A Non-Resident Indian (NRI) is a person who resides in India for less than 182 days in one financial year and is an Indian citizen. An individual is deemed to be a resident if (A) Individual has resided in India in that year for 182 days or more or (B) Having within the 4 years preceding that year been in India for 365 days or more and is in India for 60 days or more in that year. In simple words, a person of Indian origin who is permanently residing out of India or an Indian citizen who has migrated to another country is called NRI.
Now, it is being reported that DTC (The New Direct Tax Code) is all set to replace the Income Tax Act 1961, accordingly the 182 days requirement has been reduced to 60 days. This can change the criteria of being an NRI but has not been implemented yet. As per provisions in the Direct Tax Code, NRIs become residents in India if their stay exceeds 60 days. Section 6 of the Income-tax Act 1961 defines NRI as an individual who is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding that year. By the end of the financial year 2019-2020, NRIs included those who stayed in India for the period of 182 days in one year, whereas Finance Act 2020 reduced this period to 120 days for all NRIs.
According to sec 6 of the Act, the criteria of 120 days shall apply only to those NRIs whose income is more than 15 lakhs, for those who earn up to 15 lakhs in one financial year, will continue with the earlier criteria of 182 days.
Generally, an NRI is the one who stays out of India for the purpose of employment or any other purpose for eg business purposes, indicating uncertainty of the period to stay out of India. Under the Indian Foreign Exchange Regulations, Indian students studying out of the country are treated as NRIs and are eligible for all the facilities determined for NRIs.
The criteria list describes three essential documents as the proof of identity for an NRI. Firstly, it is essential for an NRI to hold a passport issued by the Indian government, secondly, under the Act of Citizenship, 1955, you need to be a citizen of India also: either parents or grandparents must be a citizen of India, thirdly, you should be the spouse of an Indian citizen or a person with the criteria mentioned above.
If all the above-mentioned criteria are fulfilled and the person of an Indian origin has migrated to another country for one of the reasons as stated above, he can be termed as an NRI and shall be entitled to all the facilities provided to the NRIs in terms of taxation, property matters etc. He can hold various identity cards provided by the government such as Aadhaar Card or Voters ID and earn from India as well.
