any utility bills or accounts held in India where you want them sent or deposited.

Benefits of Changing Residential Status for NRIs

If you are an NRI, there are a few ways that you can benefit from the new rules.

  • Public Provident Fund (PPF) accounts can now be opened by NRIs.
  • Now, non-resident Indians (NRIs) can invest in Indian stock exchanges.
  • NRIs can now participate in a wide range of new programs, including performance-based investments like PPF and NPS.
  • Mutual funds, bonds, and other financial instruments are now available to NRIs for investment. NRIs can now reduce their capital gains tax on sales of real estate. Additionally, they have access to a large number of other performance-based investing plans including PPF and NPS.
  • Saving Account- As an NRI, your income is subject to tax in India, and therefore you need to save money to build up your wealth. However, from April 2018 onwards if you want to withdraw funds from any bank account in India then it will have to be considered taxable income which means that if someone with whom they are living wants some money out then they will have had to pay taxes on such withdrawal. The reason is that NRIs do not have this restriction on their ability when withdrawing funds from bank accounts outside of India but only within their own country or region.
  • Access to Government Schemes- NRIs can apply for a variety of government benefits, including loans, scholarships, and other sorts of assistance. Still, they are only able to participate in these programs if they meet the requirements outlined in the applicable legislation.

Change in Residential Status means Different Tax Consequences

It is important to note that the taxation of income earned abroad and gifts received from abroad are different. For example, if you have a resident employee working outside India who earns an annual income of Rs 1 lakh (base salary), it will be taxable as follows:

  • 20% on the first Rs 50,000;
  • 40% on the next Rs 50,000;
  • 30% on any amount above that.

Saving Account 

  • NRE/NRO account- NRI accounts can be opened in any bank in India. However, if you want to keep your money safe and secure outside of India then it’s best to open an NRO account in another country like the UK or USA. The main difference between these two types of accounts is that the former allows for investments but does not have any withdrawal restrictions; whereas the latter allows for withdrawals only after certain stipulations have been met (usually a minimum period).

Demat Account 

A Demat account is a type of financial investment where the investor does not have to trade his or her shares through the stock exchange. Instead, he or she can buy and sell these shares of his/her own choice. Opening a Demat account will help you make the most out of your investments by allowing you to conveniently choose when it’s time for them to be sold, without having any restrictions on when they can be bought and sold like in the case of shares held in an investment portfolio managed by an external broker.

Mutual Funds

Mutual funds are a very popular investment vehicle for NRIs. They’re traded in the stock market like stocks and shares, but they also have a structure similar to bond funds. Mutual funds can be divided into equity (stock), debt, and hybrid categories depending on their focus. Equity mutual funds invest primarily in stocks while debt and hybrid funds invest in bonds or mortgages.

NRI Financial Changes are as follows:

You can change your residential status from a non-resident to an Indian citizen by applying for Permanent Residency (PR) as a spouse or child of an Indian citizen. If you have been living in India for over three years but less than five years, you can apply for PR under the Foreigners Act. This will allow you to open Demat accounts and save up to Rs 1 lakh per annum without any restriction on NRIs having their bank account with a bank outside India.

The new rules for NRI Financial Changes are as follows:

  • You can now save your money in a saving account.
  • You can also invest in mutual funds and Demat accounts through online platforms, which will help you save on taxes.

In recent years, NRIs have experienced significant transformation. The procedure of changing one’s residential status is more challenging now than it has ever been because so many people are switching from being NRIs to PIOs. The new regulations for changing your residential status are stringent, and you must first fulfill several prerequisites before proceeding. If you choose to become a PIO or NRI again after spending a lot of time abroad or perhaps moving permanently abroad, there are additional new incentives that are accessible (like students).