The expression Non-resident Indian or an NRI is used both under the Income Tax Act and FEMA. However, there is a great difference between the meaning of both the expressions. Sometimes, a person may be NRI under the I.T. Act but he may not NRI under the FEMA or vice versa. This is because NRI, i.e., an Indian Resident outside India under FEMA is treated differently now than he used to be under FERA. As regards the definition of the expression “Non-resident” under the I.T. Act. The expression used under FEMA is “person resident outside India”. Thus, Section 2(w) of FEMA defines a “person resident outside India” as a person who is not a resident in India. Hence, it becomes very important for us to know the meaning of the expression “a person resident in India”. As per Section 2(v) of FEMA a person resident in India means —
- a person residing in India for more than one hundred and eighty- two days during the course of the preceding financial year but does not include—
(A) a person who has gone out of India or who stays outside India, in either case—
(a) for or on taking up employment outside India, or
(b) for carrying on outside India a business or vocation outside India, or
(c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
(B) a person who has come to or stays in India, in either case, otherwise than —
(a) for or on taking up employment in India, or
(b) for carrying on in India a business or vocation in India, or
(c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;
(ii) any person or body corporate registered or incorporated in India,
(iii) an office, branch or agency in India owned or controlled by a person resident outside India,
(iv) an office, branch or agency outside India owned or controlled by a person resident in India.
Thus, the residential status of a person under FEMA depends on his residential status in the preceding financial year. Thus, Section 2(v) (i) incorporates the text of a person having resided in India for more than 182 days during the preceding financial year. Hence, a person would be deemed to be a resident of India, if he goes abroad but without taking up the employment or without carrying on business or vocation outside India. Likewise, if a person who was resident in India, for more than 182 days in the preceding financial year goes abroad to stay with his relatives, he would continue to be a resident of India unless he obtains a “permanent resident visa or a citizenship of a foreign country”. For conclusive proof that a person is a resident outside India under FEMA, he should take up employment outside India or carry on outside India any person or profession or vocation. An Indian citizen who is a Nonresident as per the definition of Section 2(w), i.e. who does not come under the definition of “Person Resident in India” as per Section 2(v) of FEMA is an NRI and will also include a Non-resident person of Indian origin. Persons of Indian Origin (PlO) Card Scheme was launched on 31St March, 1999 for conferring advantage to an estimated 15 million PIOs. Persons of Indian Origin settled in countries other than Pakistan, and Bangladesh will be issued PlO cards that would exempt them from the requirement of a visa to visit India. This scheme treats them on par with other NRIs in respect of facilities under FEMA. A PIO Card is valid for a period of twenty years subject to validity of the passport of the applicant. The persons eligible for issuance of PIO Cards would include the persons who at any time held an Indian passport, or either of grand parents or great grand parents were born in and permanently resident in India or who is a spouse of a citizen of India or a PIO as mentioned earlier. Generally speaking, the expression NRI under the I.T. Act and Persons Outside India or NRI under the FEMA are used interchangeably but the distinction based on a number of days in the preceding year under the current year under the FEMA and the I.T. Act as explained earlier and above should be noted very carefully by every NRI.