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Introduction
Non-Resident Indians are Indian citizens that do not permanently reside in any Indian state. Many Indians choose to leave the nation for better opportunities in their career and studies. While some Indians choose to stay in a foreign country for a definite number of years, others leave the country indefinitely. If any Indian spends the majority of a fiscal year outside India, they obtain the status of an NRI.
Even though NRIs are citizens of India, they enjoy different laws and regulations than permanent residents of the country. The taxation system for NRIs is also different from that of Indian residents. An NRI also needs to maintain a particular type of bank account for their transactions in India that a regular resident cannot obtain. The country of residence of the NRI typically has no influence on the legislation regarding the person.
Criteria to Gain NRI Status
An individual attains the NRI status in India if they live in a foreign country for more than 183 days in the previous fiscal year. A person is an NRI regardless of their citizenship status if they live outside India for most of a financial year.
The duration of stay depends on the territory, in the case of navy officers or traders who spend their time in international waters. If the individual has spent more than 183 days in foreign territorial waters, they are NRIs. However, if most of their residency was in Indian territorial waters, they are Indian citizens.
NRI Status for Indian Students Studying Abroad
Indian students who study in foreign universities spend most of their time in foreign countries. Hence, they are NRIs. Even though their stay abroad is typically for a limited time and depends on a student Visa, their residency status in India changes. The students are still citizens of India, but they have the status of NRIs and have to abide by the rules and regulations of the nation accordingly.
Benefits for NRIs
NRIs enjoy many benefits and facilities in India. Some of them are as follows:
- NRIs are typically residents of developed nations (First World Nations). It is safe to assume that they have a higher quality of life in those countries
- NRIs do not have to pay any income tax to the Indian government unless the income is from India
- The government of India has reserved seats for NRI candidates in every significant polity
- NRIs have reserved seats in Indian education Institutes
- They are eligible to be a voter in every national and local election
- If the NRIs earn any income outside India, they do not pay any taxes to the Indian government
Non-Resident External (NRE) Accounts
A Non-Resident Indian cannot use a domestic bank account like a regular citizen. NRIs need to open special bank accounts known as the Non-Resident External Accounts (NRE) to manage their finances in Indian banks.
These accounts can deposit funds in Indian banks in foreign currency. On the other hand, if an NRI uses an NRI account, they can only deposit the funds they earned in India in Indian currency. An NRE is a flexible account with multiple currencies as default currencies for transactions.
Disadvantages of being an NRI
An NRI status comes with both advantages and disadvantages. Some of the drawbacks of being an NRI are listed below:
- Even though NRIs do not pay income tax to the Indian government, they have to pay taxes to the government of the country of residence. The rate of taxes on income is much higher than India in most first world countries
- NRIs do not receive any benefits offered by the Indian government to the regular residents of India
- NRIs do not have the citizenship of their country of residence, and most countries have a complicated and lengthy process for granting citizenship to a foreign national
Conclusion
Not residing permanently in India comes with various benefits and disadvantages for NRIs. While they enjoy great opportunities and better quality of life in the world’s developed nations (first world countries), they do not have any citizenship rights in that country. It often takes years for an NRI to obtain the citizenship of their country of residence.
The Indian students that study in foreign universities are also Non-Resident Indians. They gain the NRI status even if their stay in the foreign country is for a definite number of years and typically depends on a student Visa. Furthermore, the NRIs enjoy reservation benefits and can avoid taxation, but they also face the disadvantages of having an NRE.
