3 FEMA Regulations NRIs Need to Know

If you live and work abroad, it can be tricky to receive or remit money to your homeland. The reason is the Indian government has a set of rules in place to prevent money laundering, foreign exchange outflow, etc. These rules come under the Foreign Exchange Management Act (FEMA). Read this article to learn about 3 FEMA regulations that apply to NRIs in India.

What is FEMA?

The Government of India formulated the Foreign Exchange Management Act (FEMA) in 1999 to facilitate external payments and trade. Simply put, it controls the flow of currency across Indian borders. Hence, you must abide by the law to remit money to India if you are an NRI.

Further, the act was created to encourage and promote the development and maintenance of the Indian foreign exchange market. FEMA applies to the whole of India and the offices and agencies located outside India owned and managed by Indians.

3 FEMA Regulations NRIs Must Know
Now that you have a brief idea of what FEMA is, let's dive into the FEMA laws every NRI should be aware of:

1. Maintaining Bank Accounts
Once you become an NRI, you must operate specific bank accounts that are designed for NRIs. You can also take the help of a trusted banking partner to help deal with overseas transactions. There are 3 types of bank accounts that you can open to remit money:

• NRO Account: A Non-Resident Ordinary rupee account is suitable to remit money from outside India. This account can be held jointly by two or more NRIs, and the remitted funds are non-repatriable to another country.
• NRE Account: A Non-Resident (External) Rupee account permits you to transfer money from outside India. The amount in this account is repatriable back to the country of residence of the NRI. Moreover, the income earned in this account is exempt from taxes.
• FCNR Account: Foreign Currency (Non-Resident) Account is a fixed deposit that allows NRIs to deposit any foreign currency in it. The account is available for 1 to 5 years, and is tax-free. Plus, the funds are entirely repatriable on maturity.

Leading financial institutions like IndusInd Bank offer mediums like the Indus Fast Remit to send money online from the USA and Canada to your bank account in India.

2. Financial Investments
When it comes to investments, NRIs can invest in unlimited options through repatriable and non-repatriable transactions. However, they cannot invest in Public Provident Fund (PPF) schemes or small saving schemes that give tax benefits and good returns.

3. Ownership and Transfer of Immovable Properties
NRIs and PIOs (Persons of Indian Origin) can purchase any commercial or residential real estate property in India except for:

• Agricultural property
• Farmhouse land
• Plantations

However, they can receive immovable property through inheritance from relatives.

The Bottom Line

For NRIs, knowing these fundamental rules is crucial to remit money and manage finances. Nowadays, with internet banking facilities by trusted banks, you can even send money online from different countries to your homeland.

So, visit your bank's website or branch to learn more about how you can take care of your financial affairs while living abroad.