NRI Glossary

Commonly used terms for NRIs

Aadhaar Card:

What is an Aadhaar Card ? A unique identification card issued by the Indian government that contains biometric and demographic information, required for various services and subsidies.

Capital Gains Tax:

What is Capital Gains Tax? The tax levied on the profit earned from the sale of assets such as property, stocks, or bonds, which may be applicable to NRIs depending on the specific circumstances.

Capital Account:

What is a Capital Account? The record of financial transactions involving the purchase and sale of assets such as property, securities, and investments, affecting an NRI's overall net worth.

DTAA (Double Taxation Avoidance Agreement):

What is DTAA (Double Taxation Avoidance Agreement)? An agreement between India and another country that aims to prevent the NRI from being taxed twice on the same income by both countries.

Domicile:

What is Domicile? A person's permanent legal residence, which determines their eligibility for certain benefits and legal obligations in their home country.

Estate Planning:

What is Estate Planning? The process of organizing and managing one's assets and affairs to ensure the smooth transfer of wealth to beneficiaries, including NRIs' properties and investments.

FCNR (Foreign Currency Non-Resident) Account

What is an FCNR (Foreign Currency Non-Resident) Account? A type of bank account in which NRIs can hold their foreign income in a designated foreign currency, allowing them to freely repatriate funds.

FATCA (Foreign Account Tax Compliance Act):

What is FATCA (Foreign Account Tax Compliance Act)? A United States law that requires financial institutions outside the U.S. to report information about accounts held by U.S. citizens or residents, including NRIs.

FBAR ( Foreign Bank Account Report):

What is FBAR ( Foreign Bank Account Report)? The Foreign Bank Account Report (FBAR) is an annual report that all U.S. citizens, residents, and certain other persons must file with the United States Treasury Department in which the person has a financial interest in, or signature authority over, a financial account in a foreign country .

FEMA (Foreign Exchange Management Act):

What is FEMA (Foreign Exchange Management Act? Legislation enacted by the Indian government to regulate foreign exchange transactions, including those related to NRIs.

FEMA Compliance:

What is FEMA Compliance? Adhering to the regulations and guidelines outlined by the Foreign Exchange Management Act (FEMA) to ensure legal and transparent financial transactions for NRIs.

FDI (Foreign Direct Investment):

What is FDI (Foreign Direct Investment)? Investment made by NRIs or foreign entities in Indian businesses, contributing to the economic growth and development of the country.

Foreign Remittance Certificate (FIRC):

What is Foreign Remittance Certificate (FIRC)? A document issued by an authorized bank in India as proof of inward remittances received from abroad, often required for various financial transactions.

Inflation:

What is Inflation? The rate at which the general level of prices for goods and services is rising, which can impact the purchasing power of NRIs' income and investments

Legal Heir Certificate:

What is Legal Heir Certificate? A document issued by the competent authority that establishes the legal heirs of a deceased person, often required for property inheritance and other legal matters.

Mutual Funds:

What is Mutual Funds? Investment vehicles that pool money from multiple investors to invest in a diversified portfolio of securities, offering NRIs an opportunity to participate in the Indian financial markets.

NPS (National Pension System):

What is NPS (National Pension System)? A voluntary pension scheme launched by the Indian government to provide retirement income to individuals, including NRIs, after their working years.

NRE (Non Resident External) Account:

What is NRE (Non-Resident External) Account? A type of bank account where NRIs can deposit and maintain their foreign income in Indian Rupees, providing them with easy repatriation and tax benefits.

NRI (Non-Resident Indian):

What is NRI (Non-Resident Indian)? An Indian citizen living abroad for employment, business, or education purposes.

OCI (Overseas Citizen of India):

What is OCI (Overseas Citizen of India)? A foreign citizen who has acquired citizenship of another country but still holds the right to certain benefits in India.

PAN (Permanent Account Number):

What is PAN (Permanent Account Number)? A unique ten-digit alphanumeric identification number issued by the Indian Income Tax Department, necessary for financial transactions and tax purposes in India.

PIO (Person of Indian Origin):

What is PIO (Person of Indian Origin)? A foreign citizen who can trace their roots back to India through either themselves or their ancestors.

PFIC (passive foreign investment company):

What is PFIC? The IRS defines a passive foreign investment company (PFIC) as a non-U.S. entity that either earns 75% or more of its gross income from non-business operational activities .

Power of Attorney (POA):

What is Power of Attorney (POA)? A legal document that authorizes a person (the attorney) to act on behalf of another person (the NRI) in various matters, such as property management or financial transactions.

Remittance:

What is Remittance? The transfer of money from a foreign country to the home country of an NRI, usually for family support or investment purposes.

Resident Indian:

What is Resident Indian? An individual who resides in India for more than 182 days in a financial year or 60 days in a year and 365 days in the previous four years, making them liable for taxation in India.

Repatriation:

What is Repatriation? The process of transferring funds or assets from a foreign country back to the NRI's home country, often subject to specific rules and regulations.

Repatriable and Non-Repatriable Assets:

What is Repatriable and Non-Repatriable Assets? Repatriable assets are those that NRIs can freely transfer or take back to their home country, while non-repatriable assets have restrictions on repatriation.

SIP (Systematic Investment Plan):

What is SIP (Systematic Investment Plan)? An investment strategy in which NRIs can invest a fixed amount regularly in mutual funds to achieve long-term financial goals.

Tax Residency Certificate (TRC):

What is a Tax Residency Certificate (TRC)? A document issued by the tax authorities of a country to determine the tax residency status of an individual or entity, often required by NRIs to claim benefits under the DTAA.

Transfer of Residence (ToR):

What is Transfer of Residence (ToR)? A scheme that allows NRIs returning to India to import their personal belongings and household goods duty-free or at a reduced customs duty.

Tax Deducted at Source (TDS):

What is Tax Deducted at Source (TDS)? A system in which tax is deducted by the payer (e.g., employer, bank) at the time of making payments to the NRI, ensuring compliance with income tax regulations.