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5 FEMA Rules Every NRI Should Know

Every NRI should know these fundamental rules before dealing in any kind of cash or investment.

Anshika Bajpai |

Updated:April 30, 2019, 12:50 PM IST
5 FEMA Rules Every NRI Should Know
Every NRI should know these fundamental rules before dealing in any kind of cash or investment.

Once you become an NRI sending and receiving money in India comes with a set of rules. Any transaction in or from India is controlled by FEMA. The Foreign Exchange Management Act (FEMA) came into effect in 1999 after the FERA act was revoked. Here are a few of its regulations that every NRI should know.

1) Maintaining a bank account

You need to operate bank accounts that are specifically designated for NRIs. It’s advisable to have a trusted and well established banking partner to help you deal with overseas transactions. There are 3 major types of accounts that you can open;

● NRO account - If you want to send money earned abroad back to India.

● NRE account - For repatriable or moveable assets like securities and cash.

● FCNR (B) account - To store money in foreign currency. The NRO and NRE accounts are only used in Indian rupee.

2) Financial Investment

NRIs are allowed to make unlimited investment in repatriable or non-repatriable transactions. The only exceptions are small saving schemes or PPF (Public Provident Fund) that aim to encourage small savings by giving good returns and tax benefits.

3) Ownership and transfer of immovable properties

All NRIs and PIOs (Persons of Indian Origin) can purchase any kinds of commercial and residential real estate property in India. However, there are a few exceptions;

- Agricultural land

- Plantation

- Farmhouse

4) Income for students

The Liberalized Remittance Scheme says that Indian students who are NRIs can receive a maximum of US$ 10 lakhs in a year from their NRO/NRE accounts or from profit gained from any property or estate. NRI students are also eligible to receive US$ 2.5 lakhs per year for caring of close relations.

5) Repatriation of current and immovable assets

An NRI can send money back to India gained from foreign repatriable assets like rent received from a building owned abroad. There are more restrictions on immovable assets like property and lands because the NRI can only be repatriated on his originally invested foreign fund. They cannot profit from any ROI that proceeds from these investments.

You need to know these fundamental rules before dealing in any kind of cash or investment. Once you know them well, it becomes easier to do day to day transactions and long term investments.

To know more, click here.

This content has been created in association with YONO SBI.

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