When it comes to NRIs, there are plenty of misconceptions. These are a result of ignorance. However, there is no point in continuing to live in a “blunderland” and it is time to come out of the cloud of ignorance. While the number of common misconceptions regarding NRIs is numerous but we have decided to deal exclusively with some common ones. Just check out what they happen to be.
NRIs Don’t Have To Pay Taxes
There is a myth that NRIs don’t require to pay any tax, which is true only with the income they earn abroad. However, they are liable to pay taxes for the revenues earned in India. For example, the rent they receive from their own properties in India, salary earned for services offered in the country, revenue earned from any business entity owned by them etc. So, it is incorrect to say that NRIs don’t have any tax liability in India.
NRIs Can Give Power Of Attorney Only To Their Relatives
This is another misconception regarding NRIs. The Indians based abroad can give the power of attorneys to anyone they trust. There is no strict rule that the document can only be given to relatives. But it must be remembered that banks and certain organizations have a regulation regarding who can be given the power of attorney. Hence, they should read and understand the norm pertaining to the grant of power of attorneys while dealing with these banks or organizations.
NRIs Are Not Eligible To Get Loan In India
There goes another fallacy that NRIs cannot get loans from Indian banks. The reality is that they can get loans for cars or houses from banks operating in India. But there are some additional riders attached as far as NRIs are concerned regarding availing loans compared to Indian residents. Transferring or issuing power of attorney becomes pertinent in the matters of loans and for this reason, the entire process sometimes becomes arduous. NRIs can even apply for loans along with an Indian resident but based on the place the NRI is residing the entire procedure can alter.
NRIs Cannot Lay Their Hands On Indian Stocks And MFs
NRIs can have three types of bank accounts in India: NRE, NRO & FCNR. It is only with the NRO account that NRIs have a tax liability, while the other two are tax-free. Now coming to the theory that NRIs cannot invest in mutual funds or stocks in India, is actually a wrong notion. They are free to invest in these domains using their NRE/NRO account, which is linked with the Demat account. But, NRIs from Canada or the US have some restrictions in terms of mutual fund investments because of Foreign Account Tax Compliance Act (FATCA) regulations.
Hope the above-mentioned points have helped clear some general misconceptions regarding NRIs. However, while investing or taking a loan, NRIs are advised to read the rules and regulations thoroughly before committing themselves to these things.