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FACILITIES FOR LOANS OVERDRAFTS TO NRIs
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NRIs can avail of the facility of loans/overdrafts against the security of their fixed deposits in NRE/FCNR accounts.
Such loans/overdrafts can be granted uupto any limit either for non-investment in India on non-repatriation basis in specified areas.
Such loans/overdrafts are granted to the extent of 75% of the deposit amount and generally at a rate of 2% over the interest rate payable on the fixed deposit against which loan is granted. However, if the loan/overdraft is repaid from local rupee resources, interest would be chargeable at the normal commercial bank rate.
The repayment of loan and the payment of interest thereon can be made either by way of fresh remittances from abroad or out of the maturity proceeds of the borrower's NRE/FCNR deposits or even out of local rupee resources held in the NRE account of the borrower.
The facility of granting loans and overdrafts against security of fixed deposits of the NRI in his NRE/FCNR accounts can also be extended to residents of India, if the NRI depositor agrees to pledge his fixed deposits to enable the resident individual/firm/company to obtain the facility.
The rate of interest in case of such credit facilities to the residents would be the normal commercial bank rate.
The above referred facilities of loans/overdrafts can also be availed of against the security of NRI Bonds or the India Development Bonds issued by the State Bank of India.
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IMPORT OF FOREIGN EXCHANGE BY VISITING NRI's
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Until November, 1991, any person bringing into India foreign exchange in the form of foreign currency notes and travellers cheques in excess of U.S.$ 1,000 or equivalent thereof in any other foreign currency was required to submit a declaration to the Customs Authorities on the Currency Declaration Form at the port of entry in India. This limit has since been increased to U.S.$ 10,000 or its equivalent. Keeping this in mind, NRIs visiting India and carrying foreign currency notes and/or travellers cheques of U.S.$ 10,000 or equivalent in any other foreign currency, should submit the relevant Customs Declaration on their arrival in India.
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TAX PLANNING TIPS FOR RESIDENTIAL STATUS
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The following practical tips can be borne in mind to avail benefits of tax planning in the context of residential status:
- An individual planning to go abroad for employment during a financial year should attempt to do so if possible by 28th September of the financial year, so that his stay in India during that year is restricted to less than 182 days and he qualifies for the status of a Non-Resident.This would ensure that the income earned by him outside India during the remaining part of the financial year does not attract liability to Indians Income Tax.
- An individual who is abroad and comes on a visit to India can plan his stay in India up to 181 days during the financial year and still maintain his status as a 'Non-Resident'.
- In case an individual coming from abroad on a visit desires to stay in India for a continuous stretch up to 362 days without disturbing his Non-Resident status, the same can be done by overlapping the stay in two financial years in a manner that in each year he stays in India for a period not exceeding 181 days.Thus, he can plan a continuous stay from the first week of October of one year to the last week of September of the other year, without losing his non-resident status.
- Having remained a Non-Resident for at least two years in succession, even if the individual becomes a Resident in the third year
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