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 Frequently Asked Questions(FAQ's)
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FAQS Relating to Investment
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1. What are the different Residential Status of an Individual under Indian Income Tax Act, 1961?
Ans. Under the Indian Income-tax Act, 1961, Residential Status of an individual depending upon his period of stay in India are -
(i) Resident
(ii) Non-Resident (NR)
Resident is defined as a person who during the financial year (April to March) satisfies any one of the following two basic conditions:
(i) He is in India for at least 182 days in the financial year
(ii) He is in India for at least 60 days in the financial year and his total stay in India for last four preceding previous years is 365 days or more.
Individuals leaving India for employment, as member of crew of an Indian ship, and who resides abroad and is on a visit to India in any year, the period of 60 days is extended to 182 days. In other words, such a person should be residing in India for at least 182 days or more.
Residents are of two types:
Resident and Ordinarily Resident - An individual who satisfies either of the conditions mentioned above is ROR.
Resident but Not Ordinarily Resident - An individual who satisfies either of the conditions mentioned above and also the following conditions -
(i) He has been non-resident in India in 9 out of 10 years preceding the relevant previous year; or,
(ii) He is in India for 729 days or less during 7 previous years preceding the relevant previous year.
Thus, a person returning from overseas to settle down in India can be treated as "Resident But Not Ordinarily Resident" for a maximum period of two years after he returns to India.
Non-Resident - An individual, who does not satisfy any of the basic conditions mentioned above, is a "Non-Resident".
2. Who is a Person of Indian Origin?
Ans. Under the Foreign Exchange Management (Deposit) Regulations, 2000, Person of Indian Origin (PIO) means, a citizen of any country, other than Bangladesh or Pakistan, if -
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- He at any time held Indian Passport
- He or either of his parents or any of his grandparents at any time were citizen of India
- The person is of Non-Indian origin or parentage, and married to a PIO, an NRI, or an Indian citizen.
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For the purpose of investment in partnership firm or proprietary concern, the definition of PIO is curtailed. PIO means, a citizen of any country, other than Bangladesh, Pakistan and Sri Lanka, if -
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- He has at any time held an Indian Passport
- He or either of his parents or any of his grandparents at any time were citizen of India
- The person is the spouse of an Indian citizen or a person who falls in any of two categories mentioned above.
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For the purpose of investment in immovable properties in India, the scope of PIO is further restricted. PIO means, a citizen of any country, other than Bangladesh, Pakistan, Sri Lanka, Afghanistan, China, Iran, Nepal, and Bhutan, if -
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- He has at any time held Indian Passport
- He or his father or his grandfather at any time were citizen of India
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3. Who is a NRI under FEMA?
Ans. FEMA defines 'a person outside India' and Income Tax Act defines NRI, though the term 'NRI' is used for both the purposes loosely.
Person Resident in India is ---
1.A person residing in India for more than 182 days during the course of the preceding financial year but does not include,
A) i) Person who has gone out of India or who stays outside India, in either case
a) for or on taking up employment outside India, or
b) for carrying on outside India a business or vocation outside India, or
c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
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