Full Form of NRI

Updated on April 16, 2024
Article byWallstreetmojo Team
Edited byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

Full Form of NRI – Non-Resident Indian

The full form of NRI is a Non-Resident Indian, an individual who is a non-resident in India. A non-resident Indian, as defined under FEMA Act, is an individual of Indian origin who is a citizen of India, an overseas citizen of India, or a decedent of Indian staying outside the Republic of India for employment for a minimum of 183 days during the financial year per the conditions to become a non-resident.

A non-resident Indian, in general terms, is a person, specifically an individual being non-resident as per the conditions of residence in the Income Tax Act 1969 and is a resident outside India for employment. The fulfillment of conditions is checked for the preceding financial year to be a non-resident in the current financial year.

Categories of NRI

A non-resident Indian can categorize into the following:

#1 – Person of Indian Origin Not Being Resident of India

  • A person of Indian origin is born in India, or parents/grandparents are born in non-partitioned India or have an Indian passport. A person can also be an NRI if the spouse of such a person is an Indian citizen.

#2 – Overseas Citizen of India

  • These foreign citizens have Indian origin, which authorizes them to stay and work in India indefinitely.
Full Form of NRI

You are free to use this image on your website, templates, etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Full Form of NRI (wallstreetmojo.com)

Financial Modeling & Valuation Courses Bundle (25+ Hours Video Series)

–>> If you want to learn Financial Modeling & Valuation professionally , then do check this ​Financial Modeling & Valuation Course Bundle​ (25+ hours of video tutorials with step by step McDonald’s Financial Model). Unlock the art of financial modeling and valuation with a comprehensive course covering McDonald’s forecast methodologies, advanced valuation techniques, and financial statements.

What are the Reasons for Becoming an NRI?

What are the Reasons for Becoming an NRI

You are free to use this image on your website, templates, etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Full Form of NRI (wallstreetmojo.com)

The Indian public is migrating to other countries like America, Canada, and the United Kingdom, for various reasons like employment, earnings, business, education, etc. From those Indians, people who go there for employment purposes for a specific period or more than that become NRI. The following are various reasons for becoming a non-resident Indian:

  • As per Income Tax Act: Accordingly, if a person doesn’t stay in India for 183 days or more OR doesn’t say for 60 days in India or doesn’t stay for 365 days in the previous 4 years, he will be considered as the NRI. One must check the above condition in the preceding financial year to gain the status of NRI in the current financial year.
  • As per Foreign Exchange Management Act: According to FEMA, a person is a non-resident individual if such person does not stay in India for 183 days or more in the preceding financial year.

Use of Term NRI

The term Non-Resident Indian is used in various fields in the economy.

  • In various insurance contracts, it compulsorily requires using the term non-resident Indian if the person insured is an NRI because any country’s economy always has specific terms and provisions for NRI.
  • Non-resident Indians have various exemptions if the account opened is an NTO savings account.
  • Further, the person’s taxability and deductions depend on whether the individual is a resident or a non-resident. Tax rates, the quantum of deduction, the period of taxability, and the level of exemptions are different for residents as well as a non-resident.
  • Also, assessment proceedings are different for residents as well as NIR. Double tax avoidance agreements between various countries are signed, providing special provisions for non-residents.

Some Precautions for NRI

Some Precautions for NRI

You are free to use this image on your website, templates, etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Full Form of NRI (wallstreetmojo.com)

The following things are to be taken care of if a person gains the status of non-resident Indian:

  • Firstly, the non-resident Indians must convert their regular savings accounts into NRO accounts, giving them various tax exemptions and privileges. Also, such a non-resident Indian is not allowed to open a regular savings account. This account must be held jointly by the non-resident and the resident and operated through the resident power of attorney in the country where such person is NRI.
  • Assign power of attorney to the country where you are a non-resident to operate your accounts and other administrative projects.
  • Update KYC details with financial instructions: financial institutions like banks, brokers, NBFC, mutual funds, and insurance companies are compulsorily required to obtain the KYC of every customer. Hence, after obtaining the status of NRI, you are supposed to provide an updated KYC.
  • Convert fixed deposits into NRO deposits: if the bank in which FD one opens doesn’t convert this account automatically into NRO account, then various formalities are to be done from the side of NRI to convert the fixed deposit into an NRO deposit.
  • Convert debit or credit cards into international cards to make international payments and fund transfers from one country to another.

Hence, the above precautions must be considered while gaining the status of non-resident Indian.

NRI Status

The residential status of a non-resident Indian is always non-resident in India. To decide whether a person is a resident or NRI, the Income Tax Act 1961 determines the residential status one should consider. When no conditions of ordinary residents or residents meet, the person is called a non-resident.

Different Types of NRI Accounts

Different Types of NRI Accounts

You are free to use this image on your website, templates, etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Full Form of NRI (wallstreetmojo.com)

The following are the various types of Non-Resident Indian accounts.

  1. Non-resident Ordinary (NRO) saving account
  2. Non-Resident External (NRE) saving account
  3. Non-Resident Ordinary (NRO) fixed deposit accounts
  4. Non-Resident External (NRI) fixed deposit accounts.
  5. Foreign exchange Non-resident Fixed Deposit account.

Conclusion

The status of non-resident gains by the provisions of the act enacted under the Indian economy. After considering those provisions, a person stated to be NRI or a resident Indian. Further, such a person moves out of India for another country’s reasons like employment, education, or business extra. After obtaining the status of a non-resident Indian, the precautions mentioned above must give an atmosphere of importance so that one can run financial and other transactions smoothly and obtain direct tax benefits In addition, the non-resident Indian can also obtain the relief mentioned under DTAA.

Recommended Articles

This article is a guide to the Full Form of NRI (Non-Resident Indian) and its definition. Here, we discuss the reasons for becoming a non-resident Indian, its uses, precautions, and categories. You may refer to the following articles to learn more about finance: –

Reader Interactions

Leave a Reply

Your email address will not be published. Required fields are marked *