5 most important foreign exchange rules under Foreign Exchange Management Act 1999 (FEMA) every NRI (Non Resident Indian) should be aware of.
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Welcome to FundooMoney, your 24X7 buddy for all your money matters! For every non-resident Indian (NRI), along with tax regulations, foreign exchange regulations significantly influence how they manage their India finances. Here, we will discuss 5 most important forex rules every NRI should be aware of.
Any cross border monetary transaction either to or from India is governed by FEMA (Foreign Exchange Management Act) 1999. Here are the 5 most important FEMA regulations every NRI must know.
Maintenance of bank account
Once you become an NRI, you need to open bank accounts specified for NRIs. You can open an NRO account if your money’s end use is in India. Else, you can open an NRE account where funds are freely repatriable. The money is kept in rupees in both the accounts. You can open a FCNR (B) account to keep money in foreign currency.
Financial investment options
Except small savings or Public Provident Fund (PPF), NRIs either on repatriable or non-repatriable basis, are allowed to invest in almost all kinds of financial instruments without any limit.
Acquisition and transfer of immovable properties
NRIs and Persons of Indian Origin or PIOs (excluding those from some countries) can purchase immovable property except an agricultural land or plantation or farm house through foreign income or funds from India.
Repatriation of current and immovable assets
Repatriation of current income such as rent, dividend, interest, and so on, are freely allowed. However, there is ceiling on repatriation of other immovable asset as only the originally invested foreign fund can be repatriated.
Remittances and maintenance for students
Students as NRIs can receive funds up to US$ 10 lakh per financial year out of sale proceeds of immovable properties or from the balances maintained in their NRO account in India. Besides, they can receive an amount equivalent to US$ 2.5 lakh per financial year, for maintenance of close relatives under Liberalized Remittance Scheme.
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