Confederation of Indian Industry

Returning
Indians
All that you
need to know

Knowledge Partner
2
Table of contents

Message 5
Preface 6
Executive summary 8
Introduction: all the basics, covered 10
Scope and coverage 10
Classification of returning Indians 10
Purpose of movement 11
Preparing for the move – what you need to know before moving in 12
India Landscape 12
Lifestyle 12
Social security 20
Insurance schemes 21
Investment avenues 22
Taxation system in India 23
Forms of self-employment/business 31
Banking in India 32
Remittances outside India 33
Rules specific to NRI/PIO 34
Case Studies 41
Key aspects once you make your decision – Welcome to India 45
Work permit and visa 45
Movable asset rules 46
Trailing tax and social security issues 47
Case studies - Tax 48
Case studies – Social Security 49
Schemes for Overseas Indians 50
Central Government initiatives 50
Government of Assam 55
Government of Bihar 55
Government of Gujarat 56
Government of Karnataka 57
Government of Kerala 58
Government of Odisha 59
Government of Rajasthan 60
Appendix 61
Frequently asked questions 62
A. TAX 62
B. FEMA 64
C. SOCIAL SECURITY 66
D. IMMIGRATION 67
Useful websites 69
About Ministry of Overseas Indian Affairs 70
About Confederation of Indian Industry 71
About Deloitte 72
About OIFC 73
Key contacts 74

Returning Indians – All that you need to know | 3

4
Message

Dear Friends,

Greetings to all of you!

I am pleased to know that the Overseas Indian

Facilitation Centre (OIFC) has taken the initiative to bring
out a publication, which would illustrate the policies,
procedures, case studies and the opportunity areas of
investments into India from the perspective of Returning
Indians.

During my interactions with my Overseas Indian friends

on various occasions, some of whom are considering
moving back to India, I have felt that uprooting a family
is a very complex decision. Many questions haunt their
minds – which city to move to, what job to take, the
decision to start a business, schooling for kids and more.

I hope this new publication ‘Returning Indians - All

that you need to know’ will address the questions of
‘Returning Indians’ and prove to be a useful repository
of practical information.

Vayalar Ravi
Minister of Overseas Indian Affairs

Returning Indians – All that you need to know | 5

Preface
Greetings!
On the occasion of the Tenth Pravasi Bhartiya Divas
Convention 2012, it gives us great pleasure in bringing
out ‘Returning Indians - All that you need to know’, a
one point reference book for those seeking to return to
India.
The Ministry of Overseas Indian Affairs (MOIA) is the
nodal Ministry for all matters relating to overseas Indians
and also handles all aspects of emigration and the return
of emigrants.
Returning Indians are sometimes intimidated by their
new surroundings and require credible support for their
basic queries such as what they can bring back to India;
pension and social security concerns; taxation matters;
what bank accounts they can operate and more.
The Overseas Indian Facilitation Centre (OIFC) set
up by the MOIA in 2007, in partnership with the
Confederation of Indian Industry (CII), is a special
purpose vehicle of the MOIA which provides facilitation
services to overseas Indians, especially for their
economic engagement with India.
6
With credibility extended under the umbrella of the
Government and an institutional industry chamber,
coupled with the support of a network of subject-
matter experts, Indian states, Indian missions and Indian
diaspora associations, the Centre addresses the queries
and concerns of returning Indians, making it easy for
them to return to India.
I hope that returning Indians will find this reference
book a useful guide in their quest for information about
the regulatory and practical dimensions in India.
We are grateful to Hon’ble Minister of Overseas Indian
Affairs Shri. Vayalar Ravi, for his encouragement and
guidance in bringing out this book. We also place on
record our appreciation for the contribution made
by Deloitte Touche Tohmatsu India Pvt Ltd, OIFC’s
knowledge partner, for this publication.
Parvez Dewan
Secretary, MOIA and Chairman, OIFC
Preface
Greetings to all of you!
Recession and uncertainties in the regions with large
concentration of Indian diaspora population and
emerging opportunities in India together have created a
growing possibility of reverse migration.
Increasingly, Indians abroad see the move to India, at
this point in time, as a way to have the best of both
worlds. With rapid growth and development, the basic
amenities that they are used to in overseas like access to
world-class healthcare, international schools, availability
of global brands, high quality housing are now available
in India. Work experience in India is valued, as having
relevant exposure in a growing and developing country
adds weightage to your resume. Adding to this, the
proximity you can have with your family, relatives and
friends are winning propositions.
Confederation of Indian Industry (CII) has been
privileged to incubate and support the Overseas Indian
Facilitation Center (OIFC), in a Public Private Partnership
mode, with the Ministry of Overseas Indian Affairs
(MOIA). The OIFC has been playing a proactive and
pivotal role in expanding the economic engagement of
overseas Indians with India.
I hope OIFC’s upcoming publication ‘Returning Indians
- All that you need to know’, with Deloitte Touche
Tohmatsu India Pvt Ltd as its Knowledge Partner, will be
a useful guide for those Indians who seek to return to
India.
Chandrajit Banerjee
Director General, CII and Co-Chairman, OIFC
Returning Indians – All that you need to know | 7
Executive summary
With a 1.21 billion population – one can safely say that
there is a bit of India everywhere in the world! India has
a considerable population overseas, especially in the
USA, the UK, the Middle-East, Australia and Canada.
Over the years, Indians have established themselves
in their adopted countries and have earned respect
through their hard work, dedication, achievements and
contributions to society.
In recent years, however, an interesting trend has
emerged. The oft-heralded term of “brain-drain”,
used to describe talented Indians migrating overseas
has seen a balancing force in many overseas Indians
opting to return home. India’s growth story, booming
opportunities along with focused liberalization
measures adopted by the Government have resulted
in a large number of foreign corporates setting up
operations in India.
The decision to move to India may be an emotional
one inspired by the need to return to one’s roots or
a rational one, determined by career opportunities.
In both circumstances, it is absolutely essential to be
completely aware of the facets of the new environment
that one is moving to. ‘Returning Indians’ has been
developed keeping all aspects that would impact an
Indian wanting to return home. From the rules and
regulations to softer aspects like culture, ‘Returning
Indians’ is the single publication that a returning Indian
can refer to for guidance.
The publication has been divided into four broad heads
for simplicity and convenience. The first part serves
as a general introduction and focuses on the scope
8
and coverage of the publication along with definitions
for NRI, OCI and a comparative analysis of the same.
The second section is sub-divided into two broad
chapters. The first chapter is an overview of the Indian
landscape which includes lifestyle, investment avenues,
taxation and banking systems. The second chapter in
the second section focuses on rules specific to NRIs/
PIOs. A significant and often common area of concern
relates to the social security system in India. The US,
UK and many European nations, for example, have very
developed social security systems in place and Indians
typically have queries about the corresponding system,
rules and regulations here. These have been explained
and examined in this chapter.
“Finally made the decision to come back to India?”
The third section gives a preview of the significant
steps that need to be taken before you can travel to
India. This section will cater to your requirements once
you have decided to return to India and zeroed in on
your destination city. If you have spent considerable
time overseas, you may have trailing issues relating to
tax and social security even after you return to India.
This section analyses possible issues that you may face
together with detailed illustrations.
The fourth and last major section of the publication is a
brief narrative of the schemes and measures undertaken
by the Central and OIFC partner State Governments
for the welfare and growth of the overseas Indian
community.
We hope that you will find all the information given
useful and insightful.
Indians abroad see the move
to India, at this point in
time, as a way to have the
best of both worlds. With
rapid growth and
development, the basic
amenities that they are used
to overseas like access to
world-class healthcare,
international schools,
availability of global brands,
high quality housing are
now available in India.

Returning Indians – All that you need to know | 9

Introduction: all the basics, covered

1 www.mha.nic.in
2 If the person is in India on
long term visa of more than
one year, he can apply to
the specified FRRO or the
Joint Secretary (Foreigners)
MHA
3 If the applicant is in India,
he/she can apply to the
specified FRRO or to the
Under Secretary, OCI
Cell, Citizenship Section ,
Foreigners’ Division, MHA
This introduction will dovetail into all the basic details.
We will discuss:
• our motivations to develop this publication,
• extent of coverage,
• who the intended target audience is
• classification categories for returning Indians
Scope and coverage
Returning Indians has been developed to provide
information on the amenities in India, the applicable
regulations and their impact, procedures/processes to
be complied with and initiatives of the Government for
Overseas Indians. India’s growth story and availability of
myriad opportunities has encouraged an increasing number
of Indians settled abroad to make India home, once again.
There are also an increasing number of multi-national
companies who want to set-up shop in India and ensure
that they leverage the tremendous opportunities in a
growing economy. In all of this, the Government has played
a strong role in adopting a liberal and open policy.
This publication seeks to provide assistance and
guidance on the various aspects that will impact you
who are returning from across the globe – from cultural
to regulatory, from medical to social security and more.
Classification of returning Indians
A returning Indian can be classified into four broad
buckets under immigration laws. The key features
and requirements of the categories as specified under
immigration laws are tabulated below1:

Particulars Non –resident Person of Indian Origin PIO card holder Overseas Citizen of India [OCI]
Indian [NRI] [PIO]
Definition An Indian A person who or whose A person registered as a PIO card holder under A person registered as Overseas Citizen of India under
citizen any of ancestors was MHA’s scheme section 7A of the Citizenship Act, 1955
ordinarily an Indian national and
residing who is presently holding
outside India another country’s
and holding overseas citizenship/
Indian passport nationality
Eligibility – – Any person who at any time has held an Indian A foreign national who was eligible
passport or who/either of whose parents or • To become citizen of India on 26.01.1950 or anytime
grandparents were born in or were permanently thereafter; or belonged to a territory that became
resident in India as defined in Government of part of India after 15.08.1947 and his/her children
India Act, 1935 and other territories forming part and grand children
of India thereafter provided neither was at any • Whose country of nationality allows dual citizenship
time citizen of Afghanistan, Bhutan, China, Nepal, under local laws
Pakistan and Sri Lanka or spouse of Indian citizen • Excluding persons who were citizens of Pakistan of
or PIO Bangladesh at any time
Exclusion None None PIOs of all countries except Afghanistan, Bhutan, PIOs of all countries except Pakistan and Bangladesh
China, Nepal, Pakistan and Sri Lanka
Procedure None None prescribed Eligible person can apply in prescribed form Eligible person can apply to the Indian Mission/Post in
for prescribed with enclosures to the Indian Mission/Post in the the country of citizenship or where he/she is ordinarily
registration country where he/she is ordinarily resident2 resident3
Fees for Not applicable Not applicable `15,000 or equivalent in local currency for adults US$ 275 or equivalent in local currency. US$ 25 or
application and `7,500 or equivalent in local currency for equivalent in local currency for PIO card holders
children below 18 years of age
Permitted All activities are As specified in the visa All activities except mountaineering, missionary, All activities except mountaineering, missionary,
activities permitted research work and existing prohibited/restricted research work and existing prohibited/restricted areas
areas which require specific permit which require specific permit
Indian Already an As per Citizenship Act; As per Citizenship Act; has to reside in India for Can obtain citizenship after 5 years from the date of
citizenship Indian citizen has to reside in India for minimum 7 years before applying for citizenship OCI registration provided stays in India for one year
minimum 7 years before before applying for citizenship
applying for citizenship

10
Purpose of movement
There are many reasons that could influence your
decision to move to India. The decision to move to India
Why would a person move to another location? may be an emotional one inspired
Why and when would one think of returning to his
homeland? by the need to return to one’s
Generally, the more rational decision for movement roots or a rational one, determined
includes career growth, increased remuneration,
business opportunities and a better standard of living. by career opportunities.
India has come a long way since independence in terms
of industrial development, infrastructural advancements Returning Indian has been
and new avenues for growth and investment. This has
resulted in increased employment opportunities besides developed keeping all aspects that
opportunities for setting up one’s own venture.
would impact an Indian wanting
On the emotional side, there are factors like the desire
to be with one’s family, to re-connect with one’s roots to return home.
and culture which encourage Indians to return.

Increasingly, Indians abroad see the move to India, at

this point in time, as a way to have the best of both
worlds. With rapid growth and development, the basic
amenities that they are used to at overseas location like
access to world-class healthcare, international schools,
global brands, high quality housing are now available
in India. Work experience in India is valued, as having
relevant exposure in a growing and developing country
which adds a lot of weight to your resume. Further, the
proximity to relatives, friends and family members will
make it a winning proposition.

Returning Indians – All that you need to know | 11

Preparing for the move – what you
need to know before moving in
India Landscape
Lifestyle
You would need to make many adjustments while
relocating to another location. Key concerns at the
time of relocation would revolve around your family.
Accommodation, schooling, housing, medical facilities
available are typically the most important priorities when
you are planning to relocate. This section focuses on the
available infrastructure facilities, the prevailing cultural
norms and other developments in India today.
Location assessment
The decision on which city in India you want to settle
down in would depend on various factors, including
proximity to family, career opportunities, the weather in
a particular city, the infrastructure, educational needs of
the children, etc. While some factors may be personal,
others would be dictated by purely practical reasons such
as the location of the work place. Considering that there
are many Indian cities that have become cosmopolitan,
deciding on a city that best suits your needs should
not be too challenging. There is a significant amount
of information that is easily available. This along with
12
awareness of the developments in India overseas would
help you make the right choice – for you!
Housing
After taking a decision on the city to relocate, the next
challenge is identifying suitable accommodation. A
major decision that you would have to take is whether
to purchase a house, or to stay in a rented property. If
you are returning to India for employment, there is a
high probability that the employer might take care of
your housing facilities.
The Indian cities are expanding breadthwise and
housing projects are increasing by the minute. With
property developers vying with each other to provide a
myriad of facilities and benefits, you have a wide option
to choose from while deciding on accommodation.
From integrated townships to condominiums to
bungalows, Indian cities have them all. If the type of
accommodation is wide ranging, the building styles
incorporating Italian/French and other European designs
doesn’t lag behind either. You can make a choice even
before landing in India just at the click of a button since
the real estate sector is omnipresent in the cyber space.
Certain rules and regulations govern the process of
purchase of immovable property, which is explained
further in this publication.

Renting in the initial years may be a good option, while

buying can be contemplated at a later stage.

Schooling
India has always been known for its sound education
system, and many of you would want your children to
be exposed to the sort of educational environment that
you/your parents grew up in. The rigorous academic
grounding, inculcation of values and focus on hard work
is what makes the Indian education system so highly
valued the world over.

Overall, schooling in India involves 12 years, following

the "10+2” pattern. Indian education system comprises
of the following stages- pre-nursery (popularly referred
to as “pre-school”), Nursery, Primary, Secondary (class
9-10), Higher Secondary (class 11-12), Graduation and
Post-Graduation. Some students go into a different
stream after Secondary school for 3 Years, opting for
technical education.
Indian schools can broadly be classified into private
and public schools. Private schools are run by private
individuals or trusts, while Public schools are run entirely
by the Government. Private schools in turn are divided
into two types: recognized schools and unrecognized
schools.
Government schools include the central schools, the
state Government schools, and municipality schools.
There are a large number of Government-funded
schools in India. According to a recent estimate,
80% of all schools are Government schools, making
the Government the major provider of education in
India. These schools often offer free education, food,
uniform, etc. to students. They are affiliated either to
the Central Board of Secondary Education (CBSE) or the
State Boards. Another category of Government-funded
schools are the Kendriya Vidyalayas. The Kendriya
Vidyalayas were set up to cater to the educational
needs of children of transferable Central Government
employees by providing a common programme of
education across locations.
In addition to Government schools, there are a large
number of private schools in India. Most private
schools are affiliated to the CBSE or the Indian School
Certificate Examinations (ISCE). While the ISCE and CBSE
programmes are well-recognized and respected, the
recent years have seen a huge surge in schools offering
the International Baccalaureate (IB) programme which is
reputed to follow a more flexible programme and caters
to the needs of the mobile population.
With the recent passing of the Right to Education
Act, education has become a fundamental right of all
children in the age group of 6-14 years.
Private pre-schools in India have become an important
aspect for overall development of a child. The
pre-schools prepare toddlers for kindergarten and
elementary schools, and also help them interact with a
world outside their homes. Supporting the pre-school
stage, the Government launched the Integrated Child
Development Services (ICDS) Scheme, in 1975. The ICDS
today represents one of the world’s largest and most
unique programmes for early childhood development.
ICDS focuses on providing pre-school education and
nutrition, especially to the girl child.
Acknowledging the importance of skilled manpower
requirement for the economic development of the
country, the Government of India has accorded great
importance to vocational education and training. Under
the twelfth five year plan, vocational education has

Returning Indians – All that you need to know | 13

 received a boost with more funds being allocated for the
purpose. Vocational education in India aims to develop
skilled manpower through various courses to meet the
requirements of mainly the unorganised sector and to
instill self-employment skills. Vocational education is
imparted through Industrial Training Institutes (ITIs),
which are Government-run training organisations, and
Industrial Training Centres (ITCs) which are privately-run
equivalents. In addition, polytechnics provide
undergraduate and postgraduate diploma courses in
engineering (or technical) and other vocations.
The renowned Indian Institute of Technology (IIT) and
the Indian Institute of Management (IIM) personifies the
glory of the Indian education system. IITs produce world
class engineers and technocrats in India who serve the
requirements of the industries the world over. There are
fifteen IITs at present, located in Bhubaneswar, Mumbai,
Delhi, Gandhinagar, Guwahati, Hyderabad, Indore,
Kanpur, Kharagpur, Chennai, Mandi, Patna, Punjab,
Rajasthan and Roorkee.
IIMs are India's premier management institute. They
were set up with the objective of providing world-class
management education, and to assist the industry
through research and consulting services. There are
about thirteen IIMs located in Ahmedabad, Bangalore,
Kolkata, Kozhikode, Lucknow, Indore, Shillong, Ranchi,
Rohtak, Raipur, Trichy, Udaipur and Kashipur.
India hence offers a vast choice of schools, colleges
and professional courses. All the major schools and
educational institutes in India have their own website;
one can research these on the internet before moving to
India, and make an informed choice beforehand, based
on one’s requirements.
Timing for moving is also an imperative aspect. The
typical academic year in Indian schools is from June
to March. If you are planning to return in the middle
of an academic year, you could make enquiries with
the educational institutions to ensure that your child’s
education is not impacted.

Illustrative list of recognized schools

A list of some recognized schools in the major cities is given below:

Bangalore Chennai Delhi Kolkata Mumbai

• The International School
• Mallya Aditi International
School
• AirForce School
• National Public School
• Ryan International
School
• Bishop Cotton School
• Vidya Niketan School
• Oasis International
School
• Swaminarayan
International School
• Canadian International
School School
• BGS International
Residential School
• B E L School
• American International
School
• Padma Seshadri Bala
Bhavan School
• DAV Senior Secondary
School
• Vidya Mandir Senior
Secondary School
• Chettinad Vidyashram
• Lady Andal
Venkatasubba Rao
Matriculation Higher
Secondary School
• Good Shepherd High
• P.S. Senior Secondary
School
• Chinmaya Vidyalaya
• Bhavan’s Rajaji
Vidyashram
• National Public School
• St. Johns Senior
Secondary School
• Shri Ram School
• The Mother's
International School
• Carmel Convent School
• Modern School
• Lotus Valley International
• Loreto Convent
• Delhi Public School
• Kothari International
School
• GD Goenka World
School
• Amity International
School
• Blue Bells
• Tagore International
• Mount St. Mary’s
• St. Xavier’s Collegiate
School
• La Martiniere School
• St. James School
• Loreto House
• Don Bosco School
• M P Birla Foundation Hr.
Sec School
• Calcutta Boys School
• The Heritage School
• Salt Lake School
• Auxilium Convent
• Assembly of God Church
•  The Cathedral and John
Connon School
•  Bombay International
School
•  J.B. Petiti High School
•  Ecole Mondiale World
School
•  Podar World School
•  Bombay Scottish School
•  Jamna Bai Narsee School
•  Arya Vidya Mandir
•  Don Bosco High School
•  SVKM International
School
•  NES International School
•  Singapore International
School
•  Dhirubhai Ambani
International School
•  American School of
Bombay

14
Medical Facilities
The medical facilities in India are rated as one of the
best in the world. The increasing paying capacity of
Indians and health awareness has triggered exponential
growth of very high quality healthcare service. This
growth can be understood from the very fact that even
for complex treatments like Cardio, India has emerged
as a major destination for low-cost medical care at top
international standards.Medical tourism is becoming
highly popular.

We have appended the list of hospitals in the major

cities of India for your reference.

Every Indian city has Government and private hospitals.

Treatment in Government hospitals is accessible to all.
These hospitals provide free service to the poor, while
charging low rates from others, as compared to private
hospitals. Government hospitals give quality treatment
at affordable prices, and these hospitals have been
consistently ranked amongst the top hospitals in India,
in terms of quality, especially the prestigious All India
Institute of Medical Sciences (AIIMS)4.
India has amongst the best super speciality
hospitals spread out over the entire country, both
government-run as well as privately managed. Amongst
the most renowned are – All India Institute of Medical
Sciences (AIIMS), Delhi and Post Graduate Institute of
Medical Education and Research, Chandigarh in the
Government sector, as well the privately-run Apollo
hospitals (with branches all over the country), Christian
Medical College, Vellore, Breach Candy hospital,
Mumbai, Medanta, the Medicity, Delhi and many more.
Alternative medicines can often work in conjunction 4 The WEEK/Hansa 2011
with conventional allopathic medicines, and Indians ranking
have been relying for centuries on treatments like
Ayurveda, Homeopathy, Nature Cure treatment,
yoga, Unani and many more. These medicines have
increasingly found global acceptance. For many
returning Indians who may seek a change from modern
health care cures, India will offer vast options in the
field of alternative medicines. These medicines have
withstood the test of time, and offer a gentle, natural,
non-aggressive path to health – a path most likely
followed by the NRIs’ parents and ancestors! One
can obtain more information from the website of the
Department of AYUSH dealing in traditional Indian
medicine.

Illustrative list of prominent hospitals in India

Bangalore Chennai Delhi Kolkata Mumbai

• Manipal Hospital
• Apollo Hospital
• Narayana Hridayalaya
• St John’s Medical
College & Hospital
• Fortis Hospital
• Mallya Hospital
• Lakeside Medical Centre
• Apollo Hospitals
• MIOT Hospitals
• Fortis Malar Hospital
• Vijaya Hospital
• Sooriya Hospital
• Agarwal Eye Hospital
• Sankara Nethrayala
• Frontier Lifeline Hospital
• All India Institute of
Medical Sciences
• Apollo Hospitals
• Escorts Heart Institute &
Research Centre
• Max Super Speciality
Hospital
• Batra Hospital and
Medical Research Centre
• Sir Ganga Ram Hospital
• Ruby General Hospital
• Fortis Hospitals & Kidney
Institute
• Peerless Hospital &
B.K.Roy Research Centre
• Apollo Gleneagles
Hospital
• Desun Hospital & Heart
Institute
• The Calcutta Medical
Research Institute
• Jaslok Hospital and
Research Centre
• Bombay Hospital
• Hinduja Hospital and
Medical Research Centre
• Fortis Hospitals
• Tata Memorial Hospital
• Lilavati Hospital
• Breach Candy Hospital

Returning Indians – All that you need to know | 15

Culture - India vis-à-vis the world
India is now viewed as a land of opportunities and
Overseas Indians are finding the need to connect with
their motherland even more. The desire to return to
India is cherished by a growing number of Indians
settled abroad and the numbers returning to their
motherland is growing every year.
This relocation gives rise to the challenges of
re-adjusting oneself to cultural changes in the
homeland. The children, who may have been born and
brought up outside India, may face a bigger challenge.
Having become accustomed to a certain lifestyle abroad,
adapting to a new culture - to the way people dress,
dine, work and dwell in a new environment, may take
time and effort.
However, with globalization, adapting to new
geographies has become a reasonably simpler process.
Indians returning after a long gap will find remarkable
changes in every sphere of life in India. In the recent
past, a significant number of Indians have travelled
and lived overseas, and with this increased mobility
has come exposure to foreign cultures and way of
life. In addition to this, access and use of the internet
in India has increased phenomenally. The new-age,
widely-travelled, technologically savvy Indian is not
only tolerant to foreign ideas, but is keen to try out and
experiment with different cuisines, clothes, cinema,
languages etc.
Dress
The culture, religion, languages spoken and attire of
the people of India are as diverse as the landscape of
this vast country. Due to its diversity, India does not
have just one dress, which can be called as the National
India is now viewed as a land of opportunities, and
overseas Indians are finding the need to connect with their
motherland even more. The desire to return to India is
cherished by a growing number of Indians settled abroad,
and the numbers returning to their motherland is
growing every year
16
Dress or Indian Dress. Each of the 28 states has its own
unique way of dressing. Indian costumes are vibrant,
comfortable and adaptable, according to the climate of
that particular region.
As anywhere else in the world, the kind of dress you
wear in India would depend primarily on the occasion
for which it is worn. The attire would be different
depending on whether it is a social function, a marriage,
a religious function, a business meeting, etc.
If you are an Indian returning from the West, you would
be accustomed to Western attire and may be anxious
about dressing “appropriately” in India, keeping Indian
sensibilities in mind. With globalization, western attires
are becoming increasingly popular and common in
India, especially amongst the younger generation.
You will be pleasantly surprised to find that most of
the international brands of clothing which you are
accustomed to wear in your host country are easily
available at the next door shopping mall! However, it
is important to remember that your clothing should be
respectful of the local culture.
Language
The principal official language of the Republic of India is
Hindi, while English is the secondary official language.
In addition, India accommodates a large number of
regional languages as well.
You, and more importantly your children, may not be
used to English the way it is spoken in India, and may
initially face a challenge in adapting to the accent and to
the relatively formal use of the language in India. Cultural
sensitivities may also need to be kept in mind, including
the appropriate way to address your seniors at the
workplace and your elders at home. A large number of
multinational companies operate in India, and the work
culture in these companies, including the language, may
be one you are familiar and comfortable with.
Many schools in India require the children to learn a
second regional language, besides English. This may
pose a challenge to the Overseas Indian child who
would not be familiar with any such language.
Indians show keen interest in learning foreign languages
like French, German, Spanish, Japanese, etc. Though
these languages are not commonly spoken in India,
with the increase in trade with countries where
these languages are spoken, the desire to learn these
languages has increased, since this would open doors to
global job opportunities.
Festivals
India celebrates a large number of festivals all across the
country, throughout the year. Each of the Indian states
has its own set of festivals with their unique ways of
celebration. Each festival is backed by a unique story/
legend behind its evolution, stories which have been
passed down from generation to generation. The tales
are equally fascinating and as varied as the celebration
itself. Festivals in India are occasions to celebrate with
family and close friends.
In addition to religious festivals, India is also home to
some of the most renowned cultural festivals across the
length and breadth of the country. From the Khajuraho
dance festival to the Bikaner festival, from Pushkar
festival to the Konark festival – India can well and truly
be lifetimes of rich and diverse experiences combined
together.
Many of you will agree that one of the greatest joys of
coming back to India is the opportunity to once again
participate in the revelry and joy of these festivals, with
one’s own.
Food
With changing lifestyles, a clear shift to the nuclear
family system and busy work schedules, the eating
habits of Indians, especially in the metros, has clearly
changed. World class malls, multiplexes and shopping
arcades with multinational fast food chain of restaurants
are common and extremely popular.
You will have the best of both worlds – the food you
have become accustomed to in the country you have
left behind and the home cooked Indian food you so
loved while growing up in India.
Additionally, there are numerous international hotel
chains in India – the Taj group, the Oberoi group, Le
Meridian group, etc. They offer world-class service
that can be expected in any leading hotel in the world,
coupled with warm Indian hospitality.
Traffic
As an Indian returning to your homeland after a hiatus, you
may not be used to the volume of traffic on the roads here
and may take a little while to get used to it. The volume
of traffic on the Indian roads has increased exponentially
in the last couple of decades though the Government is
taking steps to widen roads and providing alternate routes
to ease the traffic congestion. The Bandra Worli sea link, an
architectural phenomenon is one such welfare measure to
help Mumbaikars reduce their travel times.
The Government initiative to partner with the private
sector in developing and maintaining highways has met
with stupendous success as is evident from the East
Coast Corridor. The introduction of metro rail and air
conditioned buses in the major cities has also provided
an alternative to commuting driving.
Public transport –rail, buses, metros, etc. - remains the
primary mode of transport for most of the population,
and India's public transport systems are among the most
heavily used in the world. The Government has recently
announced the National Common Mobility Card which
will facilitate cashless travel in public transport system
like railways, metro rail, buses, taxi, besides toll taxes
and parking.
Rail transport is a commonly used mode of long-
distance transportation in India. Almost all rail
operations in India are handled by a state-owned
organisation, i.e., the Indian Railways, Ministry of
Railways. The rail network in India is one of the largest
networks in the world. Many cities also have their own
dedicated suburban networks to cater to commuters.
India also has rail links with Pakistan, Nepal and
Bangladesh. India has some of the lowest train fares
in the world and rail travel is heavily subsidised. Today,
railway tickets can be booked through the internet and
via mobile phones.
Returning Indians – All that you need to know | 17
 Buses form a very important module of public transport
in Indian cities, and serve as a cheap and convenient
mode of transport for all classes of society. Bus services
are typically run by State Government owned transport
corporations. In the recent past, various facilities have
been introduced like air-conditioned buses and low-floor
buses for the differently abled. Another new initiative is
the Bus Rapid Transit (BRT) system which already exists in
Pune, Delhi and Ahmedabad with new ones coming up
in Visakhapatnam, Hyderabad and Bangalore. Buses go a
long way in helping decongest the busy Indian roads.
The first modern rapid transit in India was the Kolkata
Metro, with operations starting in 1984. The Chennai
Mass Rapid Transit System was introduced in 1997. The
Delhi Metro in the capital city of New Delhi is the third
conventional metro which began operations in 2002. The
Delhi Metro Rail Corporation (DMRC) project changed
the lives of the commuters in the National Capital Region
(NCR) of Delhi, covering every area of the Delhi NCR:
Delhi, Gurgaon, Noida and Ghaziabad. It is one of the
largest metro networks in the world.The Namma Metro
in Bangalore is India's fourth operational rapid transit
beginning operations in 2011. The main objectives of
a mass rapid transport system - which are to reduce
traffic on road, make passengers life easy, save their time
and cost – are met admirably in each of the four cities.
Currently, rapid transit systems are under construction or
in planning stage in several major cities of India.
The Government has opened up the Indian skies to the
private sector resulting in diverse players competing
with each other to offer the passengers the best in
rates, infrastructure and facilities. The airports in the
major cities have been revamped and can compare with
the best in the world. No wonder the A380s can soon
be seen touching down on the Indian runways.
Access to brands/shopping
While you may get traffic on the way, chances are that
if you have the money, you can be driving (or rather,
be driven!) in latest model available of a very high-end
brand of car and reach a mall where you will find
options to all the international brands from a Mango,
Aldo, Marks & Spencer to a Guess, Next and Jimmy
Choo. And when you are tired and hungry, you can tuck
into a Pizza Hut, a KFC or a McDonald’s. The beauty of
it is the Indian twist, where you can have a vegetarian
18
Paneer Burger! There’s also the array of ice-cream
parlours offering smoothies, sorbets, ice-creams and our
very own Kulfi for one to savour.
Seeing familiar and recognised brands and having access
to sanitised environments also adds to your comfort
zone.
The Performing Arts
Welcome back to a rich world of music, dance, art,
theatre and culture! Indian art and culture is one of the
oldest in the world, and one you can be justifiably proud
of. Given below are very brief outlines of Indian music,
dance and other performing arts.
Music
Indian classical music may be categorized into two
types - Carnatic (south Indian) and Hindustani (north
Indian). Carnatic and Hindustani music have features in
common, but their rendition and articulation are usually
distinctive.
Dance
Dance has always played an important role in India as
an integral part of worship, a career option, a pastime
and as a part of theatre. Some of the well-known Indian
dance forms are - Bharatnatyam, Kathakali, Manipuri,
Kathak, Odissi, Kuchipudi and Sattriya. These dance
forms date back to many centuries and speak volumes
of the country’s rich cultural heritage.
There are numerous institutions in India that provide
training (both basic and advanced) in the various art
forms.
Theatre and films
Indian theatre has a history going back to more than
5000 years. Indian folk theatre has an ancient and rich
tradition, and is distinct to the states from where it
originated - Jatra in Bengal, Orissa and Bihar, Tamasha in
Maharashtra, Nautanki in Uttar Pradesh and so on. Ramlila
is another important form of folk theatre in India, based
on the mythological story of an epic battle between Lord
Rama and the Demon Ravana, and is staged in the month
of Dussera throughout India. The festival symbolizes
the triumph of good over evil. Puppetry is another very
ancient form of theatre in India. The modern theatre in
India is also flourising.
While theatre has been a very popular art form in India
in the past, it is struggling since the arrival of television
and movies. More films are made in India than any other
country, and films and film music typically forms a large
and very important part of an Indian person’s life.
India is home to some of the most exquisite handicrafts
in the world. These handicrafts are showcased in various
government-owned state emporiums like – Lepakshi
(Andhra Pradesh), Manjusha (Bengal), Rajasthali
(Rajasthan), Gangotri (UP), Poompuhar, Khadi Kraft
(Tamil Nadu) and many others.
Cultural centers
• Sangeet Natak Akademi
• National School of Drama
• Sri Ram Center of Performing Arts
• Lalit Kala Academy
• Gandharva Mahavidyalaya
• Prithvi Theater
• Kalakshetra
Conclusion
Many of you, especially, those who have been away
for many years, will find enormous changes for the
better in the quality of life in India. Many facilities are
of international standards, and Indian metros are fast
acquiring the status of cosmopolitan international cities.
Yet, while Indians have welcomed and accepted these
global changes, the uniqueness in attires, festival, food
etc. has been fiercely guarded and maintained to cherish
the Indian culture.
While taking changes in their stride, Indians seem
to have abided by Rabindranath Tagore’s famous
philosophy (which was also admired and followed by
Mahatma Gandhi):
"I would let the winds of the world blow through the
doors and windows of my house - but I will not be
blown away."

Exciting times ahead

India is taking giant strides in technological
advancements and striving to be up there with the
best in the world. The Government is tapping the
talent pools from public/private sectors towards this
end. The Unique Identification Number [UID] is one
such ambitious initiative that will go a long way in
information gathering and e-governance. If you are from
the USA, you could relate this UID to the social security
number that is the key to the world of benefits.

India has always been known for the depth of its

scientific talent and the activities of the Indian Space
Research Agency and Defence Research Organizations
lend weight to this claim. Also, Indian information
technology specialists have designed and developed the
first indigenous tablet “Aakaash” that is said to be the
cheapest in the world.

India also has a big presence in the area of sports. If

you are an avid sports fan, you will find that India has
some of the finest arenas/academies today like the Budh
International Circuit (for Formula 1 racing), the Pulela
Gopichand Academy, the MRF Pace Foundation etc.

Returning Indians – All that you need to know | 19

Social security
Social security provides support to citizens in times of
need – unemployment, illness, disability, death and
old age. The social security scheme in India covers the
The social security scheme in
work-force in the organised sector and the employers
either solely or jointly contribute with employees for
India covers the work-force in
the social security schemes. The Ministry of Labour and
Employment has a social security division which mainly the organized sector and the
focuses on framing policies for social security for the
workers of organized sector. employers either solely or
Unemployment, medical and health insurance
The issue of unemployment is taken care of through the
jointly with the employees
National Rural Employment Guarantee Act (NREGA) for
rural area. The concern of medical help and insurance
contribute to the social security
is taken care of by Employees’ State Insurance (ESI) for
employees earning salary lower than the prescribed
schemes.
limit. The Workmen’s Compensation Act provides
compensation for industrial accidents and occupational Since both the employer and employee need to
diseases resulting in disability and death. contribute towards PF, we shall examine these in
detail below-
Provident and Pension Fund The PF Act is applicable to all establishments employing
The retirals are taken care of by the provident fund 20 or more employees during the year and the
and pension fund contributions. compliance of provisions of PF Act are mandatory for
all employees earning a basic pay of `6,500 or less
The governing legislation for contribution and collection p.m. Where the basic pay is higher than `6,500, the
of social security is The Employees Provident Fund and employees can opt out of the scheme under certain
Miscellaneous Provisions Act (PF Act). circumstances.

Under PF, a lump sum amount is available to the employee Contribution

on retirement or on other contingencies arising to the Under the PF scheme, the employer would have to
employee. It is a defined contribution plan funded by contribute 12% of monthly pay towards social security
monthly contributions by the employer and the employee contributions. The employee would have to make a
to the fund. The fund currently earns an interest at 9.5% matching contribution, though he would have an option
p.a. on the closing balance. Withdrawal of accumulations to contribute more than 12%5.
will be tax free after 5 years of contribution. In case
of early withdrawal, contribution made by employer The contributions for a domestic employee would be as
and deduction availed in the past years will be taxable. follows:
An employee can also avail loan facility against the Employers contribution Employees contribution
accumulated balances for identified purposes.
Pension Fund – 8.33% of Pension Fund – NIL
monthly pay subject to
The pension funds make monthly sums available to the
a maximum of `541 or
employees on retirement. Such annuity payments are
`6,500 per annum
funded by monthly contributions made by the employer
Provident Fund – 12% of Provident Fund – 12% of
and the Central Government. The pension amount would
monthly pay less pension monthly pay
depend on the quantum and the period of contribution
contribution
made by the employer. Monthly pension will be taxable at
Total – 12% Total – 12% 5 Section 29(2) of the PF
the progressive tax rates in the year of receipt. Scheme

20
• Monthly pay is a broad term and covers:
−− basic wages (all emoluments paid or payable in
cash while on duty or on leave/holiday);
−− dearness allowance;
−− retaining allowance; and
−− cash value of any food concessions.
However, house rent allowance, overtime allowance,
bonus, commission or any other similar allowance or
presents are excluded from the definition of monthly
pay for PF contribution.
Tax benefit of contributions
The employer’s contribution upto 12% of monthly
pay is not liable to be taxed in the employee’s hands.
The employee’s contribution would be entitled to
be deducted from their total taxable income upto a
maximum of `100,000 p.a.
Gratuity
Gratuity is a gratuitous payment made by the employer
to his employees on resignation from employment,
death, retirement, termination etc. and is mandated by
law. The quantum of gratuity payment will depend on
the salary and tenure of employment. It is an important
form of social security, though not strictly a retiral
benefit. Gratuity is mandatory if the employee has
rendered five years of continuous employment with an
employer and is covered under the Payment of Gratuity
Act. However, the condition of five years’ continuous
service is not necessary for termination due to death or
disablement. Gratuity receipts are taxable as salary and
will be exempt to a maximum of `1,000,000.
Insurance schemes
Based on the varied life styles of the individual, the
insurance needs differ from person to person. Insurance
is divided into two major categories: Life Insurance and
General insurance. There are a number of private and
public companies that provide insurance services and
most of the policies can be taken online.
The typical types of insurance policies are:
Life Insurance
In this policy, the insurance company pays in case of the
demise of the policy holder or at the time of maturity. A
Life Insurance plan ensures that the family is financially
secure even in the unfortunate event of the demise of
the bread earner.
Health Insurance
Health insurance consists of a package of various types
of insurance related to health.
Insurance companies offer many products with different
policies and prices depending on the needs of the user.
It is important to determine what one’s requirements
are, and what health insurance benefits one is looking
for in the plan. For instance, use of regular medications
the coverage already provided by one’s employer,
family history of diseases, are all deciding factors in
Returning Indians – All that you need to know | 21

Today’s savings is tomorrow’s
investment is an oft repeated saying.
The Government is taking various
steps to inculcate and promote the
habit of savings amongst the people.
determining the premium amount one will pay.
Pre-existing diseases can affect your health insurance
claim. It is necessary to examine the terms of the policy
carefully, so that the claims are not denied later on.
Property Insurance
This insurance helps you to prevent the losses against
theft, fire, burglary or any natural calamity like
earthquake, floods etc. resulting in damage to property
Auto Insurance
The costs of getting a vehicle repaired in the event
of damage, or replacing in case it is stolen, can be
enormous. A comprehensive auto cover to give one
all-round protection is a must, especially keeping in mind
that the rate of accidents on Indian roads is higher than
average. Auto insurance also covers third party insurance.
Travel insurance
A Travel Insurance Policy gives an individual
comprehensive cover for himself and his family while
travelling. A Travel Insurance Policy must go beyond just
health insurance and provides the insured person with
a wide range of travel-related covers to make his trip
stress-free. Loss of personal belongings while travelling,
medical coverage, delays in travel are all part of the
travel insurance policy.
Investment avenues
Savings instruments
“Today’s savings is tomorrow’s investment” is an oft
repeated saying. The Government is taking various steps
to inculcate and promote the habit of savings amongst
the people. Towards this end, the Government has
provided tax incentives/reliefs for savings made. The
most popular savings among the salaried class in India
is the PF detailed above. Returning Indians coming to
22
India on employment will be covered by this depending
on whether they hold an Indian passport. Besides,
individuals drawing basic salary in excess of `6,500 may
opt out of the PF scheme. The other kinds of popular
savings instruments are:
Bank fixed deposits
Fixed deposits with banks can be opened for varying
time periods and quantums. The deposits may be
cumulative or non-cumulative. The interest rates are
related to the tenure of the deposit and taxable in the
hands of the investor.
Public Provident Fund [PPF]
PPF account (with post offices/banks) is a simple and easy
to maintain investment that facilitates recurring savings.
The investor can contribute on a monthly basis or once
a year up to `100,000 to this account. The account has
tenure of 15 years that may be extended and be opened at
any branch of the SBI or its subsidiaries, at any post office
or at the branches of specially nominated nationalised
banks. One can also withdraw from his/her account up to
specified limits and subject to conditions. Both the interest
accruing annually as well as the withdrawal of the balance
on maturity are tax free.
Life Insurance
The life insurance schemes are detailed earlier in this
chapter. They act as tax saving instruments as well as
security measures. The amount received from the insurer
on death of the insured is tax free. In other instances,
the sum received is not taxable provided the premium
payable during the policy term does not exceed 20% of
the capital sum assured.
Equity Linked Savings Scheme [ELSS]
Equity Linked Savings Scheme gives you an opportunity
to take advantage of the equity market all the while
enjoying tax benefits. These schemes have a lock in
period during which withdrawal is not permitted.
This is a risk and reward scheme that is dependent on
stock market movement. The returns from ELSS are tax
exempt.
Post Office Savings Schemes
Individuals may also choose from the savings options
provided by post offices. These include a regular savings
account, monthly income schemes, National Savings
Scheme, National Savings Certificate [NSC], etc. The
Government of India uses the deposits made with post
offices for developmental works. Post offices also follow
more or less same rules and procedures as banks when
an individual opens an account with them.
NSC is a savings scheme of the Government and is
available at post offices in varying denominations as low
as `100. NSCs mature after 5 years and earn interest at
prescribed rates. This interest accrues on an annual basis
but is paid on maturity. Also, the interest is taxable for
the investor though it qualifies for deduction within the
overall limit of `100,000.
Monthly income schemes provide fixed monthly incomes
at the specified rates depending on the sum invested
upfront. The interest received on monthly income
schemes is taxable while interest on post office savings
account is exempt upto prescribed limits.
Investments with post offices are safer since the
repayment on maturity is guaranteed by the Government.
Other investments
Individuals can also invest in equity shares/debentures
and mutual funds through the stock exchanges. For this
purpose, the individual must have a trading account with
a depository participant and can then buy and sell online.
These investments carry the associated risk of rise
and fall in stock index though the returns may be
proportionately higher.
Taxation system in India
Statutory framework
The Income-tax Act, 1961 (Act) lays down the frame
work for taxation of income. The Central Board of Direct
Taxes (CBDT) is the governing body for income-tax and
is a part of Department of Revenue in the Ministry of
Finance. An individual can resort to the provisions of
the Act or Double Taxation Avoidance Agreements
(DTAA/tax treaty) whichever is beneficial. To avail such
beneficial provisions, the individual should be a tax
resident of either India or the treaty partner.
Tax Year
The Indian fiscal year runs from 1 April to 31 March. The
taxable period is referred as previous year/fiscal year/tax
year/financial year. Income earned during the taxable
period is declared in a tax return in the year following
the said tax year.
Tax residence
Taxation in India depends on the residential status of a
person determined in accordance with the provisions of
the Act. In the case of an individual, this is determined
based on the number of days of stay in India in a
particular fiscal year. In the case of companies, the
country of incorporation and place of management
determines the residential status.
We will move on to the specifics of individual taxation in
the ensuing pages.
Individual tax
Permanent Account Number (PAN)
PAN is a 10 digit unique alphanumeric number allotted
to tax payers. This is a unique number allotted to an
individual only once. If you have obtained a PAN at any
point of time, you can continue to use the same number
for any interaction with the tax authorities in India.
PAN is used as a reference to track income, taxes and
financial transactions of a tax payer. An individual can
hold only one PAN and obtaining or possessing more
than one PAN is a penal offence. It is compulsory to
quote PAN in investment/financial transactions.
Applying for PAN
PAN application can be made either online or by
submitting a physical form. The tax authorities have
prescribed specific forms for Indians and foreign
nationals. While an Indian citizen should apply for PAN in
Form 49A, Form 49AA is to be used by foreign nationals.
The PAN application form requires details such as name,
Need for PAN
Entering into financial
Filing of tax returns
transaction notified by
the government
Paying taxes
Correspondences with
tax department
Quote PAN
Returning Indians – All that you need to know | 23
father’s name, date of birth, correspondence address, Steps for applying PAN
telephone/mobile number and e-mail address. The forms Documentary requirements
have been amended in October, 2011 to include a Know The documentary evidences would differ for an
Your Client (KYC) section. Indian citizen and foreign national. The following are
the documentation requirements prescribed by the
Besides the completed form, documentary evidences authorities vide notification dated 17th October 2011.
should be enclosed with the application. There is also In case any of the documentary proofs are available in
a stipulated fee (`94 for an Indian address/`944 for foreign language, the same may have to be translated
overseas address) that is to be paid either by way of cash/ in English and duly attested by the Indian embassy/ High
demand draft/cheque at the time of applying for PAN. Commission/ Consulate though such requirement is not
mandated by the Income tax department.
On submission of the application form and supporting
documents, the authorities allot PAN in 3-4 days if the Documentary requirements for PAN application in
requirements are met. Further, it takes 15 days on an Form 49A by a Citizen of India
average from the date of application to receive the
PAN card. An applicant receives intimation once PAN is Proof of Identity Proof of Address
allotted at the e-mail address specified in the application
Copy of-
form. The applicant may at any time, track the PAN Copy of-
• school leaving certificate; or
status by logging on to www.tin-nsdl.com by specifying • electricity bill; or
• matriculation certificate; or
the acknowledgement number provided at the time of • telephone bill; or
• degree of a recognized educational
filing the application. • depository account; or
institution; or
• credit card; or
• depository account; or
PAN in case of change in address/loss of existing • bank account; or
• credit card; or
PAN Card • ration card; or
• bank account; or
PAN issued once can be used for life and will not • employer certificate; or
• water bill; or
get altered due to change of address or loss of card. • passport; or
• ration card; or
However, a request may be made for correction/changes • voter identity card; or
• property tax assessment order; or
to the details provided at the time of initial application • property tax assessment order; or
• passport; or
or for obtaining a duplicate card (through online/ • driving licence; or
• voter identity card ; or
physical form) quoting the PAN allotted earlier. This • rent receipt; or
• driving licence; or
application is to be made in the “change form” together • certificate of address signed by a
• certificate of identity signed by a
with supporting documents. The fee for any changes Member of Parliament or Member
member of Parliament or Member
remains the same as that of the original application. of Legislative Assembly or Municipal
of Legislative Assembly or Municipal
Councillor or a Gazetted Officer, as
Councillor or a Gazetted Officer, as
Can PAN card be delivered overseas? the case may be.
the case may be.
PAN card will be delivered to the overseas address
mentioned in the application form provided suitable
documentary proof for the overseas address is furnished
at the time of application.

Fill form 49A/ 49AA Sign and affix
The form can be passport size
downloaded from photograph
www.tin-nsdl.com Signature should not
run outside the box
provided and should
be in BLACK ink
Pay fees Submit documents
Fees can be remitted • Proof of Identity
through cheque / • Proof of Address
demand draft or through
credit card. Fee would
vary according to the
communication address.

24
Documentary requirements for PAN application in Form 49AA by a foreign national

Proof of Identity Proof of Address

Copy of-
Copy of- • Passport; or
• Passport; or • PIO card issued by the Government of India; or
• PIO card issued by the • OCI Card issued by Government of India; or
Government of India; or • Other national or citizenship Identification Number or Taxpayer Identification
• OCI Card issued by Government Number duly attested by "Apostille" (in respect of countries which are signato-
of India; or ries to the Hague Apostille Convention of 1961) or by Indian embassy or High
• Other national or citizen- Commission or Consulate in the country where the applicant is located; or
ship Identification Number or • Bank account statement in country of residence; or
Taxpayer Identification Number • Non-resident External bank account statement in India; or
duly attested by "Apostille" (in • Certificate of residence in India or Residential permit issued by the State Police
respect of countries which are Authority; or
signatories to the Hague Apostille • The registration certificate issued by the Foreigner's Registration Office showing
Convention of 1961) or by Indian Indian address; or
embassy or High Commission or • Visa granted and copy of appointment letter or contract from Indian Company
Consulate in the country where and Certificate (in Original) of Indian Address issued by the employer.
the applicant is located.

Residential Status
An individual is liable to tax in India based on his tax residency during a fiscal year. Depending on the stay in India in
a particular fiscal year, an individual will be classified as a resident or non-resident. The tax residential status has no
relevance to the residential status as per Foreign Exchange Management Act (FEMA) which is a separate legislation. For
a returning Indian, the tax residential status will not be impacted based on his status (OCI/PIO) or citizenship.

Determination of residential status

Stay in India ≥ 182 days in the tax year

Yes No

Resident • Stay in India ≥ 60 days* in the tax year

and
Yes
• Stay in India ≥ 365 days in the preceding 4 tax
years
Non- Resident for 9 out of 10
previous tax years Yes

No
No
Stay in India ≤ 729 days in Yes
preceding 7 tax years

No

Resident and ordinarily

Not ordinarily resident (NOR) Non-resident (NR)
resident (ROR)

Returning Indians – All that you need to know | 25

 Tax landscape
An individual will be categorized as a ROR, NOR or NR based on the stay pattern in the particular tax year and the
history of stay and income will be taxed accordingly.

Tax status Income sourced in India Income received in India * Income received outside India
ROR Yes Yes Yes
NOR Yes Yes No
NR Yes Yes No
* Income received in first instance outside India and subsequently remitted/ transferred to India is not to be treated
as 'income received in India'.

Sources of Income Salary payments are subject to monthly tax withholding

The Act classifies taxable income and the related
provisions into five broad heads detailed as under:
1. Salaries
2. Income from House property
3. Profit and gains of business or profession
4. Capital Gains
5. Income from other sources
Salaries
Salary income refers to compensation received from
the employer or former employer for services rendered
by an employee. Salary related to services rendered
in India is taxable in India regardless of the place of
receipt. Employed individuals are subject to income-tax
on the cash salary and non-cash benefits received
from employment. Regardless of the nomenclature, all
components of salary are taxable and the Act provides
specific deduction in case of certain components.
by employer. After the end of tax year, an employer
should issue a remuneration and tax deduction
certificate in Form No.16 and Form 12 BA. This
certificate serves as a proof of the income earned by an
individual and the taxes withheld on a monthly basis.
Flashpoints for returning individuals
• Salary earned overseas is subject to tax unless
exempted by the Act or the tax treaty
• For NOR and NR, overseas salary pertaining to
services rendered outside India will not be taxable in
India
• In cases of double taxation, tax credit can be claimed
in India/the resident country as per the provisions of
the Act or tax treaty

Components of Salary

Salary Allowances / Perquisites

Reimburesment
• Basic salary • Rent free accomodation
• Overtime salary • Travel allowance • Interest free loan
• Location premiums • Medical reimbursement • Car facility
• Bonus • House rent allowance • Stock awards

26
Income from House Property
Rental income received by an owner of property is subject to tax under this head. Based on the occupancy, house
property can be classified as either self-occupied or let out.

Self-occupied property vis-à-vis let out property

Particulars Self-occupied property Let out property

Property • Occupied by the owner for residential purpose Let out during the whole or any part of the tax year
covered and has not been actually let out
• A normal residence which cannot be occupied
because it is away from the place of work
Gross income NIL Generally, actual rent received will be considered as gross income

Deductions Mortgagte/Loan interest up to ` 150,000 • Municipal taxes paid by the owner

• Standard deduction at 30%
• Actual mortgage/Loan interest without any ceiling limit

Flashpoints for returning individuals

• RORs will be taxed on house properties located outside India
• NRs and NORs will be taxed on the rental income received from the overseas property if the rental income is
received in India in the first instance

Income from Profit or Gains From Business or Profession

Business income and income derived from professional services are taxable net of deductible expenses. All self-
employed individuals/professionals will be taxable at slab rates. Partnership and LLP forms of business will be
separately taxed and hence the share of individuals from such business will be exempt from tax.

Scheme of business income taxation

Maintenance of books
Income or turnover
exceeding the ceiling
limit in the current tax
year or immediately
preceding 3 tax years:
Individuals carrying
out the prescribed
professional activities
with gross receipts
exceeding `150,000
Others - Income
exceeding `120,000
or the total turnover
or gross receipts
exceeding `10 lakhs
Audit of accounts
Compulsory if the
total turnover exceeds
`60 lakhs in case of
business and `15 lakhs
in case of profession
(includes law,
medicine, accountancy,
architecture,
technical consultancy,
interior decoration,
information technology
professionals etc
Presumptive Income
Any person whose
total turnover / gross
receipts doesn't
exceed `60 lakhs has
an option to declare
8% of total turnover
or gross receipts
as income from
business irrespective
of the actual income.
However this option
is not available for a
person carrying on
profession.
VAT and Service tax
registration
VAT registration:
VAT is state levy at
the point of sale of
goods. Every trader
or manufacturer who
is engaged in selling
of goods needs VAT
registration according
to the respective state
VAT laws.
Service Tax Registration
A service provider has
to obtain service tax
registration and remit
service tax as per service
tax rules.

Returning Indians – All that you need to know | 27

Capital Gains
Generally, gains derived from transfer of capital assets are taxable in the year of disposal. The computation
methodology and tax rates differ based on the period of holding of such assets. The period of holding of the asset is
reckoned from the date of acquisition to the date immediately preceding its transfer.
Key features of capital gains taxation
Assets held for more than 36 months are referred
to as long term capital assets and those held for not
more than 36 months are referred to as short term
capital assets.
Long term capital gains attracts a special rate of 20%
on the gains while short term capital gains are taxed
at applicable slab rates.
Gains can be exempt if investment is made in specified assets (Example: Residential house)
In the case of long term capital assets, the cost of
acquisition may be converted to reflect the current
prices. This process known as indexation is carried out
using defined cost inflation indices.
Flashpoints for returning individuals
• Gains derived from assets held outside India may be
considered exempt by applying the provisions of tax
treaty as applicable.
• NRs being Indian citizens and PIOs are taxable at
a special rate of 20% for income from investment
assets and long-term capital gain from foreign
exchange assets. However, no corresponding
deduction/indexation benefit would be available
on such investment income and capital gains. This
special rate would continue to apply for the returning
individuals even in the years they become a resident.
An individual can also opt out of the applicability of
the special provision while filing the tax return.
Income from Other Sources
All residual income such as investment income (interest/
dividend), winnings and gifts are taxable under this
head after deduction of expenses incurred in relation
to earning such income. Gifts received in the form of
cash or kind above `50,000 are taxable except when
it is received from relatives or on occasion of marriage
28
Shares, listed securities or units of UTI, Mutual funds
and zero coupon bonds are classified as long term
assets if the period of holding exceeds 12 months.
Gains from equity shares or units of equity oriented
fund listed in a recognized stock exchange in India
and subject to Securities Transaction Tax:
• Long-term capital gains are exempt
• Short-term capital gains are taxable at 15%
or other circumstances defined in the Act. Presently,
dividend received from an Indian Company or from
units of mutual fund is exempt from tax in the hands
of individuals from payment of tax. However, foreign
dividends are not exempt and are to be offered for tax
in the individual hands.
Tax computation
Personal deductions
On aggregation of income from all sources, an individual
is entitled to claim the below deductions which are
capped at specified limits:
• Insurance premiums
• Social security contributions to Provident Fund, Public
Provident Fund etc.
• Principal repayment for a mortgage property
• Purchase of notified mutual funds
• Tuition fees for children
• Donations
• Medical expenditure
• Interest on loan for higher education
• Treatment/maintenance of dependents
Computation of tax:
An individual is taxed at progressive rates on the net
taxable income.
 Applicable tax rates for the tax year 2011-12 Tax payment
Tax on income earned is payable through the following
Income Slab ` Rate % mechanisms
Up to 180,000* Nil
• Estimation of personal
180,000 – 500,000 10
income/income not subject to
500,001 – 800,000 20
withholding/income subject to
800,001 or above 30 lower withholding
• Determination of tax liability on
*Exemption limit for resident women below 60 years Advance Tax the above
of age is `190,000, for senior citizens above 60 years • Payment of tax in three
but below 80 years is `250,000 and for senior citizens installments
above 80 years is `500,000 • Due dates – 15th September,
December and March of every
Additionally, education cess is payable at the rate of 3 fiscal year
percent of the total tax liability.
• Final tax payment by individual
Self- • To be paid before filing the return
Assessment of income
Tax • Interest levy for default/deferment
in payment of taxes

Tax Filing – Process flow chart

Who has to file? Exemption from filing Due date for filing Consequences of belated filing

Individuals having income more
than the exempt threshold
View the Annual Tax Statement
(Form 26AS) which summarizes
the taxes deducted/deposited
on to your PAN
Individuals deriving only salary
and interest income up to
`500,000
Individuals whose books of
accounts are to be audited -
on or before 30th September
Other individuals - Tax return
has to be filed on or before
31st July every year
Belated filing attracts interest
and penalties
Current year loss may not
be permitted to be carried
forward

Returning Indians – All that you need to know | 29

 Wealth Tax

Scope of wealth tax:

Wealth tax is payable by an individual whose net wealth is in excess of the threshold limit as on 31 March of the
relevant tax year. For tax year 2011-12, individuals having net wealth in excess of `3,000,000 as on 31 March 2012
will be liable for wealth tax at the rate of 1% on net wealth exceeding `3,000,000.

Weath Tax – inclusions and exclusions

Incidence of wealth tax

and location of asset
ROR who is a citizen of
India is taxable for global
net wealth
Foreign nationals/NRIs will
be taxable for the assets
located in India
Special exemption for NRIs
and PIOs repatriating for
permanent settlement
Assets covered
• Buildings- residential
house, commercial
building, guest house,
farm house situated within
25kms from municipality
limits
• Motor cars
• Jewellery, bullion and other
articles made of gold, silver
or other precious metals
• Yachts, boats and aircrafts
• Urban Land
• Cash in hand in excess of
`50,000
Assets to be excluded
• Residential house let out for 300 days or more
in a tax year
• House occupied for own business or profession
• Assets held as stock-in-trade in business.
• Cash up to ` 50,000
• Shares and securities of listed/unlisted
companies
• Cash in bank accounts
Besides the above assets, the following assets will
be exempt for seven tax years from the year of
repatriation of an individual:
• Money and value of assets brought by him to
India
• Assets acquired out of monies brought to India
• Assets purchased out of NRI account

Any corresponding debt relating to the assets can be
claimed as a deduction for arriving at the net wealth.
The value of assets should be disclosed through a
separate return that is to be filed on or before 31 July of
the year following the tax year (i.e. 31 July, 2012 for the
tax year 2011-12). The tax due on the return should be
paid before filing of the return.
Specific exemption available for NRs returning to
India for permanent residence:
For NRs being Indian citizen or PIO returning to India
with an intention to stay permanently, assets bought to
India or assets acquired out such assets bought to India
or out of NRI account shall be exempted from wealth
tax for the period of 7 financial years starting from the
year of return.
Direct Taxes Code
With a view of bringing a simplified and well-structured
Tax law, Direct Taxes Code Bill (DTC) was introduced
in the Parliament in August 2010 after considering the
recommendations suggested by people from different
sections of society. This proposed code, is expected to
come into force from 1st April 2012 as a replacement to
the Income-tax Act, 1961.
Key proposals:
Personal taxation
• An individual will be classified either as a resident
or non-resident. The concept of NOR is removed.
However, the conditions for NOR have been retained
to determine the taxability of overseas income of an
individual.
• Progressive tax rates would apply for income above
`200,000. Income above `1,000,000 will be taxed
at 30%.
• Wealth tax is proposed to be levied at 1% for wealth
in excess of `10,000,000. The scope of taxable
assets is proposed to be widened.
• Rental income will be taxed based on actual rent
received/ receivable. Taxation of rental income on

30
 notional basis is proposed to be abolished. Standard
deduction for repairs and maintenance is to be
reduced from 30% to 20%.
• No special or concessional tax rate for the income of
NR’s from transfer of specified assets.
• Listed equity shares or units of equity oriented fund
which are subject to STT and held for a period of one
year or less will be taxed at an effective rate of 5%,
10% or 15% based on the slab rate of individuals.
Forms of self-employment/business
India is one of the fastest growing economies of the
world. The country’s robust economic growth is driven
largely by domestic demand and a rapidly widening
consumer base. With rising disposable income; India
provides one of the largest markets for manufactured
goods and services today. For a returning Indian it is very
important to understand the principal forms of doing
business/ self-employment in India and choosing the
right kind of business or corporate entity which best
suits his purposes. The principal forms of doing business
in India are:
Proprietary concern
It is an archaic form of business entity and also the
easiest form to set up and most common entity in India.
There is no separate legal entity status to a proprietary
concern and is not governed by a specific law. However,
the laws that apply to an individual such as Income-tax
Act, 1961, foreign exchange regulations, etc. would also
apply to the proprietary concerns.
No registration is required for a sole proprietorship. To
form a proprietary concern you simply have to open a
bank account with the name & style of the proprietary
concern. However, trade related licenses that are
mandatory have to be obtained. The concern dissolves
on the death of the sole proprietor.
Partnership firm
A partnership is an agreement between persons to share
profits of a business carried on by any or all of them
acting for all. The relationship between the partners is
defined through the partnership deed. Each partner is
liable to indemnify the firm for any loss caused to it by
his/her fraud in the conduct of the business of the firm.
Each partner is liable jointly with all other partners and
also severally for all acts of the firm done while he/she
is a partner. Partnership is governed by the provisions of
the Indian Partnership Act, 1932.
A partnership firm requires minimum 2 partners and the 6 DPIN is now equal to a DIN
maximum number of partners is 20. Registration of a
Partnership firm is not compulsory, though it is usually
done as registration brings many advantages to the firm.
For registering a partnership firm an application in the
prescribed form is required to be filed along with certain
documents with the Registrar. Other trade related
licenses that are mandatory also have to be obtained. A
tax audit is compulsory under the Indian tax laws based
on prescribed turnover/income.
Limited Liability Partnership (LLP)
A Limited Liability Partnership (LLP) is a body corporate,
a legal entity separate from its partners and has
perpetual succession. A LLP can be formed by 2 or more
persons. The relationship between the partners of a LLC/
LLP is defined through the LLP agreement. An individual
or a body corporate can be a partner in a LLP. An LLP
is required to have at least 2 designated partners (DPs)
who are individuals responsible for compliance with the
provisions of the LLP Act and at least one of DP should
be resident in India (i.e. present in India for at least
182 days in the preceding year). The DPs must obtain
a Digital Signature Certificate (DSC) from the certifying
authority for electronic filings and Director Identification
Number (DIN) from MCA, Government of India6. As a
separate legal entity, an LLP is liable to the full extent
of its assets, whereas the liability of LLP partners is
limited to their agreed contribution to the LLP. LLPs
are governed by the Limited Liability Partnership Act,
2008 and administered by the MCA through the ROC,
Company Law Board and Official Liquidator.
A partnership firm, private company or unlisted public
company can be converted into an LLP.
India is one of the fastest growing
economies of the world. With
rising disposable income, India
provides one of the largest
markets for manufactured goods
and services today.
Returning Indians – All that you need to know | 31
A LLP is mandatorily required to be registered with the
Registrar of Companies. Memorandum and Articles of
Association should also be registered with ROC. Audit is
compulsory for LLP with turnover exceeding `4 million
or contribution exceeding `2.5 million in a financial year.
Annual Statement of Accounts and Solvency & annual
return needs to be filed every year.
Company
Companies incorporated in India are governed by
the Companies Act, 1956. Companies are broadly
classified as private limited companies and public limited
companies. Companies may have limited liability (limited
by shares or guarantee) or unlimited liability. Companies
limited by shares are a common form of business entity.
Public limited companies can be closely held, unlisted or
listed on a stock exchange.
A private company is one that, by virtue of its articles
of association prohibits any invitation to the public to
subscribe for any of its shares or debentures; prohibits
any invitation or acceptance of deposits from persons
other than members, directors or their relatives; restricts
the number of members to 50 (other than employees)
and restricts the transfer of shares. A private company
can be formed with a minimum of two shareholders
and paid up capital of `100,000. A private company
requires two directors who must be individuals.
A Public company is one that is not a private company.
Minimum number of members of a public company
is 7 and requires 3 directors who must be individual.
The minimum paid up capital of a public company is
`500,000.
Process of forming a private company would involve the
following steps
• Obtain Directors Identification Number (DIN) for
proposed Directors of the new Company
• Obtain Digital Signature Certificate (DSC) for
proposed Directors of the Company
• Filing the proposed name of company for approval
to the Registrar of Companies (ROC); Get the
Memorandum and Articles of Association vetted by
the ROC and printed
• Present the required documents along with the
registration fee and requisite stamp duty to the
Registrar of Companies to get the certificate of
incorporation
• Obtain a company seal
32
• Apply to National Securities Depository Ltd. to obtain
a Permanent Account Number (PAN)
• Obtain a Tax Account Number (TAN) for income
taxes deducted at source
• Register under Shops and Establishment Act, if
applicable
• Register for value added tax (VAT) before the Sales
Tax Officer of the ward in which the company is
located, if applicable
• Register for Profession tax, if applicable
• Register with Employees' Provident Fund
Organization, if applicable
• Register with ESIC (medical insurance), if applicable
A company is mandatorily required to be registered with
the Registrar of Companies (ROC). Memorandum and
Articles of Association should also be registered with ROC.
Audit is compulsory for a company. Annual Accounts and
Annual return need to be filed with the ROC.
Banking in India
If you are returning to India for the purposes of
employment or vocation, you would be considered
‘resident’ as per FEMA provided you satisfy the 182 days
stay condition in the previous year. In such case, you
would be permitted to open regular bank accounts in
India as are available to resident citizens. These are –
• Savings bank account – This is a common account
which can be opened by a person in any bank.
Most banks will offer a nominal rate of interest of
around 3 - 4.5%. A minimum balance is required to
be maintained to operate this account. Most Indian
companies have a tie-up with the banks where a
salary account is maintained to enable e-transfer of
remuneration
• Current account - The depositor is at liberty to
operate the current account any number of times
in a day unlike savings accounts where only limited
number of transactions are allowed. This account
is opened by people who are engaged in trades,
businesses and professions.
• Fixed deposits (time deposits) - Fixed deposit
accounts are fixed in terms of maturity period, rate
of interest payable and the amount of deposit.
However, with increasing competition in the banking
sector, fixed deposit accounts are also offering a lot
of flexibility to give you extra benefits.
• Recurring deposits – As the name suggests these are
fixed term deposits where the account holder would
 choose to deposit a fixed sum of money every month net of India tax withholding and subject to other condi-
which will be added to the deposit amount. The rate tions. Remittances are also permissible net of taxes of
of interest would be slightly lower or equal to that of sale proceeds of assets acquired out of foreign exchange
a simple fixed deposit. earnings or by way of inheritance/gift.

Most banks would offer services like e-transfer of funds,
auto bill pay, online payments, debit and credit cards
etc. to its account holder. You could choose a deposit
with a nationalised bank, a co-operative bank or a
private bank. While nationalised banks would provide
you with a greater comfort in terms of security, the
co-operative and private banks may offer a higher rate
of interest and wide ranging services.
Remittances outside India
A person resident in India is permitted to hold, own,
transfer or invest in foreign currency, foreign security
or any immovable property situated outside India if
the same was acquired when he was resident outside
India or inherited from a person who was resident
outside India. A resident individual can obtain/remit
foreign exchange within specified limits for one or more
purposes without RBI approval under the FEMA (Current
Account Transaction Rules. An illustrative list of such
transactions is as under-
NRI/PIO’s can remit through authorised dealers upto
USD 1 million out the balances in their NRO acccount
Fresh investments outside India for a person
resident in India
Liberalised Remittance Scheme (LRS) for resident
individuals
Resident individuals (including minors) are allowed
to freely remit up to USD 200,000 per financial year
(without prior approval) for any permitted current and
capital account transactions, including acquisition
of property and investments outside India. The
remittances can be made in any freely convertible
foreign currency equivalent to USD 200,000 in a
financial year. The facility under LRS is in addition to
those already available for private travel, business
travel, studies, medical treatment, etc., as described
under FEMA (Current Account Transactions) Rules. The
LRS can also be used for these purposes. However,
remittances for gift and donation cannot be made
separately and have to be made under LRS only.
Accordingly, resident individuals can remit towards
gifts and donations up to USD 200,000 per financial
year under LRS.

S. No Purpose Limit
Foreign travel (other than
Nepal & Bhutan)
1.
• Personal USD 10,000 (per visit)
• Business USD 25,000 (per visit)
2. Medical treatment abroad USD 100,000*
3. Higher education USD 100,000 per academic year or fee whichever is higher
4. Employment USD 100,000
5. Donations/gifts Upto USD 5,000 per financial year per remitter or donor other than resident individual
Maintenance of close
6. USD 100,000 per year per recipient – subject to conditions
relatives abroad
No limits provided the employee is working with a subsidiary in India of a foreign company or of an Indian
company in which direct and indirect foreign equity is not less than 51% and the shares are offered by
7. Stock option purchase such a foreign company under the ESOP Scheme globally on uniform basis. One other condition is that the
Indian company has to submit an Annual Return to RBI through the Authorized dealer bank giving details
of remittance / beneficiaries etc.

* Additional amount of USD 25000 would be permissible for maintenance of the patient or the person accompanying the patient

Returning Indians – All that you need to know | 33

 Remittances can be made for the following purposes
under LRS:
• Acquisition and holding immovable property or
shares or debt instruments or any other assets
outside India
• Purchasing objects of art subject to the provisions
of other applicable laws such as the extant Foreign
Trade Policy of the Government of India.
• Acquisition of ESOPs in addition to the acquisition
of ESOPs linked to ADR / GDR and acquisition of
qualification shares subject to limit and conditions;
• Units of Mutual Funds, Venture Funds, unrated debt
securities, promissory notes, etc. For this purpose,
investment can be made out of the bank account
opened abroad under the LRS;
• An individual who has availed of a loan abroad while
as a non-resident can repay the same on return to
India under LRS as a resident
• The resident individual investors can retain and
re-invest the income earned on investments made
under the LRS. The residents are not required to
repatriate the funds or income generated out of
investments made under the Scheme.
The remittance facility is not available for the following:
• prohibited capital and current account transactions
• remittances directly or indirectly to Nepal, Bhutan,
Mauritius and Pakistan
• purchase of lottery tickets/sweep stakes
• margins or margin calls to overseas exchanges /
overseas counterparty
• purchase of FCCBs issued by Indian companies in the
overseas secondary market
• setting up a company abroad
34
Rules specific to NRI/PIO
Who is an NRI/PIO/OCI as per FEMA?
NRI - Please refer “Residence under FEMA” for definition
of NRI.
PIO - A PIO is a citizen of any country (other than
Bangladesh or Pakistan), if
• he has at any time held an Indian passport,
• he or either of his parents or grandparents were at
any time citizen(s) of India as per the Constitution of
India or the Citizenship Act
• the individual is a spouse of an Indian citizen or a
person referred herein above.
However, spouse of an Indian citizen will not be a PIO
for transactions involving immovable properties. Besides,
the definition is further restricted for certain types of
transactions specified under FEMA.
OCI - OCIs are not specifically defined under FEMA.
Acquisition or transfer of immovable property in
India
Under the FEMA, NRIs/PIOs are permitted to deal with
immovable property as under:
In case of NRI and PIO, the following is allowed:
• Purchase of residential/ commercial property in
India (excluding farm house, agricultural land or
plantation)
• Acquisition of immovable property in India (other than
agricultural land, plantation or a farm house) through
gift or inheritance from a person resident in India or a
NRI or a PIO who acquired the property in accordance
with FEMA. However, NRI / PIO who are citizen of any
of the following countries viz, Pakistan, Bangladesh,
Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan
requires prior approval of RBI for acquiring immovable
property in India through inheritance;
• Renting of immovable property is permitted provided
rent is credited to NRO/NRE/ FCNR account
Transfer of immovable property
• A NRI may transfer any immovable property in India
to a person resident in India. He may transfer any
immovable property (other than agricultural land
or plantation property or farm house) to an Indian
Citizen resident outside India or a PIO resident
outside India;
• A PIO can transfer any immovable property in India
(other than agricultural land / farm house / plantation
property) by way of sale to a person resident in India.
He may transfer agricultural land / farm house /
plantation property in India, by way of gift or sale to
a person resident in India, who is a citizen of India.
A PIO may also transfer residential or commercial
property in India by way of gift to a person resident
in India or to a person resident outside India, who is
a citizen of India or to a PIO resident outside India.
A person who had bought the residential or commer-
cial property or agricultural land or plantation property
or farm house in India when he was a resident, can
continue to hold such immovable property without
approval of RBI after becoming an NRI/PIO. Sale
proceeds, if any of such immovable property can be
credited to NRO account of the NRI / PIO. From the
balance in the NRO account, NRI/PIO may remit up to
USD 1 million per financial year subject to payment of
applicable taxes and other applicable conditions.
Other investments7
Investments on repatriation basis
NRIs are permitted to invest in shares and convertible
debentures of Indian companies under FDI Scheme
on repatriation basis, subject to the condition that
the amount of consideration for such investment shall
be made only by way of inward remittance in free
foreign currency through normal banking channels.
Few sectors such as tea sector including tea plantation,
defence production, asset reconstruction companies,
broadcasting and print media would require approval.
However, citizens of Pakistan or Bangladesh are not
permitted to make these investments.
NRI/PIO can also acquire existing shares from Indian
shareholders or from other non-resident shareholders
subject to certain conditions.
Another investment option that can be explored is the
domestic Venture Capital Funds registered with SEBI
subject to conditions.
In all the above cases specified conditions such as
pricing guidelines, reporting requirements, mode of
payment, minimum capitalization norms, etc. needs to
be complied with.
A person who had bought the residential or
commercial property or agricultural land or
plantation property or farm house in India when he
was a resident, can continue to hold such
immovable property without approval of RBI after
becoming an NRI/PIO
Further, NRI/PIO can invest in Government securities
or treasury bills, units of domestic mutual funds,
bonds issued by public sector undertakings in India,
non-convertible debentures of a company incorporated
in India, investment in shares in PSUs under divestment
offer and perpetual debt instruments and debt capital
instrument issued by banks in India.
Investments on non-repatriation basis
As an NRI/PIO, you can also invest in units of money
market mutual funds, capital of a firm or proprietary
concern in India (that is not engaged in any plantation
or agricultural activity or real estate business), units of
domestic mutual funds, commercial paper issued by
an Indian company, shares and convertible debentures
of Indian companies other than under the Portfolio
Investment Scheme, deposits with a company
registered under the Companies Act, 1956 including
an NBFC registered with the RBI or a body corporate, a
proprietorship concern or a firm out of rupee funds that
do not represent inward remittances or a transfer from
NRE/ FCNR (B) accounts into the NRO account. However,
these are to be done on a non-repatriable basis.
Portfolio Investment Scheme [PIS]
NRI/PIO can invest in shares/convertible debentures
under the Portfolio Investment Scheme provided the
total paid up value of the shares/convertible debentures
does not exceed 5% of paid up capital of the Indian
Company. Additionally, the aggregate paid up value of
investments by NRIs/PIOs cannot exceed 10% of the
paid up value of the Indian Company. Investments in PIS
scheme can be done on repatriation or non-repatriation
basis. The sale proceeds of the repatriable investments
can be either remitted outside India to the foreign
currency bank account of the NRI/PIO or credited to the
7 The regulations are subject
NRE/NRO etc. accounts of the NRI/PIO whereas the sale to change from time to
proceeds of non-repatriable investment can be credited time. Therefore, it may be
advisable to consult with
only to NRO accounts.
your adviser before making
an investment.
Returning Indians – All that you need to know | 35
Savings instruments
NRIs cannot open a new PPF account though they can
continue to deposit into an existing account. Further, they
cannot apply for extension beyond the maturity period.
NRI cannot invest in post office savings schemes or NSC.
Banking depositor a fully covered
The banking sector extends a beneficial treatment
in terms of NRI accounts to Indians remitting their
foreign exchange earnings to India.There may be
different categories of Indians who are settled abroad
but yet are keen to invest in India. You may be the
first generation Indians who have gone abroad for
employment or second generation Indians who are
the children/grandchildren of Indians settled abroad.
Most of you would have taken up citizenship overseas.
The Government is ensuring that you receive favoured
treatment as against foreigners.
Permissible Bank accounts8
NRIs are permitted to hold certain types of bank
accounts in India. The permissible bank accounts would
differ based on the category of non-residents and type
of remittances - some more privileged than the rest.
• Foreign Currency Non- Resident account - FCNR
Account
• Non-Resident External - NRE Account.
• Non-Resident Ordinary – NRO Account
Foreign Currency Non- Resident account - FCNR
Account
As the name suggests this is a foreign currency account
which can be opened through overseas remittances
through normal banking channels. NRIs/PIOs (except
individuals/entities of Bangladesh/Pakistan nationality/
ownership) are permitted to open and maintain these
accounts with Authorized Dealer Category–I banks
(AD banks).
Returning Indians need to remember that once they
become a person resident in India, deposits may be
allowed to continue until the maturity period at the
contracted rate of interest. However, such deposits shall
be treated as resident deposits from the date of the
account holder’s return to India barring the exception of
the rate of interest applicable to the deposit and a few
other requirements.
36
Non-Resident External - NRE Account 8 The banking regulations
are subject to change from
This is a Rupee designated account which can be opened
time to time. It is advisable
through overseas remittances through normal banking to always check with your
channels. NRIs/PIOs (except individuals/entities of respective bankers before
taking any decisions.
Bangladesh/Pakistan nationality/ownership) are permitted
to open and maintain these accounts with AD banks. 9 Authorised dealers may
undertake with the
These accounts need to be designated as resident swap in which currency
accounts on change of the residential status of the against the desired
designated currency. Such
individual under FEMA. Visitors however are permitted to a swap may also be done
continue with their NRE accounts even during the stay. between two designated
currencies
Non-Resident Ordinary - NRO Account
This is an account which can be opened with permitted
overseas remittances through normal banking channels
and also legitimate dues of the account holder in India.
Any person resident outside India, including an NRI/
PIO (except individuals/entities of Bangladesh/ Pakistan
nationality/ownership) is permitted to open an NRO
account with AD banks. When a person resident in
India leaves India for another country (other than Nepal
or Bhutan) for employment, conducting business, or
any other purpose, indicating intention to stay outside
India for an uncertain period, his existing accounts are
designated as a Non-Resident (Ordinary) accounts.
Likewise NRO accounts are re-designated as resident
rupee accounts on the account holder’s return to India
for employment, conducting business or any other
purpose, indicating their intention to stay in India for an
uncertain period. Where the account holder is only on a
temporary visit to India, there is no need to redesignate
the account.
Features of the various accounts – Comparative
Please find below the comparative analysis of the various types of accounts permissible for NRI/PIO/OCI.
Particulars FCNR account
Account holder NRIs/PIOs/OCI
Joint account of two Permitted
or more Nominee
Joint account with Not permitted
another person
resident in India
Currency • Pound Sterling, US Dollar,
denomination Japanese Yen, Euro, Australian
Dollar and Canadian Dollar.
• Depositor desiring to place
a deposit for any convertible
currency other than designated
currency can do so if permitted
by the authorized dealers9.
Repatriation: Principal • Freely repatriable
Interest earned on • Freely repatriable
deposits
Foreign Currency Risk • Account holder is protected
against changes in ` value
vis-à-vis the currency in which
the account is dominated
Type of accounts • Term Deposits only
Period for Fixed • For terms not less than 1 year
Deposits and not exceeding 5 years
Nomination facility Available
Rupee loans in India Loans up to specific limits are
against the security of permissible against security of
the funds held in the funds held in FCNR account.
account
Permitted credits • FCNR accounts are permitted to
be opened with funds remitted
from outside India through
normal banking channels
• Funds received in rupees by
debit to the account of a
non-resident bank or funds that
are of repatriable nature
• Transfer of funds from existing
NRE/FCNR accounts.
NRE account
NRIs / PIOs/OCI
Permitted
Not permitted
Indian Rupees
Freely repatriable
Freely repatriable
Account holder is exposed to the
fluctuations in the value of `.
Current
Savings
Recurring
Fixed Deposits
For the periods as announced by the
deposit taking bank.
Available
Loans up to specific limits are
permissible against security of funds
held in NRE account.
• Proceeds of remittances to India
in any permitted currency.
• Transfers from other NRE/FCNR
accounts.
• Interest accruing on the funds
held in the account.
• Interest on Government securities
and dividend on units of mutual
funds, provided the securities/
units were purchased by debit
to the account holder's NRE/
FCNR account or out of inward
remittance through normal
banking channels.
• Certain types of refunds
NRO account
NRIs / PIOs/OCI
Permitted
Permitted
Indian Rupees
Not repatriable except in certain cases
Freely repatriable
Account holder is exposed to the fluctuations, in
the value of ` .to the extent of interest amount.
Current
Savings
Recurring
Fixed Deposits
For the periods as announced by the deposit taking
bank.
Available
Permissible
• Proceeds of remittances from outside India
through normal banking channels received in
foreign currency which is freely convertible.
• Any foreign currency, which is freely convertible,
tendered by the account holder during his
temporary visit to India. Rupee funds should
be supported by encashment certificate, if they
represent funds brought from outside India.
• Transfers from rupee accounts of non-resident
banks.
• Legitimate dues in India of the account holder.
This includes current income like rent, dividend,
pension, interest, etc.
• Sale proceeds of assets including immovable
property acquired out of rupee/foreign currency
funds or by way of legacy/inheritance.
Returning Indians – All that you need to know | 37
Particulars FCNR account NRE account
Permitted debits • Local disbursements.
• Permissible remittances outside
India.
• Transfer to NRE/FCNR accounts of
the account holder or any other
person eligible to maintain such
account.
• Investment in shares/securities/
commercial paper of an Indian
company or for purchase of
immovable property in India
provided such investment/
purchase is covered by the
regulations made, or the general/
special permission granted, by the
Reserve Bank.
• Any other transaction if covered
under general or special
permission granted by the
Reserve Bank.
NRO account
• All local payments in rupees including payments
for investments in India subject to compliance
with the relevant regulations made by the
Reserve Bank.
• Remittance outside India of current income like
rent, dividend, pension, interest, etc. in India of
the account holder.
• Remittance up to USD One million, per financial
year (April-March), for all bonafide purposes, to
the satisfaction of the authorized dealer bank.
• All remittances of income need to be net of
applicable India taxes

Investments after coming into India
• A person resident in India (other than citizens of
Pakistan, Bangladesh, Sri Lanka, Afghanistan, China,
Iran, Nepal or Bhutan) is allowed to freely make
investments in India (immovable property, securities
infrastructure bonds, commodities, retail sector,
etc.) without any restrictions under FEMA. However,
any other restriction under other applicable law in
India as applicable to a person ordinarily residing
in India would be applicable to a returning Indian
resident in India.
• Further the persons resident in India are permitted to
purchase immovable property in India including farm
house, agricultural land or plantation in India.
For further information on investment avenues
for residents, please refer the “Indian landscape”
section.
Residence under FEMA
Under the FEMA regulations, an individual will be
resident in India if he/she satisfies the following tests:
(a) B
 asic test of physical presence in India
The individual must have resided in India during the
preceding financial year (April to March) for more
than 182 days
(b) Additional tests indicating purpose
In addition to the basic test, the individual must be
residing in India for either of the following purposes:
−− For or on taking up employment in India; or
−− For carrying on a business or a vocation in India;
or
−− For any purpose in such circumstances as would
indicate his intention to stay in India for an
uncertain period.
The following individuals would be treated as
non-residents despite satisfying the basic condition of
182 days stay in the preceding financial year –
A person staying/ going outside A person staying/coming in India,
India for otherwise than for
Taking up employment outside India Taking up employment in India
Carrying on business or vocation Carrying on business or vocation
For any other purpose for an uncertain For any other purpose for an uncertain
period period
Based on the above, it may be noted that an individual
may be resident as per FEMA depending on length
of stay in India during the previous financial year. For
instance, residential status under FEMA for financial year
2011-12 (1 April 2011 to 31 March 2012) is dependent
on stay in India during financial year 2010-11.

38
 Illustrations:
1. Mr. and Mrs. X come to India for the first time on 15th January
2011. Mr. X would take up an employment in India, whereas Mrs.
X is accompanying her husband and intends to go back after 2
months, as their children are studying overseas.
In this scenario, both Mr. and Mrs. X will not be persons resident
in India for the fiscal year 2011-12 since Mr. X has not stayed for
more than 182 days in the preceding year even though he has
taken up employment in India and Mrs. X has not been in India
for more than 182 days.
2. Mr. Y leaves India on 14th November 2011 to take up
employment outside India for the first time. What will be
residential status as per FEMA?
Mr. Y would be considered to be a non-resident under FEMA from
14th November 2011 as he is covered by the exclusion tabulated
above. This is irrespective of the fact that he was residing in India
for more than 182 days during the previous year.

Retention of holdings outside India
You may continue to have assets/ investments outside
India even after you return to India. As per FEMA, you
are allowed to hold and own your assets/ investments
outside India (such as securities, immovable property
etc) if the same were acquired when you were resident
outside India or inherited from a person who was
resident outside India. Therefore, you can continue to
retain your holdings outside India and are not required
to dispose them even when you become resident in
India as per FEMA.
Returning Indians can continue their FCNR (B) deposits
till the original maturity date and on maturity can
transfer funds to RFC accounts.
No loans/advances are allowed whether directly or
indirectly against balance in an RFC account. If you
intend to return overseas to become an NRI, the balance
in the RFC account can be converted to NRE/FCNR
account.
Permissible debits and credits to RFC account

Special considerations for returning Indians Key aspects on

Some allowed credits to RFC account
withdrawals
Overseas remittances for defined purposes
• For bonafide payments • Foreign exchange received as pension or any other
Please refer the section on “Remittances outside India”
abroad (transfer to superannuation or other monetary benefits from
for details on permitted remittances under LRS, private/
personal account the employer outside India;
business travel, education, medical treatment etc.
abroad, travel, • Remittances from abroad being sales proceeds of
investment etc.) assets held abroad or income earned abroad;
Foreign currency bank accounts
• Withdrawals/Payments • Proceeds of life insurance policy claims/maturity/
Residents in India may maintain foreign currency bank
other than foreign surrender values settled in foreign currency from a
accounts in India under the following schemes-
currency remittance permitted insurance company in India;
abroad shall be made in • Proceeds of foreign currency notes / travellers
• Resident Foreign Currency Accounts (RFC)
equivalent Indian Rupees cheques brought to India.
PIOs or NRIs returning to settle permanently in India
only • Interest in RFC account
should convert their NRE accounts to a resident account.
An individual can open a RFC account out of the foreign
exchange received from specified income in foreign Interest income on RFC deposits is taxable when the NRI
exchange and can transfer the balances in NRE and loses NOR (resident not ordinarily resident) status and
maintain funds in foreign currency like US$, Euro, GBP. becomes an ordinary resident.

PIOs or NRIs returning to settle permanently in India should

convert their NRE accounts to a resident account
Returning Indians – All that you need to know | 39
• Resident Foreign Currency (Domestic) Accounts
Returning Indians can also open Resident Foreign
Currency (Domestic) Account and can retain balances
in permitted foreign currency. This account will be
maintained in the form of a current account and
hence will not yield any interest on the accumulations.
Foreign currency withdrawals are possible for permitted
transactions.

Remittance of salary outside India

Foreign/Indian nationals, employed by a foreign company
outside India and on deputation to the office/ branch/
subsidiary/ joint venture in India of such foreign company,
may open, hold and maintain a foreign currency account
with a bank outside India and receive the whole salary
payable to him for the services rendered to the office/
branch/ subsidiary/ joint venture in India of such foreign
company, by credit to such account, provided that
income tax chargeable under the Act is paid on the
entire salary as accrued in India. Also, foreign nationals
employed with Indian companies can remit their salaries
net of statutory deductions outside India.

Repatriation of sale proceeds of residential property

purchased by a NRI/PIO out of foreign exchange
Repatriation of sale proceeds of immovable property
purchased by NRI / PIO in India is permitted to the
extent of the amount paid for acquisition of immovable
property in foreign exchange received through banking
channels. In case of residential property, the facility is
restricted to not more than two such properties. The
balance amount can be credited to the NRO account
and can be remitted under the USD one million limits.

Documentation and Income-tax clearances

An authorized dealer shall require any person desiring to
transact in foreign exchange to make such a declaration
and to give such information as will reasonably satisfy
him that the transaction will not involve and is not
designed for the purpose of any contravention or
evasion of the provisions of the FEMA or any rule,
regulation, notification, direction or order issued there
under.

Remittances from India will be permissible by the

Authorized Dealer banks on production of an
undertaking by the remitter and a certificate from a
Chartered Accountant in the formats prescribed by the
Central Board of Direct Taxes, Ministry of Finance.

40
Case Studies
Mr.Y an Indian citizen had purchased a residential
property in India. He is now a NRI, who has come
to India on employment. He plans to purchase one
flat and one commercial property from amounts
repatriated from USA. Is it possible? Further, he
plans to sell the newly acquired flat while going
back. Would it be possible for Mr. Y to repatriate
the proceeds on his return to USA?
For the purpose of FEMA, Mr. Y will be considered as
a person resident in India only if he stays in India for
more than 182 days in the previous year (even though
he comes to India for employment purpose). This is
possible only in or after year 2. If he is considered as a
person resident in India, there is no restriction on the
purchase of residential and commercial property. On
sale, he can remit the sale proceeds of the residential
property and commercial property as specified under
FEMA subject to payment of India taxes on capital gains,
through the normal banking channels.
Mr. Y is permitted to repatriate up to USD 1 million
per financial year (April-March) from his NRO account
inclusive of the sale proceeds of immovable property.
There is no lock in period for sale of immovable property
and repatriation of sale proceeds outside India.
Mr. S, OCI cardholder, plans to invest in Indian stock
market. Can he do so? Will the fact that he has
come to India for the first time and has not filed any
tax returns matter?
Mr. S may invest in Indian stock market. The fact that he
has not filed his tax returns would not matter. However
Mr. S would need to comply with the KYC (Know Your
Customer) norms and apply for a Permanent Account
Number (PAN) without which, investment will not be
permissible.
Can Ms. X, an NRI - open joint accounts in India?
Ms. X can open some joint accounts. The norms are as
below:
Joint account with resident
Type of Account
Indians
NRO
NRE
FCNR
Mr. Z is an Indian national employed with an Indian
company. Mr. Z wishes to purchase shares of ANC
Inc. USA which are currently being traded at a very
competitive price. Can Mr. Z go ahead and invest in
the shares of ABC Inc. Are there any limits applicable?
Further is trading permitted?
Mr. Z could avail of the Liberalized Remittance Scheme
(LRS) which allows remittances for permitted activities
by residents. Under this scheme, a resident could invest
in shares abroad upto a limit of USD 200,000 p.a. out
of the bank account opened abroad under this scheme.
Mr. Z needs to note that the limit of USD 200,000 is
all inclusive i.e. the total remittance under the scheme
should not exceed USD 200,000.
Trading in investments is permitted. Mr. Z can retain and
re-invest the income earned on investments made under
the LRS. Repatriation is not necessary.
Mr. A is an Indian employee working with an Indian
company – American International India. This is a
subsidiary of a US listed company. The US Company
has issued stock options to the employees of its
subsidiary and Mr. A has received 30,000 stock
options. Can Mr. A exercise his options, the exercise
price being USD 10 per option?
Mr. A is permitted under the exchange control laws to
invest in stock options of the holding company.
Under FEMA (Transfer or Issue of any Foreign Security)
Regulations, an individual resident in India who is an
employee of a subsidiary in India of a foreign company
or of an Indian company in which direct and indirect
foreign equity is not less than 51%, may acquire shares
offered by such a foreign company under the ESOP
Scheme offered by the issuing company globally on
uniform basis. One other condition is that the Indian
company has to submit an Annual Return to RBI through
the Authorized dealer bank giving details of remittance /
beneficiaries etc.
Joint Account with non-resident
Indians
Yes Yes
No Yes
No Yes
Returning Indians – All that you need to know | 41
 Social Security
International Worker provisions
The Ministry of Labour and Employment amended the
Provident Funds Scheme in October 2008, to extend its
applicability to International Workers [IW] with effect
from November 2008.
An International worker is-
• an Indian employee having worked or going to work
in a foreign country with which India has entered
into a social security agreement [SSA] and being
eligible to avail the benefits under a social security
programme of that country, by virtue of the eligibility
gained or going to gain, under the said agreement.
• An employee other than an Indian employee,
holding other than an Indian passport, working for
an establishment in India to which the Act applies;
‘Excluded employee’ has been defined to be an
International Worker, who is contributing to a social
security programme of his/her country of origin, either
as a citizen or resident, with whom India has entered
into a social security agreement on reciprocity basis and
enjoying the status of detached worker for the period
and terms, as specified in such an agreement.
Specific provisions have inserted in the Provident Fund
Act and Scheme which are specifically applicable to
international workers vis-à-vis the domestic workers.
If you are a PIO/PIO card holder/OCI and are coming
to India on employment, you will be categorised as
an international worker and the special regime will
become operative.
Social Security Agreements (SSAs)
In most countries, the coverage under social security
programme is regulated under domestic social security
laws. In cases, where the tenure is permanent or
reasonably long, the coverage under social security
programmes of the host country would apply. As
mentioned above, where the employee is on a
deputation for a short duration, the social security
benefits in the host location may not be available in
spite of making contributions to the host schemes.
In order to address this aspect and ensure that the
benefit of social security is available to the employees
un-interrupted, the Indian Government has been
negotiating and working out social security agreements
with various countries. It is necessary for both the
countries to notify the date from which it would be
effective. Currently India has notified SSAs with Belgium,
Germany, Switzerland, Denmark, Luxembourg, France,
South Korea and Netherlands. India has also signed SSAs
with Hungary, Norway, Czech Republic though these are
yet to be notified.
Benefits available under the SSA
Benefits generally available under SSA’s are:
• Detachment – Can continue to be associated with
home country social security without having to
contribute in the host country.
• Exportability of pension - Export of benefits /pension
due under the legislation of one country to another
country, where the member might choose to live, will
be possible.
• Totalization - Period of service in the host country
will be considered for determining the eligibility of
benefits.

SSAs – NOTIFIED and IN FORCE

Period of
County Name Effective Date Detachment Exportability Totalization
Detachment
Belgium September 1, 2009 Yes 60 months Yes Yes
Germany Limited October 1, 2009 Yes 48 months No No
Comprehensive Awaited Yes 60 months Yes Yes
Switzerland January 29, 2011 Yes 72 months Yes No
Denmark May 1, 2011 Yes 60/36 months Yes Yes
Luxembourg June 1, 2011 Yes 60 months Yes Yes
France July 1, 2011 Yes 60 months Yes Yes
Republic of Korea November 1, 2011 Yes 60 months Yes Yes
Netherlands December 1, 2011 Yes upto 60 Months Yes No

42
Coverage of SSAs
In the Indian context old age and survivors’ pension and permanent total disability pension are the benefits covered by most SSAs.

SSA provisions for Indian/foreign passport holders

The PF regimes would differ depending upon whether an individual returning to India for employment holds an Indian passport or not. A
comparative study of the applicable provisions is presented below:

Indian passport holders (other than individuals

Sr. No. Particulars Foreign passport holders
returning from assignment)
1. Contribution • Employers Contribution – 12% • Employers Contribution – 12%
−− Pension Fund – 8.33% −− Pension Fund – 8.33% of `6500 (i.e. `541)
−− Provident Fund – 3.67% −− Provident Fund – balance
• Employees Contribution – 12% • Employees Contribution – 12% to Provident Fund
2. Applicability Mandatory Optional for persons earning a basic pay exceeding `6500
subject to internal rules of the company and mutual agreement
between employer and employee
3. Withdrawal • On retirement after attaining of 58 years • On retirement at 55 years
conditions • As covered by SSA • On migration from India
• Medical grounds • On being unemployed for a period of 2 months
• Restriction of withdrawal from pension funds
4. Benefit of Available if covered by the SSA and the employee Not applicable
Detachment holds a certificate of coverage
5. Benefit of Available if covered by the SSA No
totalization
6. Export of Available if covered by the SSA No
benefits

Planning for repatriation

India has notified SSAs with In case you decide to leave India for an uncertain period
of time or employment, an important question that

Belgium, Germany, Switzerland, often arises is whether you would be able to repatriate
the funds outside India or would be eligible to continue

Denmark, Luxembourg, France,

to hold assets acquired in India. As per FEMA, NRIs/PIOs
are allowed to remit/ repatriate the following outside
India:
Korea and Netherlands. India • Current income like rent, dividend, pension, interest,
has also signed SSAs with etc. in India is a permissible debit to the NRO
account
Hungary, Norway, Czech • An amount up to USD one million, per financial year,
out of the balances held in his NRO account / sale
Republic though these are yet to proceeds of assets (inclusive of assets acquired by
way of inheritance or settlement), for all bonafide

be notified. purposes, on production of an undertaking by the

remitter and certificate from a Chartered Accountant
• Sale proceeds of shares and securities provided the
security has been held on repatriation basis and
appropriate tax clearances are obtained

Returning Indians – All that you need to know | 43

 • Sale proceeds of immovable property is allowed to
be repatriated outside India to the extent of the
amount paid for acquisition in foreign exchange
received through banking channels. In case of
residential property, repatriation of sale proceeds
is restricted to two such properties. The balance
amount can be credited to the NRO account and can
be remitted upto USD one million per year, subject to
payment of applicable taxes
• Sale proceeds of immovable property purchased
by a person when he was resident in India (or out
of rupee funds) is allowed to be be remitted after
becoming an NRI/ PIO, up to USD one million, per
financial year, out of the balances held in his NRO
account subject to payment of applicable taxes.
Retention of holdings in India
At the time of repatriation from India, a NRI/ PIO may
continue to hold the investments/ assets aquired while
they were resident in India and are not mandatorily
required to dispose off the same.
44
An individual repatriating from India can also keep
his India bank account open for receiving statutory
dues (tax/PF refunds). However, the account has to be
designated as a NRO account by giving a declaration to
the concerned bank. The declaration should also provide
details of credits expected into the account. On receipt
of the same, the individual should repatriate the funds
overseas and close the account.
Repatriation of sales/maturity proceeds
You can repatriate sale/maturity proceeds of NSC/
Government securities that were purchased out of funds
remitted from abroad or out of NRE/FCNR accounts.
Sale/maturity proceeds of securities purchased out of
funds in NRO accounts can only be credited to NRO
accounts and cannot be remitted abroad. However, you
can remit interest earned to the extent permitted by
Reserve Bank.
Key aspects once you make your
decision – Welcome to India
Once you decide to relocate to India, you would set
about making a to do list. Relocating to a different
location, even if its your homeland is a lengthy process
and you would want to ensure that you don’t miss out
on any important issue. On the top of your to do list
will be entry into India and associated requirements
followed by transporting your precious collections. In
this section, we would address these key aspects of
relocation revolving around the visa regulations, work
permit and baggage rules. In addition, you would have
concerns about the tax and social security issues in
your current location post relocation as also the impact
of these in India. We would provide an overview of
possible issues that you could face and the options
available to overcome these.
Work permit and visa
It’s a small world – goes the saying that has indeed
come true with the advent of technology. Travel across
countries and continents is a lot quicker and less
strenous than it was a few decades back. Yet, there
are a few restrictions that are in place and permissions
need to be taken to travel across nations. The Indian
immigration regulations detail these requirements –
visa, residential permit and so on. The visa and FRRO
registration requirements would depend on which of the
following categories the returning Indian falls in:
Indian citizen
An Indian citizen who is ordinarily residing outside India
and holds an Indian Passport does not require a visa
to travel to India or FRRO registration to stay and work
here. An NRI will fall under this bucket and can take a
flight to India without having to go through the above
formalities.
The PIO card holder
A PIO card allows the holder to enjoy visa-free travel in
and out of India and to freely engage in work or study
in India. Such visa-free travel facility can be enjoyed for
a period of 15 years from the date of issue of the PIO
card. Also, the PIO card holder can apply for Indian
citizenship after the minimum seven-year residency
requirement is fulfilled. With this, the PIO card holder
may be able to travel in and out of India without any
visa restrictions for life.
PIO card holder will be exempt from the requirement of
FRRO registration if his stay on any single visit in India
does not exceed 180 days. The registration requirement
will step in for extended stay and the PIO card holder
will have to comply with the requirement within 30 days
of the expiry of 180 days.
The Overseas Citizenship of India (OCI) card holder
OCI allows visa free travel to India for the life time of the
individual.
Although often referred to as Indian 'Dual Citizenship'
it is important to note that India itself does not support
dual citizenship and that OCI, whilst offering many
benefits, is not a full grant of citizenship.
OCI Cardholders are exempted from registration with
FRRO for any length of stay in India.
Others
This category covers returning Indians who hold foreign
passports, but who do not possess a PIO or OCI Card.
They would require a specific visa depending on the
purpose of visit to India. Listed below are details of
some of the commonly used visas required, categorized
on the basis of visit to India.
Indian Visa – types and features
Type Duration Purpose of Visit to India
Employment Normally one year Employment in India with an
Visa organization in India or other cases
of working in India
Entry Visa Co-terminus with the period of Spouse/child of person of Indian
(“X” Visa) visa granted to the principal visa Origin and/or spouse/dependent
holder family member accompanying
foreign citizen coming to India on
a long term visa
Business Visa One year or more with multiple Business
entries, but stay limited to a
maximum of 6 months in a single
visit
Student Visa Valid for the period of study as Pursue regular studies at recog-
approved by the educational nized institutions
institution in India It is a multiple
entry visa.
Medical Visa The initial duration of the visa is Medical treatment in reputed /
up to a year or the period of the recognized specialized hospitals /
treatment, whichever is less. The treatment centres in India.
visa will be valid for a maximum
of 3 entries during the one year
Returning Indians – All that you need to know | 45
 FRRO registration arrival, the passenger is first cleared by immigration and
The above category would also need to register takes delivery of baggage of his/her and passes through
themselves with the FRRO office within 14 days of arrival the Customs. For the purpose of Customs clearance, a two
in India. A list of FRRO offices in India with contact channel system has been adopted - a Green Channel for
details is given hereunder: passengers not having any dutiable goods and Red Channel
for passengers having dutiable goods. The Customs officer
Location Address Telephone on duty at the Red channel countersigns/stamps the
East Block –VIII, Level – 2, disembarkation card and scrutinizes the passport/travel
+91-011
Delhi Sector – 1, R.K. Puram, New documents. Duty is assessed based on the declared values
26711384
Delhi – 110 066 and clearance is provided on payment of the duty.
Badruddin Tayyabji Marg, +91-022
Mumbai
Mumbai – 400 001 26571998 Baggage rules vary according to the passenger's duration
Shastri Bhavan Annexe 26, of stay abroad, the country he or she is coming from
+91-044
Chennai Haddows Road, Chennai – and the age of the passenger. Usually all passengers
28232642
600 006
get a duty free allowance within which they can bring
+91-033 various goods without payment of any duty. When the
Kolkata 237, A.J.C. Bose Road, Kolkata
22470549 total value of the goods exceeds the duty free allowance,
D-123, Ranjeet Avenue, +91-0183 customs duty at a flat rate has to be paid only on the
Amritsar
Amritsar 2508250 value exceeding the duty free allowance. Presently, the
Bureau of Immigration, Besides effective customs duty on Baggage is 36.05%.
Vijaya Bank Counter, Rajiv +91-040
Hyderabad
Gandhi Terminal, Begumpet 27900211
Duty free allowances in case of transfer of residence
Old Airport, Hyderabad
Transfers of residence entitlements are applicable to Indian
55, Double Road, Indiranagar, +91-080
Bangalore nationals as well as foreigners transferring their residence
Bangalore 25202052
to India after a stay abroad of at least two years. However,
Movable asset rules the passenger or any member of his family should not
All individuals entering India by international flights will be have availed this concession in the preceding three years.
given a disembarkation card to declare the quantity and This allows the returning Indians family to import personal
value of goods that they are bringing into the country. On and house hold articles free of duty or at concessional rate

Baggage rules for individuals transferring residence to India

Used personal articles
and household effects
Items required for day-to-day
personal use (Example:
shirts, suits, spectacles, hair
dryers, blouses) are allowed
duty free. Certain household
effects are dutiable (Example:
Dish washer, music system,
oven, air conditioner) and
do not comprise articles
allowed duty free. Generally,
individuals transferring the
residence are eligible for
concession up to value of `5
lakhs exclusive of value of his
personal effects and other
household articles.
Import of jewellery
An Indian passenger who
has been residing abroad for
over one year is allowed to
bring jewellery, free of duty
in his bonafide baggage up
to an aggregate value of
`10,000/- (in the case of a
male passenger) or `20,000/-
(in the case of a lady
passenger). The limit is not
applicable if the passenger
produces evidence (Export
Certificate from Customs at
the time of departure) that
the Jewellery was in fact,
taken out of India by the
passenger or his family.
Import of foreign Laptops Import of passenger Unaccompanied baggage
exchange/currency cars
An individual can bring One laptop Baggage does Baggage rules will also apply
into India foreign brought as not include motor for the unaccompanied
exchange without any baggage by vehicles. Hence, duty baggage of passengers sent
limit. Declaration of the passenger concession will not through cargo. However, no
foreign exchange in over 18 years be applicable for free allowance is admissible
Currency Declaration of age is import of motor cars. for unaccompanied baggage
Form is required for exempt from Individuals transferring and only used personal
foreign currency notes customs duty. residence into India effects can be imported free
beyond USD5000 or are permitted to bring of duty. The baggage may
where the value of cars having engine be dispatched within one
foreign exchange exceeds capacity less than month or before 2 months
USD 10,000 (in the form 1600 cc (for new of the arrival or within such
of travellers’ checks, cars) while there is no period allowed by Assistant/
bank notes or currency cc limit for old and Deputy Commissioner.
notes). However, import used cars, already in Unaccompanied baggage is
of Indian currency is possession for more subject to Customs duty of
prohibited. than 1 year. 36.05%.

46

of duty. Separate rules apply for passengers returning from
Nepal, Bhutan, Myanmar or China. The table on page 46
relating to baggage rules gives the general regulations
applicable for individuals transferring their residence to
India.
Trailing tax and social security issues
Trailing Social security issues
As a person living and working in an overseas location,
the returning Indian may have contributed to the
social security scheme there. Having contributed to
the scheme for many years, he/she may be eligible to
receive benefits such as pension, at the time of returning
to India for settling down permanently.
The taxation of this overseas pension benefit in India
would be a matter of concern to the returning Indian.
The pension amount would be liable to tax in India
in the year the individual becomes ordinarily resident
for tax purposes. He/she would need to examine the
provisions of the DTAA between India and the overseas
location to determine if the pension amount is taxable in
India, and if any relief is available under the DTAA.
Trailing tax issues
Dual taxation of income – residence vs. citizenship
Another concern for the returning Indian, having stayed
abroad for many years is taxability in both the host
country where he/she has lived, and in India, where
he/she intends to settle down permanently. This issue
is particularly relevant where the individual retains the
citizenship or permanent resident status of the country
he/she has left, and when he continues to earn income
in that country. While India follows physical presence as
the residency criteria, many countries treat citizenship or
permanent residence as the benchmark for determining
the residency.
On returning to India to settle here permanently, the
individual would become a ROR as per the Act, generally
in the third or fourth year of returning. In that event,
he/she becomes liable to pay taxes on global income in
India. However, the returning Indian can avail credit for
taxes on the doubly taxed income if India has a DTAA
with the concerned overseas country.
To take an example - Mr. X (holding a US passport) is
moving to India for good from the US, along with his
family. He would continue to be taxed globally in US,
based on his citizenship. He would become a ROR after
a period of time in India. Once his residential status in
India changes to ROR, he would be taxed globally in
two countries, in India and the US. Under the India-US
DTAA, tax relief in the form of foreign tax credit may be
availed in one of the two countries, for taxes paid in the
other country, so as to avoid double taxation.
Even in the absence of a DTAA with the concerned
country, foreign tax credit may be claimed on the doubly
taxed income under the Act in India.
Returning Indians – All that you need to know | 47
Case studies - Tax
Since childhood, Mr. X has been living in US with his
parents. He has come to India in August 2011 for
employment with an Indian aeronautical research
company. He has earned and received interest
income in US. Is this taxable in India? If so, is he
running the risk of paying taxes on the same income
in both locations?
Based on the details provided, this is Mr. X’s first year of
stay in India. Thus his stay in India during the previous
year is more than 183 days. As such for the current year,
his residential status would be Resident but Not Ordinarily
Resident (NOR). In the case of a person who is NOR in
India, only the following incomes are liable to tax in India-
• is received or is deemed to be received in India in such
year by or on behalf of such person ; or
• accrues or arises or is deemed to accrue or arise to him
in India during such year.
Thus as long as Mr.X’s residential status is NOR in India, the
income earned in the US would not be taxable in India.
However once his residential status is Resident and
Ordinarily Resident (ROR), he will be taxable in India on his
global income.
India has a Double Taxation Avoidance Agreement (DTAA)
with USA. In such case, if the income is taxed in USA as
well as in India, like in this scenario, the provisions of DTAA
between India and US would have to be analysed to see
whether the income would be taxed in India or in the
US or can credit for taxes could be claimed in one of the
countries.
Ms. Y has been living in US for the past 2 years. She
has ancestral properties and certain investments
(bank deposits) in India. Every year, she used to
come to India for about six to seven weeks to meet
her relatives and to work with her auditor for tax
filings. This year her case was selected for scrutiny
assessment and it so happened that she had stayed
in India for about 100 days. Would this alter her tax
position in India?
Ms. Y is currently staying in USA for the purposes of
employment. Her stay in India for the current year is less
than 182 days.
As per the explanation provided to Section 6(1) of the
Income tax Act, since she has come to India on a visit, her
48
residential status for the current year would continue to be
Non-Resident. In the case of a non-resident only income
that accrues or arises in India or that is received in India
is subject to tax in India. Hence there is no change in Ms.
Y’s residential status as well as her India tax position on
account of her stay in India in the current year.
Since, returning to India for good in February 2010,
Mr. Z has been regularly following up with the
stock market. On January 8, 2011, he purchased
shares of Indian companies worth `75, 000 from
the stock market. He proposes to sell these shares
by December 15, 2012 through the stock exchange.
Does he lose out any tax benefits?
During the financial year 2012-13, when Mr. Z proposes
to sell the shares, he would be a resident and ordinarily
resident in India presuming that he has been in India
throughout since February 2010.
Mr. Z proposes to sell the shares (which have been acquired
in January 2011) in December 2012. The total period of
holding the shares is more than 12 months. As such, the
shares will be treated as a long term capital asset. Since he
has traded on Indian stock market, securities Transaction
Tax (STT) would be paid by him. When Mr. Z sells the shares
through the stock exchange, he would pay STT. Hence long
term capital gains would be exempt from tax.
Mr. A has a house property in the US which was
vacant for the past 3 years since he returned to
India. Now, he is proposing to let this out to a
corporation in US for a monthly return of $1000. He
will incur maintenance costs @ $250 per month. It’s
a debt free property. Is Mr. A required to pay any
tax in India on the property?
As long as the residential status in India is NOR, income
earned in the US would not be taxable in India. Once
Mr.A’s residential status is ROR, his global income will be
taxable in India. As such the house property income would
also be subject to India taxes. The computation of house
property income would be undertaken as per the India tax
provisions.
India has a Double Taxation Avoidance Agreement (DTAA)
with USA. In such a case, if the income is taxed in USA as
well as in India, the provisions of DTAA between India and
US would have to be analysed to see whether the income
would be taxed in India or in the US or can credit for taxes
be claimed in one of the countries.
Case studies – Social Security
Mr. A is a US citizen and OCI card holder. He
contributes to social security in the US. He is
transferred to an Indian company for 4 years and is
on the payroll of the Indian company. Would he be
required to contribute to Provident Fund in India?
Mr. A is a non-Indian passport holder; hence he would
be classified as an International Worker (IW) as per the
Provident Fund Act. In the case of an IW, the contribution
towards the India PF is mandatory. Hence PF would have to
be contributed by him at 12% of the salary.
Mr. X is a UK Citizen and OCI card holder. He is on
deputation to the Indian company for 4 years and is on
the payroll of the Indian company. He has contributed
to PF under the India PF laws. Can he repatriate the
proceeds back to the UK as and when he goes back?
Mr. X is a non-Indian passport holder, hence he would
be classified as an International Worker (IW) as per the PF
scheme.
In the case of IW’s the withdrawals from PF account are
permitted in the following situations –
• On retirement from service in the organization at any
time after the attainment of 58 years of age
• On retirement on account of permanent and total
incapacity for work due to bodily or mental infirmity, duly
certified by an authorized medical officer.
• On such grounds as specified in such SSA.
Currently India does not have a social security agreement
with UK. Hence in normal circumstances, Mr. X would be
able to withdraw the balance lying in his PF account only on
retirement at the age of 58 years.
Ms. C is a German citizen and is on assignment to
India for 2 years. She continues to contribute to
social security in Germany. Is it mandatory for her to
contribute to PF in India also?
India has a social security agreement (SSA) with Germany.
The India-German SSA provides for detachment benefit in
certain cases. Hence pursuant to this agreement, if Ms. C
is contributing towards a social security in Germany, then
she can apply for a Certificate of Coverage (COC) from the
German social security authorities. This would need to be
submitted to the India PF authorities to be exempted from
contribution to PF in India.
Would the response to the above change if C is
directly employed by the Indian company?
In case Ms. C is directly employed by the Indian company,
her contributions in Germany would stop. Hence she would
not be able to obtain a certificate of coverage (COC) from
German social security authorities and hence would need to
contribute towards Indian PF.
Mr. Z is an Indian residing in Australia for the last 6
years. Mr. Z holds an Indian passport and an Indian
PAN card. He is deputed to an Indian company for 2
years. He is on the payroll of the Indian company. All
employees of the Indian company earn a basic salary
of more than `6500 p.m. The Indian company as a
policy provides an option to its employees on whether
they would like to have coverage for PF or not? Can
the company provide Mr. Z with this option?
Applicability of PF provisions are not mandatory for a person
who is earning more than `6500 provided the individual is
not an International worker.
In the instant case Mr. Z is an Indian passport holder, hence
he would not be classified as an International Worker (IW) as
per the Provident Fund Act. In such case the company can
offer Mr. Z the option of choosing whether to contribute to
PF or not if his basic salary is more than `6500 p.m.
Mrs. B is an Indian residing in USA for the last 3
years. Mrs. B holds an Indian passport. She returns
to India and commences work with an Indian
company. Three months ago, she has got married
and left her India employment. Post marriage she
prefers to be a home maker. Can she withdraw
the balance lying in her PF account? What would
happen if she chooses not to withdraw?
Mrs. B is an Indian passport holder. As such she will not be
treated as an international worker for the purposes of Indian
PF Act. In such case, a withdrawal from PF is permitted in
the following circumstances
• On retirement at 55 years
• On migration from India
• On being unemployed for a period of 2 months
• Other medical grounds
Since she is unemployed for the last three months, her
case falls within the purview of eligible circumstances for
withdrawal.
In case she chooses not to withdraw, then after three years
from her last contribution, the account would be treated
as a dormant account and no interest would accrue to this
account.
Returning Indians – All that you need to know | 49
Schemes for Overseas Indians
The Central Government has launched various initia-
tives for the welfare of the non-resident Indians. These
are carried out through the MOIA which is the nodal
Ministry for all matters relating to Overseas Indians. The
measures are intended to promote a mutually beneficial
engagement between the Overseas Indians and India in
economic, social and cultural arena.
Besides, various State Governments have also put
welfare measures in place for Overseas Indians especially
those from their respective states.
All these and more are captured in the ensuing pages
for your ready reference.
Central Government initiatives
Initiatives:
Investment facilitation and knowledge networking
The MOIA has set up an Overseas Indian Facilitation
Centre (OIFC) in partnership with Confederation
of Indian Industry (CII) as a one stop shop for the
following:
• Promoting Overseas Indian investment into India and
facilitating business partnerships by giving authentic
and real-time information.
• Establish and maintain a diaspora Knowledge
Network
• Functioning as clearing house for all investment-
related information
• Assisting States in India to project investment oppor-
tunities for Overseas Indians; and
• Providing a host of advisory services to PIOs and NRIs
including consular questions, stay in India, invest-
ment and financial issues.
The governments of Assam, Bihar, Gujarat, Karnataka,
Kerala, Orissa and Punjab have partnered with OIFC to
appraise the diaspora about investment opportunities in
their respective states.
Bilateral Labour Co-operation
India has entered into bilateral MOU with all the major
destination countries for the protection and welfare of
Indian emigrants. Besides, the MOIA has also signed
SSAs with 13 countries and is conducting/concluding
negotiations with many others. The Government is also
entering into Human Resource Mobility Partnerships to
position international labour mobility as a win-win for
50
the countries of origin, the countries of destination and
the migrant workers.
Global Indian Network of Knowledge (Global Ink)
MOIA has developed a diaspora knowledge network
called Global Indian Network of Knowledge (Global
INK) as an electronic platform that seeks to connect
people of Indian Origin from a variety of disciplines,
recognized as leaders in their respective fields, not just
in their country of residence but globally as well, with
knowledge users at the national and sub-national levels
in India.
India Development Foundation of Overseas Indians
India Development Foundation of Overseas Indians
provides a credible window for Overseas Indian
Philanthropy in India’s social development. The objective
of the Foundation is to facilitate philanthropic activi-
ties by Overseas Indians including through innovative
projects and instruments such as micro-credit for rural
entrepreneurs, self-help groups for economic empower-
ment of women, best practice interventions in primary
education and, technology interventions in rural health
care delivery.
Scholarship Programme for diaspora Children
(SPDC)
The SPDC was launched in 2006-07 and is open to NRIs/
PIOs from 40 countries with significant diaspora popula-
tion. Under this scheme, 100 scholarships of up to USD
3,600 per month are awarded to PIO and NRI students
for undergraduate courses in engineering, technology,
humanities, liberal arts, commerce, management,
journalism, hotel management, agriculture and animal
husbandry, besides other courses. The SPDC scheme
is open to NRIs and PIOs from more than 40 countries
with a substantial Indian population.
It is implemented by Educational Consultants India
Limited EdCIL (India) Ltd., which is an autonomous body
under the Ministry of Human Resource Development.
The students have to apply for the scholarship and
applications of those who meet the eligibility criteria
are evaluated and shortlisted by a selection committee
of officer from the concerned departments, viz. the
Ministry of Human Resource Development, EdCIL
(India) Ltd. and MOIA. Besides, the Government has
also decided to scrap the Common Entrance Test for
selecting the eligible candidates for the scholarship.
Direct Admission to Students Abroad (DASA)
DASA is a Government of India run scheme that
provides deserving foreign nationals/PIOs/NRIs direct
admission to undergraduate programs. EdCIL admin-
isters the scheme, which offers students the oppor-
tunity to pursue programs at the National Institute of
Technology and other centrally funded institutes (other
than the Indian Institutes of Technology, or IITs).

Reservation for NRIs at Indian educational

institutions
The Government of India has approved a scheme to
enable a supernumerary quota of 15% seats at all higher
education institutes for foreign nationals/PIOs/children
of Indian workers in the Gulf countries. There shall be
no NRI fee and, in fact, the children of Indian workers in
the Gulf countries shall be treated as equal to resident
Indian citizens. For this purpose, the Government has
drawn up a list of institutes along with the courses
offered. The same can be viewed in the MOIA website.

Assistance for problems relating to Overseas Indian

Marriages
The issue of Overseas Indian marriages falls within the
purview of private international law that requires careful
and meticulous handling. MOIA has taken initiatives to
create awareness of problems associate with Overseas
Indian marriages. The Ministry has brought out a report
on problems relating to NRI marriages titled “Nowhere
Brides” that contains information on issues with NRI
marriages, Indian legal precedence and so on.
MOIA has launched a scheme to provide financial
assistance to women deserted by their Overseas Indian
spouses for obtaining counseling and legal services. These
services would be provided through Indian Women’s
Organizations/Indian community Associations and NGOs
that are on the panel of the Indian Missions/Posts in the
USA, UK, Canada, Australia, New Zealand and the Gulf.

The Ministry has empanelled 25 NGOs with the Indian

Missions/Posts overseas for this purpose and has
disbursed a sum of `2,753,696 to the NGO through
whom 47 women have benefited.

Voting Rights to Non-resident Indians

The Government has taken steps to have the
Representation of People (Amendment) 2010 notified
to provide voting rights to Overseas Indians. Through
this, Overseas Indian passport holders can register their
names in the electoral roll of the constituency where the

Returning Indians – All that you need to know | 51

address mentioned in their passport falls. Pursuant to
this, the overseas electors can participate in the Indian
electoral process.
For registering in the electoral rolls, overseas Indian
passport holders have to apply in the prescribed form
to the concerned registration officer either directly or
through post. The registration rules permit the overseas
Indians to attest the supporting documents themselves.
Overseas Citizenship of India
Dual nationality has been a persistent demand of the
Indian diaspora that was addressed through the OCI
scheme in 2005. This scheme provides for registration
of all PIOs provided
• they were citizens of India on or after 26th January,
1950; or
• they were eligible to become citizens of Indian on
26th January, 1950 and
are citizens of other countries, except Pakistan and
Bangladesh.
Under the OCI scheme, a registration certificate is given
together with Universal visa sticker to the PIOs. The OCI
scheme facilitates multiple entry, multi-purpose life-long
visa to a registered PIO for visiting Indian and also
provides exemption from registration with FRRO.
The OCI registration provides other benefits also such
as parity with NRIs in inter-country adoption of Indian
children, entry fee for visiting national monuments and
museums, practicing specified professions [doctors,
dentists, nurses, pharmacists, advocates, architects and
chartered accountants] and with resident Indians in
domestic air tariffs.
However, it is to be noted that OCI is not dual
nationality.
52
PIO University
The PIO University would be set up under the
Innovation Universities Act (after approval) with support
coming in the form of research support and student
scholarships.
Indian Community Welfare Fund (ICWF)
The Government of India had set up an Indian
community welfare fund in Indian missions in 17 ECR
countries to provide assistance to Overseas Indians tide
over difficult times. It has since been decided to extend
this fund to all the Missions around the world since it
has been found to be very useful by the Indian Missions
to help the Overseas Indian Community in distress.
The ICWF is designed to provide onsite, off-site and
social security services to Overseas Indian workers. The
range of services of ICWF includes:
• Boarding and lodging for distressed Overseas
Indians in household / domestic sectors and
unskilled labourers;
• Expenditure on and incidental to airlifting mortal
remains to India or the local cremation or burial of
the deceased Overseas Indians in such cases where
the concerned person is either unable or unwilling
to bear the cost;
• Extending emergency medical care to Overseas
Indians;
• Providing air passage to stranded Overseas Indians;
• Providing initial legal assistance to Overseas Indians
in deserving cases.
Tracing their roots
PIOs who want to trace the roots of their ancestors in
India can apply through the Indian mission or post in
the country of their residence.
India has entered into bilateral MOU with all the
major destination countries for the protection and
welfare of Indian emigrants. Besides, the MOIA has
also signed SSAs with 13 countries and is conducting/
concluding negotiations with many others.

Returning Indians – All that you need to know | 53

OIFC Partner State
initiatives
The Governments of Assam, Bihar, Gujarat,
Karnataka, Kerala, Odisha and Rajasthan have
partnered with OIFC to expand the engagement
of the Indian diaspora with their respective
States. Initiatives taken at organizational set up
level for some of the select States are:-

54
Government of Assam
To bring the NRI from Assam closer to the people of
the State and reinforcing their emotional bonds, the
Govenrment of Assam is proposing to start an NRI cell.
The progressive NRI community of the state desires to
actively participate in the development of the state and
work as a goodwill ambassador for the region. The State
Government welcomes investment initiatives by the NRIs
of the State.

Useful contact details:-

The Industrial Investment Secretariat Cell (IISC)
Department of Industries & Commerce
Government of Assam, Block C, 3rd Floor,
Assam Secretariat, Dispur, Guwahati - 781 006
Phone/Fax: +91-361-2237256
E-mail: info@investinassam.com
Website: http://investinassam.com

Government of Bihar
There is a ‘Bihar Foundation’ which is an initiative of
the Government of Bihar to realize the dream of a
‘Better Bihar’ through the participation of Non Resident
Biharis (NRB), NRIs, PIOs and others. Conceived to
act as a platform to facilitate interaction between the
Government of Bihar and the diaspora at multiple
levels, the Foundation solicits ideas, investments and
knowledge resources across sectors and verticals that
can help in the development of Bihar.

The Foundation endeavors to unite Biharis and form

local chapters of NRBs in regions which have substantial
population of people of Bihari origin. Policy reforms
undertaken by the administration has enabled the people
of Bihar to embrace a better and brighter future. The
Foundation works with an objective to communicate
realities in Bihar and endeavors to let the user know, why
and how. It has, in a very brief period of the time become
one of the fastest growing economies in India.

Useful contact details:-

Bihar Foundation
6th Floor, Indira Bhawan, R.C.S. Path, Patna
Phone: +91-612-2521371
Email: satyajit@biharfoundation.in
Website: www.biharfoundation.in

Returning Indians – All that you need to know | 55

Government of Gujarat
There is a NRI Division set up by the Government of Gujarat State Non-Resident Gujaratis’ Foundation
Gujarat with a view to establish effective communication Office - Block No.16, 3rd floor,
with NRIs of Gujarati origin in various parts of the world. Udhyog Bhavan,
The main objectives of the Division are to:- Gandhinagar-382011
• Prepare and maintain a comprehensive database Phone: +91 79 23238278, 23251314
about NRIs of Gujarati origin. Email: nrgfoundation@yahoo.co.in.
• Study from time to time social and cultural issues of Website: www.nri.gujarat.gov.in
NRI of Gujarati origin and take steps to formulate
schemes for meeting their requirements. For more information, log on to www.gujarat.gov.in
• Take effective steps to survey and assess the technical
and professional skills of NRIs and to dovetail the
same in the developmental efforts of the State.
• Create a database on Non-Resident Gujaratis (NRGs),
highlighting the professional areas of interest.
• Enable Government of Gujarat and its agencies to
communicate with NRGs with relevant interest.
• Facilitate Government of Gujarat to initiate steps to
address the specific needs of NRGs in different fields.
• Tap the technological, managerial and financial
resources of the NRI so as to upgrade the technical
and professional skills and the human resources of
the State, for the economic and industrial develop-
ment of the State.
• Channelize the savings and surplus financial
resources of the NRIs in to the developmental efforts
of the State for mutual benefits.
• Monitor the general welfare of the NRI and, in times
of crisis, identify specific problems of Gujarati Non
Resident Indians groups and take up the same with
and through Government of India.

In order to facilitate the achievement of above objec-

tives, the Government has in addition set up the
'Gujarat State Non-Resident Gujaratis' Foundation
(NRGF)'.

Useful contact details:-

Gujarat State Non-Resident Indian Department
General Administration Department
Block No.7/1st Floor, Sardar Bhavan
Sachivalaya, Gandhinagar
Ph: +91 79 23250474, 23250478
Email: ds-nri-gad@gujarat.gov.in
Website: www.nri.gujarat.gov.in

56
Government of Karnataka
The Government of Karnataka has set up ‘NRI Forum’ to
forge a symbiotic relationship between Karnataka and its
diaspora. The Forum will provide information on socio-
economic activities of Karnataka State and its develop-
ment and also coordinate investment in the state across
all potential sectors.
India has emerged as the country which attracts the
largest quantum of investment from its diaspora. With
the State having earned a reputation as the most sought
after destination for multinational corporations, espe-
cially in the technology area, the NRI forum has been
formed to attract more investment to the State. The NRI
Forum will facilitate investors among NRIs (Non-Resident
Indians) in setting up their ventures in the state.
The main aim of NRI Forum is to assist NRIs:
• With their requirements in India;
• Motivate NRIs for development and promotion of
Karnataka's literature, cultural and heritage activities
overseas; and,
• Encourage NRIs for adoption of Educational
Institutions in the backward areas of Karnataka so as
to provide quality education to the children.
The NRI Forum also hopes to draw up on the knowledge
reservoir of diaspora for development of the State.
Useful contact details:-
NRI Forum Karnataka
No. 6 & 7, Vikasa Soudha,
Bangalore – 560 001
Ph: +91 80 22034057, 22034058
Email: info@nriforumkarnataka.org
Website: www.nriforumkarnataka.org
For more information, log on to www.karnataka.
gov.in
Returning Indians – All that you need to know | 57
 Government of Kerala
In order to ensure the welfare of the Non Resident
Keralites, redress their grievances and safeguard their
rights the NORKA, the Non Resident Keralites Affairs
Department was set up by the Government of Kerala in
1996. Since then, NORKA has been playing a vital role in
the lives of NRKs, supporting them in times of need and
lending them a helping hand in every possible means.
Norka-Roots is the field agency of the Department of
NORKA, set up in 2002. It acts as an interface between
the Non-Resident Keralites and the Government of
Kerala and a forum for addressing the NRKs’ problems,
safeguarding their rights and rehabilitating the
returnees.
Its major objectives are:
• Welfare of NRK's
• Heritage village for parents of NRK's
• Promotion of Malayalam language and culture
• Cultural exchange programme between the natives
and Malayalees settled abroad.
• Promotion of regional development with the active
participation of NRK's
• Social Security Network for NRK's
• A relief fund for rendering immediate assistance to
NRK's in need
• Organization of annual meets for NRK's
• Resettlement and reintegration of NRKs returning to
Kerala
• Employment mapping
• To facilitate the creation of a high calibre human
resource pool
• Upgrading of skills of jobseekers
• Data Bank of NRK's
• Channelising investments to the State
• Prevention of illegal recruitment.

Useful contact details

NORKA Department, Government Secretariat
Thiruvananthapuram – 695 001
Ph: +91 471-2518182, 2518061
Email: ds@norka.kerala.gov.in
Website: www.norka.gov.in

NORKA-ROOTS
4th Floor, Centre Plaza, Vazhuthacaud
Thiruvananthapuram – 695 014
Ph: +91 471- 2332416, 2332452
Email: mail@norkaroots.net
Website: www.norkaroots.net

For more information, log on to www.kerala.gov.in

58
Government of Odisha
In Odisha, the Non Resident Oriya Facilitation Center
(NROFC) is an organization that works in liaison with
the NRO Cell of Government of Odisha to help the
Non-Resident Oriyas (NROs) in the following ways:
• Collection of information on NROs and creation of
database, mailing lists, discussion forum etc.,
• Exchange of information of all manner with
NROs,Government and people of the locality, repre-
sentation of the interests of the Members including
providing information,
• Voluntary gathering of all Oriyas residing outside
Odisha and abroad interested in the development of
the state of Odisha in all conceivable forms,
• Organization of designated events such as Pravasi
Oriya Divas, Annual Orissa Development Symposium,
• Facilitation of NRO projects by providing relevant
information and help with Government interface,
• All other related activities with active support of the
Government via the NRO cell in the Government
departments.
Useful contact details:-
Team Odisha
IPICOL House, Janpath, Bhubaneswar-751022
Orissa (India) Ph: +91 674-2542601/02/03
E-mail: info@teamorissa.org
Website: www.teamorissa.org
Non-Resident Oriya Facilitation Center
D-3,B.J.B. Nagar, Bhubaneswar-751014
Ph: +91 674 2432251, Email: sahadevas@yahoo.com
Website: www.nrofc.org
For more information, log on to www.orissa.gov.in
Returning Indians – All that you need to know | 59
Government of Rajasthan
Rajasthan Foundation, an organization set up by
Government of Rajasthan that works in the noble
direction of strengthening bonds between Non Resident
Rajasthani community and the state of their origin.
Rajasthan Foundation is a platform through which
eminent pravasi Rajasthanis like Shri L.N Mittal, Shri
Kumar Mangalam Birla, Shri Rahul Bajaj have partici-
pated in the journey of Socio-Economic development
of the state. Today there is hardly any field of activity,
be it business, public welfare, education, art, literature,
culture, sports, politics, science, medicine or engineering
where Rajasthanis have not achieved remarkable and
unprecedented success. No matter, where they went,
Rajasthan remained in their hearts and emotions; their
deep attachment to Rajasthan has kept the bond strong
between the land and its people.
60
The establishment of Rajasthan Foundation reflects
the state government's determination to nurture its
interaction with its noble sons and they are committed
to promote and facilitate every step taken by our Non
Resident Rajasthanis to contribute into the growth and
development of Rajasthan.
Useful contact details:-
Rajasthan Foundation,
Government of Rajasthan
Yojana Bhavan, Yudhister Marg, C-Scheme,
Jaipur, Rajasthan, India
Ph: +91-141-2229111, 2229444, 2229091
Email: rajfound-rj@nic.in
Website: www.rajasthanfoundation.gov.in
For more information, log on to www.rajasthan.
gov.in
Appendix

AD Authorized Dealer MCA Ministry of Corporate Affairs

ADR American Depository Receipts MHA Ministry of Home Affairs
BPO Business Process Outsourcing MNC Multinational Company
CBDT Central Board of Direct Taxes MOIA Ministry of Overseas Indian Affairs
CBSE Central Board of Secondary Education MOU Memorandum of Understanding
CII Confederation of Indian Industry MRTS Mass Rapid Transit System
COC Certificate of Coverage NCR National Capital Region
DASA Direct Admission to Students Abroad NGO Non-Government Organization
DIN Director Identification Number NOR Not Ordinarily Resident
Department of Industrial Policy and NORKA Non Resident Keralites Affairs Department
DIPP
Promotion
NR Non Resident
DMRC Delhi Metro Rail Corporation
NRB Non Resident Bihari
DP Designated Partner
NRE Non Resident External account
DSC Digital Signature Certificate
NREGA National Rural Employment Guarantee Act
DTAA Double Taxation Avoidance Agreement
NRG Non Resident Gujaratis
DTC Direct Taxes Code
NRGF Non Resident Gujaratis Foundation
ECNR Emigration Check Not Required
NRI Non Resident Indian
ECR Emigration Check Required
NRK Non Resident Keralites
EdCIL Education Consultants India Limited
NRO Non Resident Ordinary Rupee account
EPF Employees’ Provident Fund
NROFC Non Resident Oriya Facilitation Centre
ESIC Employees’ State Insurance Corporation
NSC National Savings Certificate
ESOP Employees’ Stock Option Plan
OCI Overseas Citizen of India
FCCB Foreign Currency Convertible Bonds
OIFC Overseas Indian Facilitation Centre
FCNR   Foreign Currency (Non Resident) Account
OWRC Overseas Workers Resource Centre
FDI Foreign Direct Investment
PAN Permanent Account Number
FEMA Foreign Exchange Management Act
FRRO Foreigners’ Regional Registration Office PF Provident Fund

GDR Global Depository Receipts PIO Person of Indian Origin

ICWF Indian Community Welfare Fund PIS Portfolio Investment Scheme

IIM Indian Institute of Management PPF Public Provident Fund

IIT Indian Institute of Technology PSU Public Sector Company

Industrial Investment Promotion RBI Reserve Bank of India
IPICOL
Corporation of Orissa Limited RFC Resident Foreign Currency
ISCE Indian School Certificate Examination ROR Resident and Ordinarily Resident
IT Information Technology SEBI Securities and Exchange Board of India
ITC Industrial Training Centre SME Small and Medium Enterprises
ITI Industrial Training Institute Scholarship Programme for diaspora
SPDC
IW International Worker Children
JV Joint Venture SSA Social Security Agreement
KYC Know Your Customer STT Securities Transaction Tax
LLP Limited Liability Partnership TAN Tax Deduction Account Number
LRS Liberalized Remittance Scheme VAT Value Added Tax

Returning Indians – All that you need to know | 61

Frequently asked questions
A. TAX
Can an individual hold two permanent account
numbers (PAN)?
No, an individual can have only one PAN. If an individual
has applied and been allotted a second PAN, he must
surrender the same. If a person fails to comply, then, the
tax authorities can impose a penalty of `10,000.
How can taxes due on other income (apart from
salary) be settled?
Taxes due on other income to the extent not settled by
way of “deduction at source” by the payer need to be
estimated in advance and paid in installments during the
financial year in which such income is earned. 30% of
the tax dues are to be remitted by September 15, 60%
by December 15 and 100% by March 15. The require-
ment for payment of advance tax arises only when the
tax dues are over `10,000.
Alternatively, a salaried employee can estimate and
provide his other income details to his employer, thereby
requiring the latter to deduct tax dues on such income
from monthly salary.
62
What are the methods for deposit of tax?
An individual can deposit taxes either through a desig-
nated bank branch or through the e-payment facility
of authorised banks. In both the cases, the tax payer
should fill the tax challan with the details of PAN, assess-
ment year and remittance mode. Cash/cheque/demand
draft payments can be made through any designated
bank branch. On receipt of cash/realization of cheque,
the bank will hand over the acknowledgment coun-
terfoil of challan stamped with Challan Identification
Number (CIN). The CIN is a unique identifier and to be
quoted in the tax return as proof of tax payment.
Alternatively, tax payers who have net-banking account
with any of the Authorized Banks can remit the taxes
online. For this, one needs to log on to www.incometax-
india.gov.in, select Pay Taxes Online option, fill the ITNS
280, submit the form and provide the net-banking
account details for transfer of funds. On e-payment, an
acknowledgement is generated by tax website quoting
the CIN.
When will a returning Indian be taxable for
overseas income in India?
An individual who has stayed in India for more than 729
days during the previous seven tax years will be liable to
tax on global income. Keeping this in mind, a returning
Indian who has not made any frequent visits to India
will be NR/NOR in the first two tax years. From the third
tax year, an individual may turn out to be a ROR and is
taxable for overseas income in India.
How can an individual check his/her tax credit in
India?
Income tax department enables tax payers to check their
credits online through the Annual Tax Statement in Form
26AS. This form provides complete details of tax paid
by/tax withheld on account of a tax payer for a partic-
ular tax year. Example: Form 26AS captures the details
of tax deduction by employer, tax deduction by banker
on deposits, advance/self-assessment tax deposited by
the individual. This form helps an individual to verify
the taxes deducted/paid through various sources to tax
department.
Commonly, individuals check their credit by registering
the PAN in e-filing portal or using the net banking
facility. No fee is charged for availing this facility.
What are the areas in tax a returning Indian should
be aware of while taking up self-employment in
India?
• Self-employed professionals have an option to follow
either cash or mercantile system of accounting. Tax
payers following the cash system pay taxes only on
those incomes which have been actually received.
Further, they are allowed deduction for expenditures
actually incurred. Under a mercantile system, profits
are accounted on an accrual basis.
• It is mandatory for professionals/businessmen to
maintain books of account and get the same audited
by a Chartered Accountant once the gross receipt/
turnover exceeds prescribed limits.
• Tax payers subject to tax audit should deduct taxes
at source on certain payments – Example: On salary
paid to employees, consultants, contractors etc.
• A self-employed individual should estimate taxable
income, arrive at the tax liability (after considering
the tax deduction from various sources) and remit
advance tax within scheduled dates. A taxpayer
should remit interest for the failure or short-fall in
payment of taxes within the scheduled dates.
How can an individual claim tax deduction?
An employed individual has the option of claiming
deductions through his/her employer (by submitting
documentary evidences) and can reduce the tax impact
at source stage. However, there are other one-off
deductions for treatment/maintenance of dependents
which can be claimed only in the tax return. In such
cases, the deduction can be used for adjustment with
personal income or can be claimed as refund. Self-
employed individuals can claim deductions directly in
the tax return. No documents need be enclosed with
the tax return in support of the claim for deduction.
However, such details must be produced when called for
by tax office.
Is there any restriction for non-residents to claim tax
deductions?
Fixed deduction of `100,000 is available for certain
investment/expenditure irrespective of the residential
status and period of stay in India.
How/where to file the tax return?
Tax return can be submitted either physically or electron-
ically. Physical return can be filed at the tax office having
jurisdiction over the correspondence address mentioned
in the tax data base. Against this, electronic submission
can be made from anywhere through the tax portal
(www.incometaxindiaefiling.gov.in).
What are the consequences for non- filing of the tax
return?
Tax returns need to be filed before due dates failing
which interest at 1% per month would apply on the
pending liability till the period of default. Tax authorities
may also levy a penalty of `5,000.
Is it mandatory for an individual having PAN to file
tax return in India?
Tax returns are mandatory only if the income exceeds
the threshold limit. Hence, an individual having income
below the tax limit or no refund claim from the tax
office need not file the tax returns.
Which are the incomes generally exempt from tax
in India?
The below is an illustrative list of income exempt from
tax:
• Dividend from an Indian company and specified
mutual funds
• Long term capital gains from sale of equity shares/
equity oriented fund provided the transaction has
suffered Securities Transaction Tax (STT)
• Withdrawals from retirement benefits like recognized
provident fund subject to conditions
• Interest from NRE accounts of individuals who qualify
as resident outside India as per FEMA or who are
permitted by RBI to maintain such accounts
• Interest from FCNR deposits of NRs and NORs
• Interest on notified securities/bonds specified by
central Government subscribed in convertible foreign
exchange
Are stock option benefits taxable in India? If yes,
what is the taxation scheme?
Yes, stock option benefits are taxable in two stages.
At the time of allotment by the employer, the benefit
(difference between fair market value and the cost paid
by employee) is taxable as employment income and
the employer has to withhold appropriate tax. On sale
of shares, the resulting profits (difference between sale
value and the fair market value considered by employer)
are taxable as capital gains. The rate of taxation of the
gains will vary based on the holding period and whether
the transaction is subject to Securities Transaction Tax in
India.
Returning Indians – All that you need to know | 63
Stock options are taxable in India at the time
of allotment. If such options are also taxable in
another country, can such taxes be used for set-off
against the taxes payable in India?
Technically, an individual can claim credit in India based
on his/her treaty residence (residential status as per the
provisions of DTAA) and subject to the conditions for tax
relief. One may have to examine the treaty provisions in
detail if taxes are paid in a different year or the benefit is
characterized differently in the other country.
B. FEMA
Under the applicable foreign exchange regulations,
who has general permission to purchase immovable
property in India? Are there any limits on the
number of properties that can be purchased?
General permission under the FDI policy is available to
a person resident outside India who is a citizen of India
(NRI) and to a PIO only for purchase of residential or
commercial property in India. A person resident outside
India cannot purchase agricultural land, plantation
property or farmhouse in India.
There is no restriction on the number of residential or
commercial properties an NRI or PIO can purchase under
general permission.
64
To whom can an NRI sell residential or commercial
property without seeking any specific approval?
An NRI can sell residential or commercial property in
India to a person resident in India or to an NRI or a PIO.
Can a PIO sell residential or commercial property
without any prior approval?
A PIO can sell residential or commercial property in India
only to a person resident in the country. For transfer to
any other person prior approval from the RBI is required.
To whom can an NRI or a PIO sell his agricultural
land, plantation property or farmhouse in India
without any prior approval?
Under general permission, NRI/PIO may sell his agricul-
tural land/plantation property/farm house in India to a
person resident in India who is a citizen of India.
Can an NRI or a PIO mortgage, their residential or
commercial property to an authorized dealer or
housing finance institution in India?
Yes, this is permissible.
Can an NRI or a PIO mortgage their residential and
commercial property in India to a party abroad?
No, this is not permissible. Prior approval of the RBI is
required for such transfer.
Under general permission available what is the
payment mode for the purchase of residential or
commercial property in India by an NRI or a PIO?
Under general permission, an NRI or PIO may purchase
residential or commercial property in India out of funds
remitted to India through the normal banking channel
or funds held in his NRE/FCNR (B)/ NRO account. No
consideration shall be paid outside India.
Can an NRI or a PIO take a loan from an authorized
dealer against the security of funds held in their
NRE Fixed Deposit account/FCNR (B) account for the
purpose of acquisition of flat/house in India for his
own residential use?
Yes, subject to certain terms and conditions as provided
in the applicable provisions of the FEMA regulations.
Can an NRI or a PIO take a housing loan in Rupees
from an authorized dealer or housing finance
institution in India approved by the National
Housing Finance Bank for the purchase of residential
accommodation or for repairs/renovation/
improvement of residential accommodation?
Yes, subject to certain terms and conditions. The borrower
can repay such loans through inward remittance through
the normal banking channel or by debit to their NRE/FCNR
(B)/NRO account or out of rental income derived from
renting out such property. Such loan can also be repaid
by the borrower’s close relatives through their accounts in
India by crediting the borrower’s loan account.
Can an NRI avail of a ‘Rupee’ housing loan from his
employer in India?
Yes, subject to certain terms and conditions.
Can an NRI or a PIO repatriate the sale proceeds of
residential or commercial property in India acquired
through inward remittance via the normal banking
channel or by debit to an NRE/FCNR (B)/NRO
account? If so, what is the quantum?
• In case of sale of immovable property other than
agricultural land / farm house / plantation property in
India, the amount to be repatriated does not exceed:
−− the amount paid for acquisition of the immovable
property in foreign exchange received through
normal banking channels; or
−− the amount paid out of funds held in Foreign
Currency Non-Resident Account; or
−− the foreign currency equivalent (as on the date of
payment) of the amount paid where such payment
was made from the funds held in Non-Resident
External account for acquisition of the property; and
• In the case of residential property, the repatriation of
sale proceeds is restricted to not more than two such
properties.
NRI/PIO may repatriate up to USD 1 million per
financial year (April-March) from their NRO account
which would also include the sale proceeds of
immovable property. There is no lock in period for
sale of immovable property and repatriation of sale
proceeds outside India.
The Rupee loan availed by an NRI for the purchase
of residential accommodation was repaid either by
inward remittance or by debit to the NRE/FCNR (B)
account. Can the sale proceeds of such property be
repatriated?
Yes. Loan repayment in foreign exchange is considered
equivalent to the foreign exchange received for the
purchase of residential accommodation.
Is there any lock-in period for the sale of residential
or commercial property purchased out of inward
remittance/debit to NRE/FCNR (B) account?
No lock-in period is applicable for the sale of such
property.
Is there any restriction on the repatriation of sale
proceeds of residential property purchased by an
NRI or a PIO out of funds remitted to India through
the normal banking channel or funds held in their
NRE/FCNR (B) account?
Yes. The repatriation of sale proceeds is restricted to not
more than two residential properties.
Can an NRI or a PIO rent out residential or
commercial property purchased out of foreign
exchange/Rupee funds, if not required immediately?
Yes. As current income, rent received may be credited to
an NRO/NRE account or remitted abroad.
Can an NRI who had acquired immovable property
- residential or commercial property, agricultural
land, plantation property or a farmhouse - in India
while he was a person resident in India continue to
hold or transfer such immovable property? In which
account should the sale proceeds be credited?
An NRI who had acquired immovable property in India
while he was a person resident in India may continue to
hold such property. Under general permission, he may
Returning Indians – All that you need to know | 65
 transfer through sale or gift, agricultural land/ planta-
tion property/farm house in India to a person resident in
India who is a citizen of the country and may transfer,
through sale or gift, residential/commercial property in
India to a person resident in India or to an NRI or a PIO.
The sale proceeds may be credited to an NRO account.
Can a PIO who had acquired immovable property -
residential/commercial property/ agricultural land/
plantation property/farm house - in India while he
was a person resident in India continue to hold or
transfer such immovable property? In which account
should the sale proceeds be credited?
A PIO is permitted to continue holding the immovable
property in India that was acquired while he was a
person resident in India.
Under general permission, a PIO may:
• Transfer by way of gift or sale, any immovable
property agricultural land, plantation property or a
farmhouse in India to a person resident in India who
is a citizen of the country
• Sell any residential or commercial property in India
to a person resident in India who is a citizen of the
country
• Gift any residential or commercial property in India
to a person resident in India or a person resident
outside India or a PIO.
However, if a PIO is a citizen of Pakistan, Bangladesh, Sri
Lanka, Afghanistan, China, Iran, Nepal or Bhutan, they
should seek prior approval of the RBI for the transfer of
such immovable property in India. The sale proceeds
may be credited to an NRO account.
Can a resident extend local hospitality to a non-
resident?
A person resident in India is free to make any payment
in Indian Rupees towards meeting expenses on account
of boarding, lodging and services related thereto or
travel to and from and within India, of a person resident
outside India, who is on a visit to India.
Can remittance be made under LRS Scheme for
acquisition of ESOPs?
The Scheme can also be used for remittance of funds for
acquisition of ESOPs.
66
Can a resident individual invest in units of Mutual
Funds, Venture Funds, unrated debt securities,
promissory notes, abroad etc., under LRS?
A resident individual can invest in units of Mutual Funds,
Venture Funds, unrated debt securities, promissory
notes, etc. under this Scheme. The resident can invest in
such securities out of the bank account opened abroad
under the Scheme.
Can an individual, who has availed of a loan
abroad while as a NRI repay the same on return to
India, under LRS as a resident?
This is permissible.
Is it mandatory for resident individuals to have PAN
number for sending outward remittances under LRS?
It is mandatory to have PAN number to make remit-
tances under the Scheme.
Can remittances by a resident under the Liberalized
Remittance Scheme be made only in US Dollars?
The remittances can be made in any freely convert-
ible foreign currency equivalent to USD 200,000 in a
financial year.
Can an NRI/PIO/OCI upon becoming resident in
India invest in sectors / businesses allowed for
citizens of India residing in India?
Any person resident in India (other than citizens of
Pakistan, Bangladesh, Sri Lanka, Afghanistan, China,
Iran, Nepal or Bhutan) is allowed to freely make invest-
ments in India (immovable property, securities infrastruc-
ture bonds, commodities, retail sector, etc.) without any
restrictions under FEMA.
Hence, any NRI/PIO upon becoming a person resident
in India in accordance with the definition of ‘person
resident in India’ provided under FEMA can freely invest
in India without any restrictions. (Note: The defintion of
PIO shall be further restricted for certain types of trans-
actions specified under FEMA)
C. SOCIAL SECURITY
Who is an IW?
An International worker is-
• An Indian employee having worked or going to work
in a foreign country with which India has entered
 into a social security agreement [SSA] and being
eligible to avail the benefits under a social security
programme of that country, by virtue of the eligibility
gained or going to gain, under the said agreement.
• An employee other than an Indian employee,
holding other than an Indian passport, working for
an establishment in India to which the Act applies.
‘Excluded employee’ has been defined to be an
International Worker, who is contributing to a social
security programme of his/her country of origin, either
as a citizen or resident, with whom India has entered
into a social security agreement on reciprocity basis and
enjoying the status of detached worker for the period
and terms, as specified in such an agreement.
How many countries does India have a SSA which
is in force?
Currently India has notified SSAs with Belgium,
Germany, Switzerland, Denmark, Luxembourg, France,
South Korea and Netherlands.
When can an IW withdraw the funds from the PF
authorities? How is it different from a domestic
Indian employee?
An IW can withdraw the Funds lying in the PF account
only in the following circumstances-
• On retirement after attaining of 58 years
• As covered by SSA
• Medical grounds
• Restriction of withdrawal from pension funds
In the case of a domestic worker the funds can be
withdrawn
• On retirement at 55 years
• On migration from India
• On being unemployed for a period of 2 months
• For medical reasons
Is the contribution made by an IW to the PF Act
different from that of a domestic employee?
Both the IW as well as the domestic employee would
need to contribute 12% of their base salary towards PF
and pension fund. The employer also needs to make
a matching 12% contribution. The difference is in the
break-up towards PF and pension contribution. This is
highlighted as follows:
For an IW the contributions would be as follows:
Employers Contribution – 12%
• Pension Fund – 8.33%
• Provident Fund – 3.67%
Employees Contribution– 12% towards PF
contribution
For a domestic worker the contributions would be as
follows:
Employers Contribution – 12%
• Pension Fund – 8.33% of `6500 (i.e. `541)
• Provident Fund – balance
Employees Contribution – 12% to Provident Fund
contribution
D. IMMIGRATION
Does a PIO/OCI card holder require a visa for
visiting India?
PIO card holders can visit India without a visa for 15
years from the date of issue of the PIO card. The OCI
card holder can visit India without visa for life.
Whether every foreigner is required to be registered?
A foreign national who holds a valid visa (student,
research, employment, missionary medical and medical
attendant) for a period which is more than 180 days is
required to register himself with the concerned office
within 14 days of his first arrival in India. However in some
locations, a registration is required for E-visa holders.
A foreign national who holds other categories of visa,
including a business visa would not require registration
if he does not intend to stay in India for more than 180
days on each visit. If he intends to stay for more than
180 days on a single visit, he should get himself regis-
tered well before the expiry of 180 days.
Children below 16 years of age do not require registra-
tion, on any type of visa.
Where can a foreigner register himself?
A foreigner is required to get himself registered with
the FRRO (in case of Delhi, Mumbai, Kolkata, Amritsar,
Bengaluru, Chennai and Hyderabad); or
In FRO cum District Superintendents of Police (SP), at
other places where the foreigner intends to stay.
Returning Indians – All that you need to know | 67
Who can get PIO Card?
PIO cards can be obtained under the following
circumstances:
• If a foreign national holds an Indian passport at any
time.
• He/ She or either of his/her parents or grandpar-
ents or great grandparents was born in India or
was permanently resident in India, and provided
that neither was at any time a citizen of any other
specified country (Pakistan, Bangladesh, Afghanistan,
Nepal, Bhutan, China, and Sri Lanka ).
• He/ She is a spouse of a citizen of India, or a person
of Indian origin
• Iranian nationals of Indian Origin can seek PIO card
with the approval of MHA.
What are the documents requiremed to obtain a
PIO card?
The requirements are as follows:
• Previous Indian Passport, or
• Birth Certificate and parents’ Indian passport, or
• Marriage certificate and copy of spouse’s Indian
passport
• Photocopy of the foreign passport presently held
(Front page i.e. photo page and visa page).
• Photocopy of the initial visa, with which registered
with FRRO/FRO cum Superintendent of Police.
• Photocopy of all the pages of Registration certificate
issued by the FRRO/FRO office.
• Four recent passport size photographs.
Who can get an OCI Card?
A foreign national who was eligible to become citizen
of India on January 26, 1950, or was a citizen of India
on or at any time after January 26, 1950, or belonged
to a territory that became part of India after August 15,
1947 and his/her children and grandchildren, provided
his/her country of citizenship allows dual citizenship in
some form or other under the local laws, is eligible for
registration as Overseas Citizen of India .Minor children
of such person are also eligible for OCI. However, if
the applicant had ever been a citizen of Pakistan or
Bangladesh, he/she will not be eligible for OCI.
Whether a person can travel for purposes other
than that covered by the visa?
It is advised that one should always travel with the type
of visa that is most appropriate for the travel purpose.
Immigration officials may deny entry if the type of visa
does not match the purpose of the visit.
68
Can a person hold two active Indian visas at the
same time?
No, the Indian Government will not permit two valid
visas at the same time. The currently active visa will need
to be cancelled upon approval and issuance of a second
visa.
Whether a new visa is required upon a name
change?
One can travel with marriage certificate or proof of
name change if the new passport is yet to be obtained
and the old passport and visa with the prior name have
not expired.
If a new passport has been issued in the new name,
and you still have your previously issued passport (with
a valid visa), please request transfer of visa and submit
a copy of your marriage certificate or proof of name
change. If you do not have your previously issued
passport, please apply for a new visa with your new
passport.
Do children require a visa to visit India?
Yes, all travelers including children must have a valid
visa to travel to India. A separate application for each
child is required. For minors, the parents should sign the
application.
If a child is born to a registered foreigner in India,
can the newly born child be given stay visa?
While in India, the first visa is only granted by the
Ministry of Home Affairs. The foreigner needs to
approach the ministry first and seek visa orders for the
child. The same visa orders would be endorsed by the
concerned FRRO/FRO cum Superintendent of Police on
the passport of the child.
Thereafter, subsequent visa extensions can be made by
FRRO/FRO cum Superintendent of Police on co-terminus
basis to the child’s parents.
What type of visa is granted to the family members
of foreigners holding “E” type (Employment) visa?
Family members are granted “X” (entry) visas, with a
validity co-terminus with the validity of their spouse’s
visa (or for such shorter period as required).
On every approved visa extension of a foreigner on
Employment visa, their spouse and children can seek
visa extension on co-terminus basis.
Useful websites

Sl. No Particulars Website

1 Ministry of Home Affairs www.mha.nic.in
2 Bureau of Immigration www.immigrationindia.nic.in
3 Central Board of Secondary Education cbse.nic.in
4 Council for The Indian School Certificate www.cicse.org
Examinations
5 Department of Education & Literacy http://education.nic.in
6 Department of AYUSH http://indianmedicine.nic.in
7 Indian Railways www.indianrailways.gov.in; www.indianrail.gov.in;
www.irctc.co.in
8 Delhi Metro Rail Corporation www.delhimetrorail.com
9 Bangalore Metro Rail Corporation Limited http://bmrc.co.in
(namma metro)
10 Airports Authority of India www.aai.aero
11 Air India http://home.airindia.in
12 Jet Airways www.jetairways.com
13 Go Airlines (India) Ltd. www.goair.in
14 Indigo http://book.goindigo.in
15 Unique Identification Authority of India http://uidai.gov.in
16 Employees’ State Insurance Corporation http://esic.nic.in
17 Employees’ Provident Fund Organization www.epfindia.com
18 Insurance Regulatory and Development Authority www.irda.gov.in
19 India Post www.indiapost.gov.in
20 Income Tax Department of India www.incometaxindia.gov.in
21 Directorate of Income Tax [e-filing of tax return] https://incometaxindiaefiling.gov.in
22 National Securities Depository Limited www.tin-nsdl.com
23 Ministry of Corporate Affairs www.mca.gov.in
24 Reserve Bank of India www.rbi.org.in
25 Central Board of Excise and Customs www.cbec.gov.in
26 Securities and Exchange Board of India www.sebi.gov.in
27 Maps of India www.mapsofindia.com
28 India Brand Equity Foundation www.ibef.org
29 Justdial www.justdial.com
30 timescity.com http://timescity.com

Returning Indians – All that you need to know | 69

About Ministry of
Overseas Indian Affairs
The Ministry of Overseas Indian Affairs is a young
ministry established in May 2004. It is the focal Ministry
for all matters relating to Overseas Indians comprising
Persons of Indian Origin (PIO), Non-Resident Indians
(NRIs) and Overseas Citizens of India (OCI).
Vision
Proactively engage with Overseas Indians to meaning-
fully serve India.
Mission
Establish a vibrant institutional framework based on
three value propositions:
• Through multi-skilled market driven entities
promoted by the Ministry and managed by
knowledge partners.
• Policy coherence in strategic engagement with
Overseas Indians.
• Enlisting the States as partners in emigration
management and Overseas Indian related initiatives.
70
Objectives
1. Facilitate sustained, symbiotic and strategic engage-
ment of Overseas Indians with India and offer them
a wide variety of services in economic, social and
cultural matters.
2. Extend institutional support for individual initiatives
and community action to harness the knowledge,
skills and resources of Overseas Indians to supple-
ment the national development efforts.
3. Transforming management of emigration through
appropriate domestic interventions and international
cooperation.
4. Optimize service delivery of the Ministry.
5. Improve the Engagement with the professional
bodies/associations of Overseas Indians.
Ministry of Overseas Indian Affairs
Government of India
Akbar Bhawan, Chanakyapuri
New Delhi- 110 021 (India)
Tel : +91 11 24197900 Fax : +91 11 24197919
Email: info@moia.nic.in, Website: www.moia.gov.in
About Confederation of
Indian Industry
The Confederation of Indian Industry (CII) works to
create and sustain an environment conducive to the
growth of industry in India, partnering industry and
government alike through advisory and consultative
processes.
CII is a non-government, not-for-profit, industry led
and industry managed organisation, playing a proactive
role in India's development process. Founded over 116
years ago, it is India's premier business association, with
a direct membership of over 8100 organisations from
the private as well as public sectors, including SMEs
and MNCs, and an indirect membership of over 90,000
companies from around 400 national and regional
sectoral associations.
CII catalyses change by working closely with govern-
ment on policy issues, enhancing efficiency, competi-
tiveness and expanding business opportunities for
industry through a range of specialised services and
global linkages. It also provides a platform for sectoral
consensus building and networking. Major emphasis is
laid on projecting a positive image of business, assisting
industry to identify and execute corporate citizenship
programmes. Partnerships with over 120 NGOs across
the country carry forward our initiatives in integrated
and inclusive development, which include health,
education, livelihood, diversity management, skill devel-
opment and water, to name a few.
CII has taken up the agenda of “Business for Livelihood”
for the year 2011-12. This converges the fundamental
themes of spreading growth to disadvantaged sections
of society, building skills for meeting emerging economic
compulsions, and fostering a climate of good govern-
ance. In line with this, CII is placing increased focus on
Affirmative Action, Skills Development and Governance
during the year.
With 63 offices including 10 Centres of Excellence in
India, and 7 overseas offices in Australia, China, France,
Singapore, South Africa, UK, and USA, as well as institu-
tional partnerships with 224 counterpart organisations
in 90 countries, CII serves as a reference point for Indian
industry and the international business community.
Confederation of Indian Industry
The Mantosh Sondhi Centre
23, Institutional Area, Lodi Road,
New Delhi – 110 003, India
Tel: 91 11 24629994-7
Fax: 91 11 24626149
Membership Helpline :
91 11 43546244 / 91 9910446244
CII Helpline Toll free No:
1800-103-1244
E: info@cii.in • W: www.cii.in
Returning Indians – All that you need to know | 71
About Deloitte

Globally India
Deloitte provides audit, tax, consulting and financial Deloitte is spread across 13 locations and its 18000
advisory services to public and private clients spanning professionals take pride in their ability to deliver to
multiple industries. With a globally connected network clients the right combination of local insight and
of member firms in more than 150 countries, Deloitte international expertise.
brings world-class capabilities and deep local expertise
to help clients succeed wherever they operate. Deloitte’s
more than 182,000 professionals are committed to
becoming the standard of excellence.

Deloitte’s professionals are unified by a collaborative

culture that fosters integrity, outstanding value to
markets and clients, commitment to each other,
and strength from cultural diversity. They enjoy an
environment of continuous learning, challenging
experiences, and enriching career opportunities.
Deloitte’s professionals are dedicated to strengthening
corporate responsibility, building public trust, and
making a positive impact in their communities.

72
About OIFC
The Overseas Indian Facilitation Centre (OIFC) set up by
the Ministry of Overseas Indian Affairs’ (MOIA) in 2007,
in partnership with the Confederation of Indian Industry
(CII), provides facilitation services to the Overseas
Indians, especially for their economic engagement with
India. The OIFC is governed by a Council of prominent
Overseas Indians, Industry leaders and senior policy
makers from the Government.
With the credibility extended under the umbrella of
the Government and an institutional industry chamber,
coupled with the support of a network of ‘Knowledge
Partners’, Indian states, Indian missions and Indian
diaspora associations, the Centre serves as a focal point,
especially, for the diaspora professionals and small/
mid-sized entrepreneurs to build strong inter linkages
with India, enabling them to expand their economic
engagement with India.
Currently OIFC’s activities include, query addressal on
various issues faced by the NRIs & PIOs, a robust online
business networking portal, projection of member
states’ projects, 16 X 5 live facilitation services, road
shows through investors interactive meets in various
countries, Market Place business forums in India and
overseas, and a Global Indian Network of Knowledge
portal.
Overseas Indian Facilitation Centre
C/o Confederation of Indian Industry
249-F, Sector 18, Udyog Vihar, Phase IV
Gurgaon-122 015. Haryana (India)
Tel: +91 124 401 4055/56 • Fax +91 124 430 9446
Email : oifc@cii.in • Website: www.oifc.in
Returning Indians – All that you need to know | 73
Key contacts

Ministry of Overseas Indian Affairs Reserve Bank of India Securities and Exchange Board of India
Akbar Bhawan, Central Office Building, Plot No.C4-A,'G' Block, Bandra Kurla Complex,
Chanakya Puri, 18th Floor, Shahid Bhagat Singh Road, Bandra (East),
New Delhi – 110021 Mumbai-400 001. Mumbai- 400051
Phone: 91 11 24197900 Website: www.rbi.org.in Phone: 91 22 26449000 / 40459000
Fax: 91 11 24197919 Fax : 91 22 26449016-20 / 40459016-20
Email: info@moia.nic.in Passport Office Email : sebi@sebi.gov.in
website: www.moia.gov.in Trikoot - 3, HUDCO Building, Website: www.sebi.gov.in
Bhikaji Camaji Place,
Confederation of Indian Industry R.K.Puram Ministry of Corporate Affairs
CII Headquarters, New Delhi – 110066 'A' Wing, Shastri Bhawan,
Mantosh Sondhi Centre, Phone : 91 11 26187075 / 26166292 / Rajendra Prasad Road,
23, Institutional Area, Lodi Road, 26192409 New Delhi - 110 001
New Delhi - 110003 Fax - 011-26165870 / 26161783 Phone: 91 11 23384158, 23384660,
Phone : 91 11 24629994 - 7 Email: rpo.delhi@mea.gov.in 23384659
Fax :91 11 24626149 / 24633168 Website: www.passport.gov.in Email: hq.delhi@mca.gov.in, oandm.dca@
Email : info@cii.in sb.nic.in
Website: www.cii.in National Securities Depository Limited Website : www.mca.gov.in
3rd Floor, Sapphire Chambers,
Overseas Indian Facilitation Centre Near Baner Telephone Exchange, Department of Commerce
C/o Confederation of Indian Industry, Baner, Pune - 411 045. Udyog Bhawan,
249- F, Sector 18, Udyog Vihar, Phone: 91 20 2721 8080 New Delhi - 110 01.1
Phase IV, Gurgaon -122 015, Fax: 91 20 2721 8081 Phone: 91 11 23062261
Phone: 91 124 4014055 Email: tininfo@nsdl.co.in Fax: 91 11 23063418
Fax: 91 124 4309446 Website: www.tin-nsdl.com Website: www.commerce.nic.in
Email: oifc@cii.in
Website: www.oifc.in Ministry of Home Affairs Insurance Regulatory and Development
North Block, Authority
Ministry of External Affairs Central Secretariat, 3rd Floor, Parisrama Bhavan,
A - Wing, Shastri Bhavan, New Delhi - 110 001 Basheer Bagh,
New Delhi - 110001 Phone: 91 11 23092161 / 23092011 Hyderabad - 500 004
Phone: 91 11 23383371 / 3373 Fax: 91 11 23093750 / 23092763 Phone:91 40 23381100
Fax: 91 11 23384319 Email: websitemhaweb@nic.in Fax: 91 40 6682 3334
Email: jsxp@mea.gov.in / usxps@mea.gov.in Website: www.mha.nic.in Website: www.irda.gov.in
Website: www.mea.gov.in
Office of the Director General of Foreign Investment Promotion Board
Ministry of Finance Income Tax (Systems) Department of Economic Affairs,
North Block E-2 ARA Centre, Ground Floor, North Block,
New Delhi - 110 001 Jhandewalan Extn New Delhi – 110001
Phone: 91 11 23092947 New Delhi 110055 Phone: 91 11 2309 5123/4031
Website: www.finmin.nic.in Phone: 91 124 2438000 Website: www.fipbindia.com
Email: ask@incometaxindia.gov.in
Department of Industrial Policy & Promotion Website: www.incometaxindiaefiling.gov.in
Udyog Bhawan,
New Delhi - 110 011
Phone: 91 11 2306 1204 / 2306 1222-29
Fax : 91 11 23062626
Website: www.dipp.nic.in

74
Returning Indians – All that you need to know | 75
Overseas Indian Facilitation Centre
C/o Confederation of Indian Industry, 249-F, Sector 18, Udyog Vihar, Phase IV, Gurgaon-122 015. Haryana, India
Tel: +91 124 401 4055 / 56, Fax: +91 124 430 9446; Email: oifc@cii.in ; Website : www.oifc.in

The Publication has been prepared by Deloitte on behalf of OIFC.

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