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.