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NRI - Non-Resident Indian

Non-Resident Indians are those Indians who live outside of India. NRI is an abbreviation for Non-Resident Indian. An NRI is an Indian citizen who spends more than 183 days working or doing business in another country in a financial year. As per the Income Tax Act of 1961 and the Foreign Exchange Management Act of 1999 (FEMA), NRI must follow specific laws.

NRI - Non-Resident Indian

FEMA's definition of a resident differs from the Income-tax.

FEMA does not define "financial year," but it is presumed to refer to the period from April 1 to March 31.

The Income Tax Act needs 182 days of physical presence, whereas FEMA demands 183 days.

The Income Tax Act considers a person's physical presence during the current fiscal year, whereas the Federal Emergency Management Agency considers physical presence during the previous fiscal year.

NRI definition according to Income Tax Act

The Income Tax Act does not clearly define NRI. Income tax Section 6 of the IT Act, 1961 has law and specification that defines Resident of India. And anything beyond that person would be considered a non-resident. If an individual's taxable Indian income reaches Rs 15 lakh, they are considered a resident unless the following conditions are met:

  • Visited India for at minimum 120 days in the prior year
  • Has spent at least 365 days in the country in the preceding four years

A person's status as a resident or non-resident is determined by the length of time he spends in India. The size of stay is measured in days for each fiscal year, from April 1 to March 31. (Known as a previous year under the Income-tax Act).


In any previous year, an individual will be classified as a Resident in India if they

  1. spends at least 182 days in that year,
  2. OR at least spend 365 days in the four years earlier that year and at minimum 60 days in that year.

Individuals who do not meet both criteria mentioned above will be classified as "Non-Resident" for the preceding year.

For the following instances, the definition of Resident is safe by omitting Condition 2 (i.e., only Condition 1 applies):

  • If an Indian citizen moves outside India for doing the job or as a crew member of an Indian ship in any calendar year,
  • An Indian citizen or a person of India who is originally from India works outside India and visits India. It should be noted that a person is considered of Indian ancestry if their parents or any grandparents were born in undivided India.

"Resident and Ordinarily Resident" and "Resident but Not Ordinarily Resident" are two different types of residents.

If BOTH of the following conditions are met, a person residing in India is considered "Resident and Ordinarily Resident."

  • 9 out of the previous 10 years had been spent in India, AND
  • They must have spent at least 730 days in India during the seven years preceding that year.

If any of one condition is not met, the person is classified as "Resident but not Ordinarily Resident."

Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and Persons of Indian Origin (PIOs) are the three major categories under which people from abroad are classified.

What are the differences between PIOs and OCIs?

Persons of Indian Origin refer to an Indian by descent or birth who live outside India (PIO). People with passports from countries other than China, Bhutan, Afghanistan, Bangladesh, Pakistan, Nepal, and Sri Lanka had previously been issued an identification card. Nonetheless, on January 15, 2015, the Indian government discontinued the PIO Card Scheme and merged it with the OCI Card Scheme. An Overseas Citizen of India (OCI) is a person who lives outside of India. Except for Pakistan and Bangladesh, they have lifetime visas.

Criteria for Eligibility

Before engaging in legal activities in India, NRIs and OCI cardholders must meet specific criteria. Any NRI's proof of identity is a must-have document. The following is a list of the requirements:

Indian Passport: If NRI's are non-resident Indian citizens, they must have a passport issued by the Indian government.

Citizenship: As an NRI, they must be an Indian citizen under the Citizenship Act of 1955. Either their parents or grandparents must be Indian citizens. Simply put, either they or their parents or grandparents must be citizens of India.

Spouse: NRI's must be the spouse of an Indian citizen who meets the qualifications listed above.

In India, how do NRIs obtain insurance?

If the insured dies during the policy, the insurance policy will offer financial stability to the nominee. It not only protects their family financially, but it also helps them meet the demands of their family.

The main thing to remember about term insurance is that it provides the best profits with the lowest costs. Furthermore, it is a cost-effective and long-term strategy. Non-Resident Indians, as well as Indian citizens, are eligible to apply. There are two ways to challenge the policies.

An individual can purchase the policy during their visit to India. After the legal processes associated with the capitalization of the insurance policy are completed, their policy will be treated like any other policy claimed by Indian citizens.

Using the Mail Order Business, they can even purchase the insurance right from sitting in their home. The policy will be confirmed by an official lawyer from the Indian Embassy and an Indian ambassador. NRI students can also apply with the help of their respective deans.

Rules and elements of NRI Insurance plans

Many insurance companies in India offer their insurance plans for NRIs as well. However, their terms and conditions may differ slightly from regular Indian residents.

Policy Term- The policy period for an NRI may range from 6 months and extend up to 25 years. They can get insurance from the age of 18 to the age of 60. The policy term is subjected to the terms and conditions given in the policy.

Premium - The NRI insurance policy does not have a set premium. The premium, or initial payment, is determined by several elements, including the policy term, the amount of coverage guaranteed, the premium payment regulation, and the rider's options selected if any.

Sum Assured - The guaranteed amount for an NRI term might range from millions to crores. When the insured passes away during the insurance period, the sum assured will be paid to the nominee of the insured NRE account.

Grace Period - One of the benefits of NRI plans is that they are given a grace period if NRI's miss their premium payment deadline. Their policy will not be terminated if they pay the remaining premium amount within this time frame.

Policy Renewal - NRI will be provided with insurance policies renewed at the end of the term. The insured must pass many health-related examinations and meet the required renewal criteria to complete this process. They also need to maintain an exceptional track record of paying premiums on time with no delays or dues.

Payment of Premium Amount - As a Non-Resident Indian, they have the option of paying their premium using Internet banking. The policyholder must have an account with any accepted bank that allows internet transactions with the insurance business where they purchased the policy. When making a premium payment, an NRI should be well-versed in all of the terms and conditions of online banking. The online payment options are settlement in foreign currency, an NRE/FCNR bank account, and an NRO bank account.

Tax benefits- NRIs, like Indian residents, are eligible for tax incentives under Section 80 D of the Income Tax Act of India. Some countries, however, may levy a tax on maturity earnings.

Documents Required

To finish the procedure, the insurance company may require several documents, such as a proposal form, proof of identity, a passport copy with attestation, a health status report, and so on. When NRI buys a policy from a mail-order company, the insurance provider may ask for additional documentation like an application form, a copy of their passport, proof of income, and any other evidence of age and address may be required.

NRI's have two choices for submitting a report on medical issues. One can do them in India, and the other can do them where they live and submit the data to the insurer. Several insurance firms can categorize people's lives by determining premiums and coverage. NRI's should check with the insurer to see whether additional documents are required.

NRI's can live a secure and peaceful life in India as a Non-Resident Indian and Overseas Citizen of India. There are numerous options available. The policy information will be better utilized to ensure security for them and their family in India.

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