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GIFT City IFSC: India’s Global Financial Hub & Investment Gateway

GIFT City has emerged as a major investment and financial hub, designed to offer NRIs, OCIs, PIOs, and global investors an efficient gateway to invest in India or internationally. The city offers a transparent, tax-efficient, and globally competitive platform for financial services, banking, fund management, securities trading, and real estate investments. With its unique SEZ and DTA structure, regulated by IFSCA, GIFT IFSC provides a flexible regulatory environment, making it attractive for cross-border financial activities while remaining physically located within India. ExpertNRI serves as a trusted GIFT City investment consultant in India, guiding investors to maximize opportunities in GIFT IFSC.

Origin and vision of GIFT IFSC

In 2007, then Chief Minister of Gujarat, Narendra Modi, announced the establishment of an International Financial Services Centre in Gujarat (IFSC) with an aim to create a world-class financial hub that could compete with other centers like London, New York, Hong Kong, Dubai, Singapore, Mauritius, etc. and the Gujarat International Finance Tec-City (GIFT City) was born. GIFT City includes both a Domestic Tariff Area (DTA) and a Special Economic Zone (SEZ). The SEZ area is designated as the GIFT International Financial Services Centre (GIFT IFSC). While the DTA caters to domestic business activities, the SEZ is focused exclusively on international financial services. GIFT IFSC is regulated by an independent regulator, the International Financial Services Centres Authority (IFSCA), which has been established to develop and regulate the financial services market in the IFSC across banking, capital markets, fund management, insurance, leasing, and related services.

Regulatory and structural framework of GIFT City

While GIFT IFSC is located within India, it is considered as out of India jurisdiction for regulatory purposes. A lot of benefits and concessions in income tax, GST, Stamp Duty, FEMA, SEBI, etc. are available for entities established in GIFT IFSC and to investors using GIFT IFSC to invest in various financial securities. There has been a great push by the regulator as well as the government of India to promote GIFT IFSC as well as interest from NRIs or PIOs or OCIs to use GIFT IFSC to invest in India or globally.

Growth of the GIFT IFSC ecosystem

As of March 31, 2025, 29 banks, 83 broker/dealer, 161 Fund Management, 229 AIFs/Schemes have been registered. In addition, 5 payment service providers, 33 aircraft leasing entities, 24 ship leasing entities, 45 Insurance and Insurance Intermediaries, 91 Ancillary service providers and others with a total of 865 have already registered with IFSCA with more than 25% got their registrations approved in last 1 year.

Investment environment and banking facilities

In GIFT IFSC, the transactions take place in any currency except INR. Various investment options are available for GIFT city. Any PROI (NRI or OCI or PIO or Foreigner) can open a bank account and invest in any deposit accounts with any banks set up in GIFT IFSC. The interest rates are not regulated and the banks are allowed to keep interest rate as per the situation, circumstance, interest rate environment, internal demand/supply of foreign exchange. The deposits can be created for 7 days to even 10 years. The RBI cap limit for interest and tenure related to FCNR deposit account does not apply to the banks in IFSC.

Exchanges and listed securities in GIFT IFSC

There are mainly 3 exchanges in GIFT IFSC: IndiaINX (of BSE), NSE IX (of NSE) and IIBX (Bullion Exchange). Gain or loss on securities listed on these exchanges are not subject to income tax in India. As currently, only derivatives are listed on these exchanges, the income would be in the nature of business income and there is a income tax exemption for income earned (for 10 years in a block of 15 years) by entities set up in IFSC.

India-bound investment structures

For inbound investing, various funds have been set up are in the process of being set up. They can mainly be categorized as master fund, feeder fund or retail fund. The retail fund has not been active yet. The feeder fund is used by existing MF, PMS or AIF players to feed the funds raised through GIFT IFSC fund into their existing funds. Master funds are the funds that directly invest or trade in securities listed in India. Any non-resident (NRI, PIO, OCI, Foreigner) is allowed to invest in any India bound fund. However, an Indian resident is not allowed to invest in such funds.

Global investment opportunities through GIFT IFSC

An NRI or PIO or OCI can invest in funds that invest globally and are registered in GIFT IFSC. Indian residents can also invest out of India through a global access platform available in GIFT IFSC under LRS. The regulations relating to Global Access are being updated and currently, a consultation paper has been issued recently. The revised regulations are expected to come out in 3-6 months.

Real estate framework in GIFT City

All immovable properties in GIFT City are available on lease hold basis for 99 years. Many Investors are also looking for investments in residential or commercial properties on the long-term lease basis.

Tax treatment for non-residents and residents

Income from investments in GIFT IFSC could be rent interest, dividend, profit (or loss) on trading of securities or capital gain. There is no Income Tax, Capital Gains Tax for non-resident investors or funds on the interest, dividend, or business income on trading of securities listed on exchanges in GIFT IFSC. So NRIs or PIOs or OCIs looking for investing in funds that invest in direct shares of Indian companies would be subject to long term and short-term capital gains. However, the investors may not have to pay any tax as the tax will be paid at the fund level. Any fund that invests or trades in derivative instruments listed on exchanges in GIFT IFSC, there won’t be any tax on the business income. So, such funds will be able to pass on the tax saving to the investors. NRI, PIO or OCI Investors in mutual funds set up as a feeder fund in GIFT IFSC are currently enjoying the true tax-free income as there is no capital gain in GIFT IFSC and the mutual funds in India are exempt from tax for buying and selling of securities in India. As global income is taxable for an Ordinary Resident, income from GIFT IFSC would also be subject to income tax in India for Ordinary Residents.

GIFT City IFSC stands out as India’s strategic financial gateway, providing a tax-efficient, flexible, and globally aligned platform for domestic and international investors. With its growing ecosystem, multiple investment avenues, offshore regulatory status, and long-term real estate opportunities, GIFT IFSC continues to attract global capital and facilitates seamless investment in India and beyond. This makes it a key pillar in India’s financial infrastructure, bridging global investors with the country’s expanding markets and contributing significantly to the growth of India’s international financial services landscape.

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How To Get The Best Exchange Rate For INR Transfers

Foreign currency conversion is often treated as a routine banking activity, but in reality, it is one of the most profitable business segments for banks and money exchangers. Whether you are an NRI sending money to India, a resident receiving international funds, or someone managing large cross-border transfers through NRE or NRO accounts, the exchange rate you receive can make a massive difference to your final value. A small difference of a few paisa per dollar can translate into lakhs of rupees for high-value transactions. Understanding how rates are determined, how banks price foreign exchange, and how to negotiate effectively can help you retain more of your own money instead of losing it to hidden margins. This makes understanding bank accounts and exchange rates a critical part of planning any high-value cross-border transaction.

The business of foreign exchange: Why rates matter

Conversion of foreign currency is a very lucrative business for banks and money exchangers. The foreign exchange rates are determined based on the demand and supply of currencies in the whole world and change in real time. The bank’s treasury tracks these rates and based on the currency requirements for the day, determines IBR (Inter Bank Rate), which is also real time and closely follows the international rates. IBR usually indicates the bank’s cost for buying and selling foreign exchange and may be different among banks. This makes the treasury function the most critical point of control for pricing foreign exchange within a bank. The closer your deal is to the live IBR, the lower the hidden cost you bear.

Card rate vs. IBR: Where you lose money

Every bank publishes card rates for the respective currency on a daily basis. Card rates are derived based on the previous day’s closing rate, any fluctuations after the market was closed and expected fluctuations during the day. This is the rate, at which, if any foreign exchange is converted, the bank would make the maximum profit. If the spread between the card rates for buying and selling USD is 3 rupees (which generally is the case); it would be reasonable to assume that the IBR is at centre and there is a profit of Rs. 1.50 per USD on either side. During high volatility periods, the spread could be even higher. While the card rate reflects maximum margin for banks, they do negotiate for a better rate based on the type of client and amount of remittance. For customers, the card rate should never be treated as the final rate. It is only the starting point for negotiation.

Real-life example: Small vs. large remittance

For example, if Mr. Biswajit transfers US $8,000 every month, he may not get any beneficial rate and the remittance may be converted at the card rate only.

However, if Ms. Shuk, a PIO from China, transfers US $100,000, she could get a better rate because of the volume. If she is not aware about the IBR, she would be satisfied with even 20 paisa better than the card rate instead of conversion at IBR-10 paisa, which is usually the case.  If the difference between the card rate and IBR is 150 paisa, she could have saved 140 paisa i.e. an additional INR 140,000.

Even if Ms. Shuk is smart or has the right advisor who negotiates with the bank and the bank agrees for IBR-10 paisa, Ms. Shuk can never be sure whether the rate given to her is actually IBR-10 paisa. It is very important to have the right contacts inside the bank’s treasury department to be assured that you get the rate that you were promised. However, to get the right contacts is very difficult.

This highlights the importance of transparency, timing, and relationship management in large-value forex transactions.

The golden rule: Always negotiate

In short, for ANY amount of transfer, negotiate with the bank for a better exchange rate. If the amount is higher, negotiate more. Banks do convert at IBR -0.05 or IBR-0.03 to initiate, maintain and sustain relations depending on the amount of remittance and forex requirement of the bank. Also, get in touch with bank’s treasury to know the live IBR when (actual time) the conversion is made. And, if you are not satisfied with the rate, complain and raise your concern.

NRO accounts in forex planning

An NRO Account is a bank account opened and maintained by Person Resident Outside India (PROI) or Non-Residents under FEMA for carrying out Ordinary or general transactions. NRO account is denominated in Indian Rupees (INR) and the account holder assumes the currency risk.

For example, if Jyoti transferred C$100,000 at Rs. 50/C$ and credit Rs. 5,000,000 in the NRO FD account. If rupee depreciates to Rs. 55/C$, the value in Jyoti’s currency would become C$90,909 i.e. a loss of C$9,091.

The remittance of current income like interest, dividend, rent, etc. is freely allowed after payment of tax and a CA certificate. Remittance out of balance held in NRO account or sale proceeds of assets is allowed up to US$ 1 million or equivalent per year for the bona fide purposes.

Interest on an NRO account is chargeable to tax for NRIs and TDS @ 31.2% is deducted. While an NRI can claim the DTAA benefit and lower the TDS to 10% – 15%, he/she would need to obtain the Tax Residency Certificate (TRC) and submit it to the bank to deduct TDS at the DTAA rates.

For forex planning, the NRO account is primarily relevant for managing Indian income, understanding repatriation limits, and factoring in post-tax returns while converting currency.

NRE accounts for repatriable funds

An NRE Account is a bank account opened and maintained by Non-Residents and the primary source of funds is External i.e. out of India. An NRE account is denominated in Indian Rupees (INR) and the exchange risk is borne by the account holders.

Interest on an NRE account is exempt from income tax in India to a person resident outside India as per FEMA or who is permitted by RBI to maintain the NRE Account (section 10(4)(ii)).

The NRE account is fully repatriable without any limit, restrictions or paperwork.

While the maximum period of an NRE deposit is the same as residents and NRO deposits, the minimum period of NRE fixed deposit is 1 year. As a result, if the fixed deposit is made for 1 year or more but is prematurely withdrawn before the completion of 1 year, no interest is paid on the NRE deposit.

For large remittances and fund mobility, the NRE account becomes the preferred vehicle because of its tax-free interest and unrestricted repatriation.

Strategic action plan for better forex rates

Track live market-linked rates instead of relying on card rates.

Build a relationship with your bank’s forex or treasury team.

Consolidate transfers to improve negotiation power.

Use the correct account type based on repatriation and tax objectives.

Escalate discrepancies immediately.

As you put this plan into action, structured guidance can make a measurable difference. Expert NRI, through its specialized NRI financial management services in India, helps NRIs optimize account selection, plan remittance timing, coordinate with banking channels, and stay compliant with FEMA and tax regulations so every conversion is efficient, transparent, and value-driven.

Foreign exchange conversion is one of the few financial activities where awareness alone can significantly increase your net returns without taking any additional risk. The difference between card rate and IBR represents your negotiable space, and your success depends on how effectively you use it. For NRIs and global investors, aligning exchange timing, negotiation strategy, and account selection between NRE and NRO structures can create powerful financial efficiency. The objective is not merely to transfer money, but to transfer it intelligently, transparently, and at the closest possible rate to the interbank benchmark. In forex transactions, knowledge is not just power, it is profit.

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Loans And Financial Planning For NRIs Returning To India

In today’s globalized world, financial transactions between resident Indians and Non-Resident Indians (NRIs) are increasingly common. Whether it’s sending money for personal needs, education, or business purposes, understanding the rules and regulations around loans to and from NRIs is essential. Loans between NRIs and resident Indians are governed by specific rules under FEMA (Foreign Exchange Management Act). These loans are subject to limits, conditions, and taxation provisions. Understanding these regulations is crucial for both borrowers and lenders to ensure compliance and make informed financial decisions. In the blog below, we explore the different types of loans that can be given or received by NRIs, their tax implications, and the regulatory framework under FEMA.

Loans from NRIs to resident Indians

Resident Indians can receive loans from NRIs under two main categories: repatriable and non-repatriable. Let’s break down both types for clarity.

Repatriable loans in foreign currency

A resident Indian can borrow up to US dollars 250,000 from a non-resident (NRI, PIO or OCI) close relatives on a repatriation basis i.e. on repayment, the NRI can credit the funds in an NRE account and take this money back without any restrictions. The lender non-resident should be a close relative of the borrower. For example, an NRI uncle can lend to his niece in India, and she can repay from her NRE account. The amount of loan should be received by an inward remittance or by debit to the NRE/FCNR account. This type of loan is particularly useful for personal or urgent needs since the borrower can access foreign currency without major regulatory hurdles.

Note: As the loan should be interest-free, no income can be generated. And, as there is no income, there is no tax. Since there is no interest involved, the borrower and lender do not face any tax obligations, making repatriable loans a simple and effective option.

Non-repatriable loans in Indian rupees

A resident, not being a company incorporated in India, may borrow in rupees from a non-resident (NRI/PIO/OCI) on a non- repatriation basis. The period of loan should be 3 years or less and the rate of interest should not exceed 2% over the prevailing bank rate at the time of the loan. The funds cannot be used for agricultural/plantation/real estate business or for relending or for investment. These loans are regulated to ensure that funds are used for personal needs or business purposes without violating FEMA regulations.

Note: Income from loans given to residents is interest. The interest income on loans given is taxable for NRIs. And, the payer is required to deduct TDS @ 31.2% on the interest amount. This ensures that even when NRIs earn from lending money in India, the income is properly taxed and compliant with Indian law.

Rules for resident-to-NRI loans

When resident Indians lend to NRIs, there are specific regulations that must be followed to ensure compliance with FEMA and tax laws. The key rules are as follows:

Any loan from a resident individual should be to their non-resident close relatives and should be within the overall limit of the Liberalized Remittance Scheme (LRS), which is currently US $250,000.

The loan should be interest free and minimum period of 1 year. The amount is to be credited to the NRO account and not the NRE/FCNR accounts. Also, the loan amount cannot be remitted outside India.

The loan amount is to be used for personal requirements or for the business purposes. It cannot be used for agriculture, plantation, farm house, real estate business, chit fund or a nidhi company, or for investments.

These restrictions help maintain transparency and prevent misuse of funds for prohibited activities.

Loans from resident Indians to NRIs

Just as NRIs can lend money to residents, resident Indians are also allowed to provide loans to NRIs under certain conditions. This ensures financial support for non-resident family members or business interests in India. NRIs are allowed to borrow from a bank/authorized dealer, housing finance companies and close relatives. The repayment of a loan can be made out of inward remittances or from the NRE/FCNR/NRO accounts, or after selling of assets against which such a loan was granted. A resident individual is also allowed to repay the loan of a close relative non-resident within the LRS limit. This flexibility allows both NRIs and resident Indians to ensure smooth repayment while staying compliant with regulatory norms. Loans from residents are often limited by the Liberalized Remittance Scheme (LRS), which ensures that the total foreign remittance does not exceed US $250,000 per financial year.

Key takeaways

Understanding loans to and from NRIs involves knowing the type of loan, whether it’s repatriable or non-repatriable, and the tax implications for both parties.

Loans from NRIs to residents can be either in foreign currency (repatriable) or Indian rupees (non-repatriable).

Repatriable loans are interest-free and non-taxable, while non-repatriable loans involve interest and TDS at 31.2%.

Resident Indians can lend to NRIs, but only to close relatives, within the LRS limit, and the loan must be interest-free.

Repayment of loans should follow FEMA guidelines, ensuring compliance and proper documentation.

By understanding these rules, both NRIs and resident Indians can make informed decisions and maintain smooth financial transactions.

Loans between NRIs and resident Indians provide an important avenue for financial support, personal needs, and business purposes. By following the FEMA guidelines and tax rules, individuals can ensure transparent, legal, and hassle-free lending and borrowing. Whether it’s a repatriable loan in foreign currency or a non-repatriable loan in Indian rupees, understanding the framework helps avoid penalties and fosters trust between family members across borders. If you’re an NRI planning to return to India, ExpertNRI can help you navigate loans, investments, and financial planning with ease. As trusted NRIs returning to India consultants, they provide personalized guidance on FEMA regulations, taxation, and repatriation, ensuring smooth financial transitions and compliant money management for a secure future.

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The Role Of Residential Status In Tax Planning

For NRIs, taxation in India is not just about filing returns; it begins with correctly identifying their residential status first. A single misclassification can alter the taxability of income, reporting requirements, and compliance obligations. With evolving regulations, income thresholds, and global mobility, NRIs need structured guidance to stay compliant while optimizing tax exposure. This is where professional NRI-focused tax advisory becomes essential. ExpertNRI, through its specialized NRI tax services in India, supports individuals in accurately determining residential status, managing cross-border income, and ensuring end-to-end compliance under Indian tax laws. The framework of residential status under the Income Tax Act is the core on which all NRI taxation rests, and understanding it thoroughly helps individuals plan their stay, manage income streams, and avoid unnecessary tax burdens.

How residential status shapes NRI tax liability in India

Residential status determines the incidence of tax, i.e. whether any income would be taxable or not. The taxability of a particular receipt would depend not only on the nature or place of the receipt but also on the residential status. All persons, except for individuals and Hindu Undivided Family (HUF)s, like firm, company, trust, etc. can either be a resident or a non-resident. Only individuals and HUFs can be a Not Ordinary Resident (NOR) in India. In short there are three residential statuses for an Individual or HUF – Ordinary Resident (OR), Not Ordinary Resident (NOR) or Non-Resident (NR). NOR can also be known as RBNOR (Resident But Not Ordinary Resident. For NRIs, this classification decides:

Whether global income is taxable in India

Whether only Indian income is taxable

The scope of disclosure and compliance

Eligibility for DTAA benefits

The best way to determine the residential status for an individual would be to first determine whether a person is a Resident or Non-Resident. If resident, determine whether he is an Ordinary Resident or Not Ordinary Resident.

Determining whether an individual is resident or non-resident

As per the Income Tax Act, an individual is a Resident, if:

He stays in India for 182 days or more in the previous year OR

He stays in India for 60 days or more in the previous year AND 365 days or more during the 4 years immediately preceding the previous year.

These two tests form the base for most residential status evaluations.

Special provisions for Indian citizens and Persons of Indian Origin

For Indian citizens, who leave India as a member of the crew of an Indian ship or for purposes of employment outside India, the 2nd condition would change to: “He stays in India for 182 days or more in the previous year AND 365 days or more during the 4 years immediately preceding the previous year.”

For for Indian citizen/PIO living outside India comes to India for visit; the 2nd condition would change to:

If income from Indian source is up to 15 lakhs, “He stays in India for 182 days or more in the previous year AND 365 days or more during the 4 years immediately preceding the previous year.”

If income from Indian sources is more than 15 lakhs, “He stays in India for 120 days or more in the previous year AND 365 days or more during the 4 years immediately preceding the previous year.”

Also, if an Indian citizen, having income from Indian sources of more than 15L is not liable to tax in any other country is deemed to be a resident of India. This understanding helps determine whether a person is a Resident or Non-Resident.

Resident but Ordinary Resident (OR) vs Not Ordinary Resident (NOR)

Only after determining that you are a Resident, you need to go to the next step, which is to determine whether you are an Ordinary Resident (OR) or Not Ordinary Resident (NOR) for Income Tax. A Not Ordinary Resident is a person who:

has been a non-resident in India in any 9 out of the 10 previous years preceding the relevant previous year, OR has been in India for a period of 729 days or less during the 7 previous years preceding the relevant previous year.

Indian citizen or a PIO who has spent more than 120 days in India and having income from Indian sources of more than 15L

Indian citizen who is not liable to tax in any country having more than 15L income from Indian sources

How residential status impacts NRI taxability

Your residential classification directly affects the scope of income taxed in India. A Non-Resident is taxed only on income earned or received in India, whereas a Not Ordinarily Resident is taxed on Indian income along with specific foreign income linked to India. In contrast, for an Ordinary Resident, global income becomes taxable. This classification also determines the level of reporting and compliance required, including disclosure of foreign assets, applicability of DTAA benefits, the ability to claim tax credits, and advance tax obligations. Even a few extra days of stay in India can change tax treatment completely.

Accurate stay calculation, correct income classification, and long-term planning require specialized expertise, individuals can ensure proper residential status determination, efficient tax planning for Indian and global income, DTAA optimization, correct capital gains and property taxation, and full FEMA and return filing compliance; with timely planning, NRIs can manage their period of stay to retain the desired tax status, use the NOR phase for a tax-efficient transition to India, structure investments efficiently, avoid dual taxation, and achieve compliant wealth repatriation, making residential status not merely a regulatory condition but a critical tax planning tool.

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Making Logical NRI Investment Decisions For Your Family’s Future

Investing in India as an NRI can be an exciting opportunity to grow your wealth and secure your family’s financial future. However, it is often riddled with complexities – from navigating tax laws and regulatory requirements, to making the right investment choices. Every decision carries an implicit cost that is often overlooked, leading to potential loss of returns or unnecessary expenses. By understanding the concept of opportunity cost, prioritizing logical decision-making, and selecting the right advisor, NRIs can maximize returns, simplify compliance, and achieve peace of mind.

Understanding Opportunity Cost: The real cost of investment decisions

Opportunity Cost is the value of the next best alternative. As human beings, we are more concerned with the real cost than the opportunity cost. In NRI investing, this distinction is crucial. Often, what seems like a minor saving or delay can end up costing far more than anticipated. Consider the following illustrative examples:

Case 1: The cost of delayed investment

Ms. Khushbu from UAE has an equivalent to Rs. 10,000,000 with her bank in Dubai that she wants to invest in India. However, she would send documents via normal courier instead of next day air to save Rs. 1000 in shipping costs even if it takes additional 5 days in normal courier. Assuming an additional 4% return, Ms. Khusbu may not recognize that she is losing Rs. 1,095 EVERY DAY for late investments and that saving of 5 days for Rs. 1,000 is a no-brainer.

Case 2: Choosing the right mutual fund option

Ms. Shalini from Ireland has invested Rs. 50,000,000 in an equity mutual fund that is generating about 12% return p.a. with a dividend option. After 3 months, she realized that she should have invested in the growth option. With an exit load of 1%, she may not immediately redeem the investment but would wait for 1 year to save the exit load. Assuming Shalini is in the highest tax slab she would need to pay tax on the dividend income @ 30%. With the growth option, the long-term capital gain is taxed at 12.5%, the saving would be 17.5% of gain i.e. more than double the cost of exit load.

Case 3: Expense ratio vs. advisory cost

Ms. Tripti, a PIO from Canada has invested Rs. 10,000,000 in an equity based mutual fund whose expense ratio could be lower by 1% if invested directly. However, she may not want to hire an advisor and pay 0.75% for his advice and help in investing directly.

The above list of examples is only illustrative and not exhaustive. Such cases have happened, are happening and will happen unless you treat the opportunity cost as your real cost. It is very important that investment decisions are made logically. People are more concerned with Rs. 100 going out of the pocket than Rs. 200 less coming into the pocket. YOU can change that for yourself and your family as it will save a lot of time and cost and benefit immensely by increasing your return.

The importance of logical investment decisions

It is very important that investment decisions are made logically. For NRIs, factors such as taxation, compliance, investment horizon, and financial goals are interconnected. Decisions are dynamic, not independent, and often affect the family’s financial well-being in multiple ways. The key for smooth and successful investment experience is the ability to make the right decisions. And, the quality of decisions depends on the quality of relevant information. In this technological age, information is overloaded and it is extremely difficult to find the quality information that is actually relevant and useful. So, having a right advisor is extremely crucial.

Selecting the right advisor who works for you

For investing in India, a lot of decisions are to be taken and the tax laws, procedures, situations, securities, requirements, regulations, priorities as well as frame of mind are always changing. Also, the decisions are not independent and not to be answered in chronological order but are dynamic and affect the family’s investments, taxation, compliance and ultimately, mental peace. Having the right advisor ensures that your decisions are informed, coordinated, and strategically aligned with your family’s overall financial objectives.

Please note that the bank relationship managers (RM), insurance agents, mutual fund distributors, are not your advisors as they get their commission or income from selling the products they recommend. In contrast, a professional advisor who is paid by you, and not through product commissions, aligns their advice with your interests.

Because of the inter-connections of multi-country investments, tax and reporting complications, it is advisable to work with one adviser rather than multiple advisors who can provide holistic advice ensuring a 360-degree view for simplifying your move and family’s financial life.

Qualities of the right advisor

The advisor should be trustworthy and capable to handle your needs. Also the advisor should be getting paid by you and not earning commission by selling the product. The right advisor should have a balance of knowledge and experience in:

Indian Income Tax and FEMA Laws

Your home country’s income tax laws

Double Tax Avoidance Agreement (DTAA) between your home country and India

Gift tax and money transfer rules and procedures

Global Compliance requirements

Tax efficient Investment and Wealth Management

Even Arjun needed Shri Krishna as an Advisor. A knowledgeable and experienced investment adviser pays you back multiple times over by saving taxes, growing wealth, complying with laws, smoothening return, simplifying life and bringing peace of mind. For those seeking expert guidance, ExpertNRI offers NRI Financial Management Services in India, helping you navigate investments, taxes, and regulatory compliance with confidence and clarity.

NRIs have unique opportunities to grow and preserve wealth through investments in India, but these opportunities come with inherent challenges. Understanding opportunity cost, making logical investment decisions, and selecting the right advisor are crucial steps toward financial success. Small delays, minor cost savings, or fragmented advice can collectively lead to substantial losses over time. By working with an experienced advisor, staying informed, and planning strategically, you can optimize returns, simplify compliance, and secure peace of mind for yourself and your family. Smart financial management today is an investment in a more secure, prosperous tomorrow!

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Making Logical NRI Investment Decisions For Your Family’s Future - Expert NRI

Learn how making logical NRI investment decisions for your family’s future can maximize returns, reduce risks, and simplify compliance with

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India’s Income Tax System: FY 2025-26

Income tax compliance in India for FY 2025-26 requires a clear understanding of how income is calculated, how tax regimes operate, and how residency status affects tax liability. With the new tax regime now being the default, it is important for taxpayers to understand the applicable rules, restrictions for non-residents, and the process of paying income tax. This blog provides an overview of income tax provisions applicable for FY 2025-26, explaining the method of computing taxable income, the basic exemption limits, the specific limitations applicable to non-residents, and the relevance of the new tax regime. It also outlines how tax is paid through TDS, advance tax, and self-assessment tax, ensuring clarity on compliance requirements under the current income tax framework.

How income tax is calculated

Income tax computation begins with the aggregation of income under various heads. From this gross total income, eligible deductions are reduced, and clubbing provisions are applied wherever applicable. The resulting figure is the net total income. From the net total income, the basic exemption limit is applied, and the balance amount becomes taxable income on which tax is calculated as per the applicable regime and rates.

Basic exemption limit and its restrictions for NRIs

The basic exemption limit i.e. the maximum amount not chargeable to tax, for an individual is Rs. 250,000. For a senior citizen (60-80 years) and super senior citizens (80+ years), the basic exemption limit is Rs. 300,000 and Rs. 500,000 respectively. These high limits are available only for resident taxpayers. Non-residents are not eligible for these higher exemption limits and their basic exemption limit of Rs. 250,000. Also, non-residents cannot get basic exemption benefit for any income which is taxed at special rate i.e. STCG @ 20% and LTCG @ 15%. Residents can enjoy basic exemption for all taxable income including capital gains. For non-resident taxpayers navigating exemption restrictions and capital gains taxation, ExpertNRI, NRI tax consultants India, provide guidance on accurate tax computation and compliance to ensure hassle-free return filing.

Taxation of NRIs under the old regime

While the new tax regime is now the default, non-resident individuals continue to be assessed under traditional slab rates where applicable. For FY 2025-26, non-resident income under the old regime is taxed at progressive slab rates, with income above Rs. 1,000,000 taxed at 30%.

The new tax regime

Finance Act 2020 introduced a new income tax regime for Individuals and HUFs with reduced tax rates, provided the taxpayers are willing to forego about 60+ exemptions and deductions.

The taxpayer won’t be able to claim any deductions under chapter VI like deduction for tax saving investments in PPF, insurance, etc., medical premium for self and parents, savings account / FD interest deduction, any donation, etc. Also, deduction for interest on housing loan, additional depreciation or set off of brought forward loss or unabsorbed depreciation are not allowed.

The salaried taxpayers cannot claim any allowances like Leave Travel Allowance, House Rent Allowance, Children Education Allowance, Deduction for professional tax, but can only claim Rs. 50,000 as standard deduction for F.Y. 2023-24 and Rs. 75,000 from F.Y 2024-25. They can still claim employer’s contribution to the National Pension Scheme (NPS) up to 10% of basic pay + Dearness Allowance.

This new tax system is made optional and co-exists with the old/existing regime. The individuals or HUF with business income can exercise the option only once, whereas Individuals and HUFs without business income can exercise the option and change the regime every year.

Finance Act 2023 gave extra push to the new tax regime by increasing the rebate, reducing the number of tax slabs, tax rates and surcharge for persons in the highest tax slab. Also, the new tax regime is now the default tax regime for all the taxpayers, but the taxpayers can still opt for the old tax regime.

Tax slabs under the new regime

The tax slab and tax rate application under the new regime are as follows:

0 – 400,000: 0%

400,001 – 800,000: 5%

800,001 – 1,200,000: 10%

1,200,001 – 1,600,000: 15%

1,600,001 – 2,000,000: 20%

2,000,001 – 2,400,000: 25%

2,400,001 or more: 30%

Rebate provisions applicable in 2026

The rebate under the new regime is for annual taxable income of up to Rs. 700,000 i.e. rebate of up to Rs. 20,000 for F.Y. 2023-24. The rebate has been increased to Rs. 60,000 for F.Y. 2025-26 for income up to Rs. 1,200,000. So, anyone having total income less than 700,000 and 1,200,000 for F.Y. 2024-25 and F.Y. 2025-26 respectively would not be required to pay any income tax.

From F.Y 2025-26, the rebate would not apply to income which is charged at specified rates i.e. short-term capital gain of 20% or long-term capital gain of 15%. Also, the rebate is available for resident individuals only and not available for non-resident individuals, HUFs or any other person.

Choosing between the old and new tax regime

Whether to choose an old or new regime depends on the total amount of deductions that are only available for the old regime. If the total deductions are more than the threshold mentioned, it is advisable to file return under the old regime. If it is less than the threshold, new regime will save taxes. In 2026, this choice has become more situational rather than universal, with the new regime being suitable for the majority of taxpayers.

Surcharge on high-value incomes

Surcharge is applicable where total income exceeds specified thresholds and is calculated on the tax amount. For incomes above Rs. 50 lakhs, surcharge rates range from 10% to 37%, depending on income levels. Surcharge on capital gains, irrespective of the regime, is capped at 15%. Importantly, from FY 2025-26, taxpayers opting for the new regime benefit from a cap of 25% surcharge on other income, significantly reducing the effective tax burden for high-income earners.

Education cess

In addition to income tax and surcharge, all taxpayers are required to pay education cess at 4% on the total tax liability, including surcharge.

Payment of Tax: TDS, Advance Tax, and Self-Assessment Tax

The income tax so computed needs to be paid as TDS, TCS, advance tax or self-assessment tax. Any tax deducted by the payer and paid to the income tax department on your behalf is called TDS (Tax Deducted at Source). Any tax collected by the receiver and paid to the income tax department on your behalf is called TCS (Tax Collected at Source). Any tax paid by the taxpayer during the financial year is called advance tax and any tax paid after the end of the financial year but before filing of the return is called self-assessment tax. If total tax payable for the year exceeds TDS/TCS by more than 10,000, advance tax is to be paid on or before 15th June (15% of tax payable), 15th September (45% of tax payable), 15th December (75% of tax payable) and 15th March (100% of tax payable). The due date and % limit is the same for all persons. If the advance tax is not paid by the due dates, interest @ 1% per month or part of a month until the next due date will apply. In case of capital gains, advance tax is to be paid in balance instalments. Any balance of tax payable including interest after adjusting TDS and advance tax is paid as self-assessment tax before filing the income tax return.

In 2026, income tax compliance for FY 2025-26 is shaped by the dominance of the new tax regime, enhanced rebates, reduced surcharge, and clearer differentiation between resident and non-resident taxpayers. While the old regime continues to exist as an option, its relevance is now largely dependent on the availability of substantial deductions. A clear understanding of exemption restrictions, rebate eligibility, surcharge impact, and advance tax obligations is essential for accurate compliance and effective tax planning under the current Indian income tax framework.

Resource: India’s Income Tax System: FY 2025-26

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Understanding Gift, Property, Investment, And Other Taxes For NRIs In India

Managing taxation in India can be complex for NRIs. Apart from income tax, several indirect tax provisions, regulatory laws, and compliance requirements impact NRIs, especially when dealing with gifts, investments, property transactions, foreign assets, and cross-border fund transfers. This blog provides a comprehensive overview of critical tax and regulatory frameworks affecting NRIs in India, including Gift Tax provisions under the Income Tax Act, Security Transaction Tax, the Benami Transactions Act, the Prevention of Money Laundering Act, the Black Money Act, and the Foreign Contribution Regulation Act. Understanding these laws is essential for effective tax planning, compliance, and risk mitigation.

Gift Tax

Transfer of any asset without consideration or with inadequate consideration is called a gift. The Gift Tax Act has been abolished but tax on gifts has been introduced indirectly in the Income Tax Act. Currently, there is no tax for the gift giver, but any gift of over Rs. 50,000 is treated as income under the head ‘Income from Other sources’ and charged to income tax as regular income for the gift receiver. If the gift amount is up to Rs. 50,000, the gift is exempt from tax. However, if the gift is more than Rs. 50,000, the entire amount is included as income. For the gift of assets, movable assets are valued at their fair market value and immovable assets are valued at their stamp duty value.

Gifts that are exempt and not taxable

The following gifts are exempt and not taxable:

Gift from a close relative

Gift on occasion of own marriage

Gift under a will or as inheritance

Gift from any local authority

Gift from any foundation, trust, education or medical institutions

Gift from any charitable trust or institution

Clubbing provisions will apply for gifts to a spouse, minor child and daughter-in-law.

From July 5, 2019, the taxability of any gift to a non-resident would be determined by origin (India) and not destination (resident country of NRI). And, any taxable gift of money or property to NRI would be deemed to accrue or arise in India and would become taxable in India. From April 1, 2023, any gift to Not Ordinary Resident would also be deemed to accrue in India and taxed if more than Rs. 50,000 during the year. However, the gift from the close relatives would continue to be exempt from income tax in India.

It is important to have the gift properly documented on a paper that includes the name, address, PAN of the donor and donee, relationship, etc. Also, the gift should be out of love and affection towards the donee. It should also include an offer by the donor and acceptance by the donee with their signatures. It is advisable to prepare and register the gift deed for any gift of immovable property, pay the stamp duty and get the property transferred in the name of the donee. An NRI should also consider the gift tax laws and compliance procedures in their country of residence before giving or accepting a gift from residents, whether relative or not.

Security Transaction Tax (STT)

STT is a tax on any buy or sell transaction in securities through a recognized stock exchange. STT is applicable to any buy or sell transaction of shares, derivatives (futures and options) or equity-oriented mutual fund units. STT does not apply to any debt instruments, debt mutual fund units or any off-market transactions.

Purpose of STT

In India, shares and derivative instruments are traded on the stock exchange, but investors may not disclose the capital gain on these transactions in their return of income and thereby avoid paying income tax. This results in a loss of revenue to the government and also increases the supply of unaccounted money in the economy. STT addresses both these issues and helps better regulate the financial markets. Not only did the government introduce STT, the government kept the rates of STT very low and gave tax incentives to genuine investors. On a security subject to STT, short term capital gain is taxed at the rate of 20% instead of a slab rate. Please see Income Tax-Capital gain for more details.

STT rates and applicability

STT rates vary by securities and are applicable on equity transactions, equity mutual funds, and derivatives. STT is deducted at source by the broker or asset management company and is adjusted in the price of the security at the time of buy or sell transaction. The total cost of purchase would increase and net sale consideration would decrease by STT amount. However, STT is not deductible in calculation of capital gain. Finance Act (No. 2) 2019 restricted application of STT only to the difference between settlement and strike prices in case of exercise of option.

Benami Transactions Act and Property Risks for NRIs

A Benami transaction is a transaction where the legal owner and payer of a property transaction are two different persons. The Benami Transactions Amendment Act, 2016 is an amendment of the older Benami Transactions Act 1988 and is effective from November 1, 2016.

What constitutes a Benami Transaction

As per the revised Act, a Benami transaction includes:

A transaction where a property is transferred to one person for a consideration paid or provided by another person, subject to specified exceptions

A transaction carried out in a fictitious name

A transaction where the owner of the property is not aware of or denies knowledge of such ownership

A transaction where the person providing the consideration is not traceable or is fictitious

Any transaction where possession of any immovable property is taken as a part performance of a contract is not a Benami transaction if the contract is registered and consideration as well as stamp duty have been paid.

Penalties under the Benami Act

Anyone found guilty of entering into a Benami transaction would be liable for both financial penalty and imprisonment:

Financial Penalty of up to 25% of the fair market value of the property

Rigorous imprisonment for minimum of 1 Year to maximum of 7 year.

If anyone gives incorrect information or explanation in response to any inquiry to any authority,

Financial penalty up to 10% of the fair market value of the property, and

Rigorous imprisonment of minimum 6 months to maximum of 5 years

Prevention of Money Laundering Act (PMLA)

The objectives of Prevention of Money Laundering Act, 2002 (PMLA) is to prevent money-laundering, prevent channelizing of money into illegal activities and economic crimes, penalize offenders and confiscate property involved in money laundering. The Enforcement Directorate is responsible for investigating the offenses of money laundering. The PMLA imposes obligations on banking companies, financial institutions, and intermediaries and persons carrying on a designated business or profession, to verify identity of clients, maintain records and furnish information to Financial Intelligence Unit – India (FIU-IND). NRIs/PIOs/OCIs should avoid cash transactions in India, especially in acquisition and transfer of immovable properties in India. They should use official banking channels for transferring money in and out of India and should not be involved in the hawala transactions.

Black Money Act and Foreign Asset Reporting

Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 deals with the problem of black money or undisclosed foreign assets and income and imposes tax and penalty on such income. It aims to bring back the income and assets held abroad back to India. An Ordinary Resident is required to report his/her foreign assets and income while filing income tax return in India. Any income or assets not reported in the income tax return may be claimed as Black Money.

The Black Money Act is mainly related to Indian residents as NRIs are not required to pay tax on foreign income in India or report foreign assets while tax return in India. However, Finance Act (No. 2) of 2019 expanded the scope of the Black Money Act to include non-residents with retrospective effect from 1st July, 2015. As a result, action can be taken against current NRIs, who were residents at the time of acquisition of the undisclosed properties or bank accounts before changing the status to non-resident.

The Act would also apply to ex-NRIs who have returned to India permanently after having earned income and have assets outside India. They would need to report the foreign assets and income in the income tax return when their residential status is changed to Ordinary Resident, even if they are a citizen of a foreign country.

Foreign Contribution Regulation Act (FCRA)

The Foreign Contribution (Regulation) Act (FCRA) regulates the acceptance and utilization of foreign contribution by individuals or associations or companies. The primary purpose of FCRA is to consolidate the law on foreign funds and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to national interest. The Act defines foreign contribution as “donation, delivery or transfer made by any foreign source”, be it Indian or foreign, or any article valuing more than the stipulated value. The interest accrued on foreign contribution is also included.

FCRA makes it mandatory for all associations, groups and non-governmental organizations that intend to receive foreign donations to register under the Act. The registration is valid for five years and needs to be renewed before expiry. An annual return detailing the utilization of the foreign funds is required to be submitted. For non-compliance with FCRA rules, the organization may be penalized or registration can be canceled. It may also have to face prosecution under FCRA.

For any NRI/ PIO / OCI, making any contribution to any association in India, it is advisable to check the status of organization’s registration on the website before making the contribution.

Why professional NRI Tax services matter

Indian tax and regulatory laws governing NRIs are wide-ranging and interconnected. Gift taxation, investment taxes, property ownership rules, money laundering regulations, foreign asset reporting, and foreign contribution laws together create a complex compliance landscape. ExpertNRI provides specialized NRI tax services in India, helping ensure correct interpretation of laws, proper documentation, accurate reporting, and protection from penalties, prosecution, and long-term legal exposure. Structured planning and compliant execution are essential for safeguarding wealth, investments, and family transfers across borders.

Read more article: Understanding Gift, Property, Investment, And Other Taxes For NRIs In India

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Protecting Your US Tax Return

Filing your US tax return is a vital financial responsibility, and securing your e-filing account is equally important to ensure accurate reporting. With rising cyber threats and increasing scrutiny by tax authorities, taxpayers must understand how to protect their accounts and respond promptly to any notices. While this guide uses examples from the Indian Income Tax system, the principles of e-filing security and responding to notices are equally applicable to US tax return for NRI. This blog explains the e-Filing Vault, a tool designed for higher security, and the various types of notices issued for non-filing or discrepancies, providing actionable steps to manage and respond effectively. By following these guidelines, taxpayers can safeguard their financial information, maintain compliance, avoid penalties, and achieve peace of mind during the tax filing process.

e-Filing Vault: Stepping up the security of your tax account

In today’s digital age, safeguarding your tax information is more important than ever. With increasing cyber threats and unauthorized access risks, taxpayers need reliable measures to protect their e-filing accounts. One such initiative is the e-Filing Vault, designed to enhance security and give taxpayers greater control over who can access their accounts. This restricts the access to the Income Tax e-filing account and to protect the taxpayer’s information. Once activated, the income tax e-filing account can only be accessed by one or more of following ways:

Net-Banking

Digital Signature Certificate (DSC)

Aadhar One Time Password (OTP)

Bank Account Electronic Verification Code (EVC)

Demat Account EVC

Bank ATM (offline method)

Activating e-filing Vault options would restrict unauthorized access and ensure higher security of the taxpayer’s income tax e-filing account. It is also available for resetting the password of the e-filing account. However, if the taxpayer does not want to continue, he/she may deactivate the same. Most NRIs would need to login to the e-filing website only by using the net banking as they may not have an Aadhaar card, a DSC or Demat account. Also, if anyone is satisfied with the current e-filing login mechanism i.e. accessing with PAN and Password, nothing is to be done.

How the Income Tax Department sends notices

The Income Tax Department (ITD) has been receiving information of financial transactions from various sources. After reviewing the data, if the ITD thinks that a person should have filed the IT return, the IT officer would issue notices with an objective to widen the tax base through identification of stop-filers and non-filers. A typical notice would say, “The Income Tax Department has received information on financial transactions/activities relating to you. A list of some of the information for the Financial Year is provided below. As per records, you do not appear to have filed Income Tax Return for Assessment Years.” The notices are issued if the information is submitted to the Income Tax department but income tax return is not filed. The notice would list details of the information by year, category, nature and value of transaction. The person needs to login to his/her e-filing portal and furnish the response in the Compliance Module.

Understanding the Tax Department’s information-gathering system

The Income Tax department gathers information through its CIB (Central Information Branch). In 1975, the Income Tax Department formed the Central Information Branch (CIB) for strengthening the tax data-base. Since August 2011, to conform to new norms regarding exchange of information and greater transparency by the financial institutions, Directorate of Income Tax (Intelligence & Criminal Investigation) was set up under a DGIT which included the erstwhile intelligence set up and CIB setup.

Tracking non-filers and ensuring tax compliance

The CPC-CM is an ambitious project of the Central Board of Direct Taxes (CBDT) aimed at enabling the I-T department to use technical data to check cases of non-compliance and non- filers of taxes. CPM-CM & CIB report would include information relating to financial transactions like investment, expenses, payment of taxes, etc. and details of persons who are involved in some specified activities.

Understanding the tax data included in notices

In addition to the SFT (Statement of Financial Transactions), following is the list of major information codes and descriptions which may be included in the notice. It will be a good eye opening for a lot of taxpayers in India that the ITD is collecting all this information, especially no. 5, 8, 12, and securities transactions. Please note that this is only an indicative list and includes only major codes.

Other income tax notices

In addition to notices for non-filing of income tax returns, the ITD issues various other notices. These notices are important and need to be followed up immediately. Major reasons why a notice may be issued to a taxpayer include non-compliance with tax regulations, discrepancies in reported income, missing or incomplete financial information, or specific transactions that trigger scrutiny. Ignoring these notices can result in penalties, fines, or further investigation.

What to do when you receive an income tax notice?

Receiving an income tax notice can be stressful, but ignoring it is never the solution. Follow these steps to manage notices effectively:

Don’t ignore any notice: Ignoring IT notices may lead to penalties.

Review the notice in detail: Verify if the notice applies to you by checking PAN, name, address, and year.

Check the validity: Ensure you can reply within the prescribed time limits.

Understand the notice: Identify the reasons and details behind the notice.

Consult a CA or tax consultant: Explain the notice and get professional guidance.

Gather documents: Collect evidence to support your reply.

Reply within the prescribed time limit: Submit your response and request an acknowledgment copy for records.

Timely and accurate responses to notices protect you from penalties and maintain compliance with tax regulations.

Protecting your US tax return goes beyond accurate filing; it requires securing your e-filing account and being prepared to respond to notices promptly. Activating the e-Filing Vault ensures higher security for your account, restricting unauthorized access, while understanding how the ITD tracks financial transactions helps you stay compliant. Always review notices carefully, gather documentation, and consult professionals to avoid penalties. By taking these steps, you can protect your tax information, respond effectively to IRS or IT notices, and ensure a smooth filing experience. For US tax return for NRI, ExpertNRI offers expert guidance to ensure secure e-filing, accurate reporting, and timely responses to IRS notices. With professional support, NRIs can stay compliant, avoid penalties, and manage their US tax returns confidently and efficiently.

Resource: Protecting Your US Tax Return

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How NRIs Can Access Income Tax Services Online

For NRIs returning to India, understanding the Income Tax Department’s processes is essential for efficient tax management and compliance. Over the years, the department has increasingly leveraged technology to simplify tax administration, making it easier for taxpayers to access information and communicate directly online. Through the IT Department’s e-filing portal, NRIs can conveniently manage their accounts, track filings, and stay updated on notices or refunds. The portal provides secure access to personal tax records, allows seamless submission of returns, and offers tools to verify and correct information. This blog aims to give NRIs a comprehensive overview of navigating the e-filing portal, ensuring smooth tax compliance and safeguarding sensitive financial information.

Accessing your account with the Income Tax Department

The IT Department’s e-filing portal (https://eportal.incometax.gov.in/) allows taxpayers to register and manage their accounts online. To register, a taxpayer must provide their Permanent Account Number (PAN), date of birth, father’s name, and email address. An email verification step ensures authenticity, where a verification code is sent to the registered email.

The taxpayer can also login to his/her account on the website through net banking. The taxpayer needs to select a bank on the website and login to the net banking website using his/her net banking credentials. Then the taxpayer needs to locate the Income Tax e-filing tab on the bank website. By clicking on the link in the mentioned tab, the taxpayer will be redirected to the Income Tax e-filing website from the net banking website.

This integration provides NRIs with a convenient and secure way to manage their tax filings, especially for those who may not possess certain India-specific identifiers like Aadhaar.

Key functions available on the e-filing portal

Once logged in, the taxpayer can perform a wide array of functions, making it easier to stay compliant and manage taxes efficiently. These include:

Know the jurisdictional IT officer, know/apply/edit PAN or TAN, Download e-PAN, etc.

Pay various direct tax payments through various challans

Access and download 26AS

Check, update and download Annual Information Statement (AIS) and access Tax Information Summary (TIS)

Download Pre-filled Data

File and E-verify income tax return

Access, download and/or print income tax return, acknowledgement for filing tax return, assessment orders, etc.

Check status of income tax refund and submit refund re-issue requests

File and track rectifications, condonation delay requests

Submit grievances and check the status

Check and respond to outstanding demands, e-proceedings

Access to reporting portal and compliance portal

Register Digital Signature Certificate (DSC) for electronically signing the forms and return

Add and disengage a Chartered Accountant (CA) (e.g. for 15CB) or E-Return Intermediary (ERI)

File, view and download various forms, including Form 15CA (for transferring funds out of NRO accounts)

This wide range of services ensures that NRIs returning to India can manage their taxes efficiently from anywhere in the world, without visiting IT offices in person.

e-filing vault higher security

The Income Tax department has launched “e-Filing Vault options” to restrict the access to the Income Tax e-filing account and to protect the taxpayer’s information. Once activated, the income tax e-filing account can only be accessed (login) by one or more of following 5 ways only:

Net-Banking

Digital Signature Certificate (DSC)

Aadhar One Time Password (OTP)

Bank Account Electronic Verification Code (EVC)

Demat Account EVC

Bank ATM (offline method)

Activating e-filing Vault options would restrict unauthorized access and ensure higher security of the taxpayer’s income tax e-filing account. It is also available for resetting the password of the e-filing account. However, if the taxpayer does not want to continue, he/she may deactivate the same.

Recommended login methods for NRIs

Most NRIs would need to login to the e-filing website only by using the net banking as they may not have an Aadhaar card, a DSC or Demat account. Net banking provides a secure and convenient way for NRIs to access their income tax accounts from anywhere in the world. This method ensures that taxpayers can manage all filings, payments, and communications online without the need to visit IT offices. Also, if anyone is satisfied with the current e-filing login mechanism i.e. accessing with PAN and Password, nothing is to be done.

Managing tax filing as an NRI

For NRIs returning to India, managing taxes can seem complicated due to dual residency and foreign income sources. However, the IT Department’s e-filing portal streamlines the process significantly. Here are some tips to simplify compliance:

Ensure Pthe AN is active and linked to your account. All filings, including Form 15CA for foreign remittances, require PAN.

Download Form 26AS and AIS regularly to verify tax credits and ensure accurate reporting of income earned abroad.

File returns on time and use the pre-filled data option to reduce errors and ensure timely submission.

Track refunds online and submit re-issue requests if necessary.

Additionally, NRIs can manage digital signatures, add or remove Chartered Accountants, and file rectifications through the portal without visiting any IT office physically.

For NRIs seeking professional assistance, ExpertNRI provides expert guidance as leading return to India tax consultants. From filing income tax returns to managing foreign income and ensuring compliance with Indian tax laws, ExpertNRI helps simplify the process, save time, and avoid errors, making the financial transition back to India smooth and stress-free.

Benefits of using the IT Department’s online services

Using the IT Department’s online services offers numerous advantages for NRIs, making tax management simpler, faster, and more secure.

Convenience: Access tax information and file returns from anywhere in the world.

Speed: Faster communication with IT officials, quick filing, and instant access to documents.

Transparency: Complete visibility into tax credits, assessment orders, and outstanding demands.

Security: Enhanced login options and e-Filing Vault ensure protection of sensitive information.

Comprehensive services: From PAN management to filing complex forms like 15CA, the portal provides end-to-end services.

For NRIs returning to India, the Income Tax Department’s e-filing portal is an invaluable tool that simplifies tax management. With features ranging from online PAN and TAN services to pre-filled data, digital signatures, and refund tracking, NRIs can stay compliant without the need for physical visits to IT offices. Activating the e-filing vault provides an additional layer of security, although most NRIs may primarily rely on net banking for login. By understanding the available tools and functions, NRIs can manage their tax obligations efficiently, ensuring a smooth financial transition while returning to India. The IT Department’s robust digital infrastructure empowers NRIs to handle all tax-related requirements online, keeping their information secure while providing comprehensive control over filings, payments, and communications with the authorities.

Resource: How NRIs Can Access Income Tax Services Online

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Inside The GIFT IFSC Economy: What Investors Can Do With This Parallel Financial World

India’s aspiration to emerge as a global financial powerhouse found its turning point in the mid-2000s. As global capital markets evolved and financial centres like London, New York, Singapore, and Dubai strengthened their dominance, India began imagining a world-class financial ecosystem of its own—one that could not only attract international players but also empower Indian investors, NRIs, and global institutions to participate in cross-border financial activity seamlessly. This long-term vision ultimately led to the birth of one of India’s most ambitious financial infrastructure projects.

The vision behind this parallel financial world

The story begins in 2007 – an important year for India’s financial modernisation. In 2007, then Chief Minister of Gujarat, Narendra Modi, announced the establishment of an International Financial Services Centre in Gujarat (IFSC) with an aim to create a world-class financial hub that could compete with other centers like London, New York, Hong Kong, Dubai, Singapore, Mauritius, etc. and the Gujarat International Finance Tec-City (GIFT City) was born. This foundational message set the tone for GIFT City’s purpose: A financial centre built inside India, but crafted to operate with the flexibility and sophistication of the world’s leading offshore hubs.

The dual ecosystem: How GIFT City was structurally designed

To bring this vision to life, GIFT City was intentionally split into two distinct zones, each serving a specific purpose within the broader financial ecosystem. GIFT City includes both Domestic Tarriff Area (DTA) and SEZ (Special Economic Zone). The SEZ area is known as GIFT International Financial Services Centre (GIFT IFSC). This dual-structure enabled GIFT City to function as both: A domestic financial district for Indian institutions, and a globally integrated financial centre through its SEZ, the IFSC. The most interesting part, however, lies in the jurisdictional structure designed to enable global competitiveness. While GIFT IFSC is located within India, it is considered as out of India jurisdiction for regulatory purposes. This single line represents one of the biggest differentiators between GIFT IFSC and the rest of India’s financial system. It is precisely this “international-within-national” structure that allows the IFSC to offer unique tax, regulatory, and capital mobility benefits.

One of India’s most powerful financial regulators: IFSCA

To ensure that the IFSC could operate with global competitiveness, it was placed under an independent regulator. The GIFT IFSC is regulated by an independent regulator International Financial Services Centre Authority (IFSCA) to develop and regulate the financial services market in the IFSC. The regulator has actively pushed for faster approvals, smoother compliance, and wider participation from global and NRI investors. This coordinated effort is visible in the rapid growth of entities within the IFSC.

There has been a great push by the regulator as well as the government of India to promote GIFT IFSC as well as interest from NRIs or PIOs or OCIs to use GIFT IFSC to invest in India or globally. As of March 31, 2025, 29 banks, 83 broker/dealer, 161 Fund Management, 229 AIFs/Schemes have been registered. In addition, 5 payment service providers, 33 aircraft leasing entities, 24 ship leasing entities, 45 Insurance and Insurance Intermediaries, 91 Ancillary service providers and others with a total of 865 have already registered with IFSCA with more than 25% got their registrations approved in last 1 year.

These registrations highlight the scale: aircraft leasing, ship leasing, bullion trading, fund management, banks, and financial intermediaries, forming a vibrant and expanding financial economy.

A parallel financial system: How business works inside GIFT IFSC

One of the biggest distinctions between the IFSC and the rest of India is its currency framework. In GIFT IFSC, the transactions take place in any currency except INR. This unique freedom positions GIFT IFSC as a hub for global capital operations, similar to international financial centres like Singapore or Dubai. Supporting this global framework are several regulatory and tax concessions. A lot of benefits and concessions in income tax, GST, Stamp Duty, FEMA, SEBI, etc. are available for entities established in GIFT IFSC and to investors using GIFT IFSC to invest in various financial securities. These benefits directly enhance the attractiveness of GIFT IFSC to both institutions and investors.

Investment avenues within GIFT IFSC

GIFT IFSC is not a single-utility zone; it is a multi-layered financial marketplace with varied investment avenues. Below is a structured view of these options using your content exactly as given.

Bank fixed deposits

Any PROI (NRI or OCI or PIO or Foreigner) can open a bank account and invest in any deposit accounts – including GIFT CITY fixed deposits – with any banks set up in GIFT IFSC. The interest rates are not regulated and the banks are allowed to keep interest rate as per the situation, circumstance, interest rate environment, internal demand/supply of foreign exchange. The deposits can be created for 7 days to even 10 years. The RBI cap limit for interest and tenure related to FCNR deposit account does not apply to the banks in IFSC. This makes IFSC banking one of the most flexible NRI banking options available globally.

Trading on IFSC exchanges

There are mainly 3 exchanges in GIFT IFSC: IndiaINX (of BSE), NSE IX (of NSE) and IIBX (Bullion Exchange). Gain or loss on securities listed on these exchanges are not subject to income tax in India. As currently, only derivatives are listed on these exchanges, the income would be in the nature of business income and there is a income tax exemption for income earned (for 10 years in a block of 15 years) by entities set up in IFSC. This offers a tax-efficient environment for trading derivatives and bullion at the international level.

India-bound funds

For inbound investing, various funds have been set up are in the process of being set up. They can mainly be categorized as master fund, feeder fund or retail fund. The retail fund has not been active yet. The feeder fund is used by existing MF, PMS or AIF players to feed the funds raised through GIFT IFSC fund into their existing funds. Master funds are the funds that directly invest or trade in securities listed in India. Any non-resident (NRI, PIO, OCI, Foreigner) is allowed to invest in any India bound fund. However, an Indian resident is not allowed to invest in such funds. This structure makes GIFT IFSC a gateway for global investors into Indian markets.

Global investment options

An NRI or PIO or OCI can invest in funds that invest globally and are registered in GIFT IFSC. Indian residents can also invest out of India through a global access platform available in GIFT IFSC under LRS. The regulations relating to Global Access are being updated and currently, a consultation paper has been issued recently. The revised regulations are expected to come out in 3-6 months. This expands the IFSC’s scope beyond India-linked assets to global financial participation.

Real estate

All immovable properties in GIFT City are available on lease hold basis for 99 year. Many Investors are also looking for investments in residential or commercial properties on the long-term lease basis. The long-term lease model is designed to maintain regulatory oversight while encouraging real estate participation.

ExpertNRI, a leading GIFT City investment consultant in India, helps NRIs, OCIs, and global investors navigate banking, funds, taxation, and regulatory rules within the IFSC. Their advisory ensures compliant, well-structured participation across India-bound and global investment opportunities.

GIFT IFSC stands today as one of India’s most forward-looking financial initiatives – a hub built to operate on global principles while remaining rooted in Indian soil. With independent regulation, international currency operations, tax incentives, global investment access, inbound and outbound fund structures, and a rapidly expanding ecosystem of banks, exchanges, leasing companies, funds, and intermediaries, the IFSC represents India’s push toward becoming a true global financial force.

Resource: Inside The GIFT IFSC Economy: What Investors Can Do With This Parallel Financial World

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Back To India? Your Essential Tax & FEMA Compliance Guide For A Smooth Transition

Returning to India after years abroad is both an emotional and financial transition. One of the most critical aspects of this move is understanding how your income, assets, investments, and foreign holdings will be taxed once you move back to your native land. India’s taxation framework for returning NRIs is governed primarily by two key legislations – the Income Tax Act and the Foreign Exchange Management Act. Whether you have foreign investments, overseas bank accounts, property abroad, or global income streams, navigating these laws is essential to ensuring compliance and minimizing tax liabilities. This blog brings together a clear and professional understanding of both frameworks to help you have smooth transitions.

Understanding Income Tax for returning NRIs

Income tax is a direct tax and is levied on the personal income. It is the key source of revenue that the government uses to fund its activities and serve the public. The highest income tax rate was in 1973-74 @ 97.75%. The latest marginal rate is less than half the highest rate now at 39%, since FY 2023-24.

The structure and governance of Income Tax in India

The levy is governed by the Indian Income Tax Act, 1961 and is being amended every year through the Finance Act (after approval of the annual budget). The Income Tax rules, Central Board of Direct Taxes (CBDT) circulars and notifications as well as various court decisions also affect the income tax laws in India. The CBDT provides essential inputs for policy making and planning for direct tax and is also responsible for the administration of the act through the department. The Income Tax Department is also responsible for enforcing Double Taxation Avoidance Agreements (DTAA) and deals with various aspects of international taxation including Transfer Pricing.

The new Income Tax Bill 2025

A new Income Tax Bill 2025 is currently introduced in the Parliament that will replace the old act. While there may not be any major changes in the new Act, it simplifies the language and has better organization of the sections. For returning NRIs, this structural change aims to make tax interpretation easier, particularly in the areas of residency rules, foreign income reporting, taxability of overseas assets, and disclosure requirements. Clarity of language means greater transparency while planning your post-return financial life.

FEMA and its role in Return to India Taxation

The Foreign Exchange Management Act (FEMA) is India’s key framework governing foreign exchange transactions. It aims to simplify, regulate, and ensure smooth functioning of India’s external trade and payment systems.

The scope and applicability of FEMA

FEMA is an Act by the Parliament of India “to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India”. FEMA was passed in the winter session of the Parliament in 1999 and was made effective from June 01, 2000 replacing FERA (Foreign Exchange Regulation Act). FEMA is a civil law, whose emphasis is on the management of foreign exchange and any violation is dealt through civil procedures. Here, the burden of proof is on the enforcement agency and not on the implicated person. FEMA extends to the whole of India. And, any transaction denominated in foreign currency by residents or any transaction in India by non-residents (whether in Indian rupees or in foreign currency) is within the purview of FEMA. The Act also applies to all branches, offices and agencies outside India owned or controlled by a person resident in India. FEMA also applies to Indian branches or offices of foreign companies.

The structure and administration of FEMA

The overall structure of FEMA is covered by legislations, rules and regulations. While FEMA has only 49 sections, it empowers other ministries and/or regulating agencies to make rules, issue circulars or notifications. The FEMA includes, FEMA Act, Rules, notifications, circulars and directions issued by the Central Government, RBI, Enforcement Directorate as well as FDI Policy. FEMA envisages that RBI shall have a controlling role in the management of foreign exchange. Since RBI cannot directly handle foreign exchange transactions, it authorizes “Authorized Persons” to deal in foreign exchange as per the directions issued by RBI.

Who are the Authorized Persons (APs) under FEMA?

An Authorized Person (AP) means any person who is authorized by RBI to deal in foreign exchange or foreign securities and include an authorized dealer, money changer, off-shore banking unit or any other person. RBI issues directions to such authorized persons through AP (DIR) circulars. In simple terms, an Authorized Dealer means a bank or a bank branch. Three categories of authorized dealers and permitted activities for respective dealers are as follows:

Category I AD: All current and capital account transactions as per RBI directions

Category II AD: Specified non-trade related current account transactions and activities permitted to Full Fledged Money Changer

Category III AD: Transactions incidental to the foreign exchange

While all nationalized, private and foreign banks are appointed as a Category I Authorized Dealer, all branches of the banks may not be Category I Authorized Dealers. It is important to know the category of the bank branch as it gives a good indication of the knowledge and experience of its employees in dealing with foreign exchange. For returning NRIs, this becomes crucial when converting NRE/NRO/FCNR accounts, repatriating assets abroad, managing remittances, or investing in India or abroad after return.

Current vs capital account rules for returning NRIs

FEMA manages foreign exchange based on whether a transaction is a capital account transaction or a current account transaction.

Capital Account Transactions: A capital account transaction means a transaction involving foreign exchange for altering the assets or liabilities, transferring or issuing of securities, borrowing or lending, acquisition and/or transfer of immovable properties, and guarantees. These are significant for NRIs returning to India since most cross-border investments, property holdings, and loans fall under this category.

Current Account Transactions: A current account transaction means a transaction other than a capital account transaction, which specifically includes any payments due in connection with foreign trade, other current business, services, and short-term banking and credit facilities in the ordinary course of business. It may also include payments due as interest on loans or net income from investments, expenses related to foreign travel/education/medical care, as well as remittances for living expenses of parents/spouse/children.

Key differences returning NRIs must understand: The definition of current and capital account transactions, while it is similar in both accounting and FEMA, the perspective is different. For example, Mr. Krishna from India imports machinery from Germany for $1,000,000 by making a payment. Thus, for Mr. Krishna it is a capital account transaction as it changes the assets of his company. However, under FEMA, it is a current account transaction as the payment in foreign exchange is already made and it does not create any foreign exchange asset or liability. However, if the purchase is financed by a foreign currency loan, it is considered as a capital account transaction under FEMA as the transaction creates a foreign exchange liability for making loan repayments in future.

Difference in permission rules: Current account transactions are generally permitted, unless specifically prohibited or require prior approval. In contrast, capital account transactions are generally prohibited, unless specifically permitted. For example, if Mr. Ram, an NRI from the USA wants to spend his money for traveling in India, it is a current account transaction and is allowed as it is not prohibited. However, if he wants to take a loan for a personal purpose, accepting a loan is a capital account transaction and is allowed because it is a specifically permitted transaction under FEMA.

Debt and non-debt instruments

The Ministry of Finance, Government of India has classified instruments issued under FEMA as debt and non-debt instruments and has notified the rules/ regulations in this regard on October 9, 2020 which supersedes earlier regulations. As a result, RBI becomes governing body for debt transactions like investment in government bonds, corporate bonds, borrowings by Indian firms through loans, etc. And, the central government becomes governing body for non-debt transactions like investment in equity of incorporated entities, capital participation in LLPs, acquisition and dealing immovable properties, contribution to trusts, investment in units of Alternative Investment Funds (AIFs) & equity oriented mutual funds, etc. RBI still holds the responsibility of monitoring the foreign exchange related to non-debt instruments.

Income Tax vs FEMA: Which applies to returning NRIs?

For returning Indians, understanding which act to use – Income Tax Act or FEMA is crucial, because both apply simultaneously but regulate different aspects of their financial lives. The Income Tax Act determines how your income is taxed in India and abroad, using the 182-day rule and residential categories such as Resident, Non-Resident, and Resident but Not Ordinarily Resident. It also mandates reporting of overseas assets through Schedule FA and influences NRE/NRO/FCNR accounts indirectly through tax treatment, while its investment rules focus on how earnings, gains, and losses are taxed. FEMA, on the other hand, regulates the movement and management of foreign exchange. It does not tax income but governs what a person resident in India can hold, send, bring, or invest across borders. FEMA directly controls NRE/NRO/FCNR accounts, sets eligibility and limits for foreign investments, defines strict residency rules, and requires RBI compliance for overseas assets. In essence, the Income Tax Act guides taxation, while FEMA governs permissible cross-border financial activities.

Returning NRIs often face confusion because residency status under Income Tax and FEMA differs, leading to different rules for taxation, investments, bank accounts, and asset ownership. Understanding which law applies to which activity is essential for smooth financial planning and compliance. If you want expert help in managing your finances as you move back, ExpertNRI’s return to India tax consultants specialize in navigating both Income Tax and FEMA. Their tailored guidance ensures full compliance while helping you optimize taxes, manage foreign assets, and transition your financial life into India smoothly. With the right guidance, your move back to India can be financially seamless, compliant, and strategically planned!

Resource: Back To India? Your Essential Tax & FEMA Compliance Guide For A Smooth Transition

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GIFT City Fixed Deposits – A Global Investor’s Guide

GIFT City, India’s first International Financial Services Centre (IFSC), was created to serve as a global financial hub regulated by the International Financial Services Centres Authority (IFSCA). Although located in India, GIFT IFSC operates as an offshore jurisdiction, offering significant tax and regulatory advantages across income tax, GST, FEMA, and more. With rapid growth, GIFT IFSC is becoming a preferred gateway for all – NRIs, OCIs, PIOs, and global investors. Among the many Gift City investment avenues, Bank Fixed Deposits (FDs) stand out for their attractive interest rates and regulatory flexibility.

Why Bank FDs in GIFT IFSC are gaining popularity

The Fixed Deposit remains one of the safest and most trusted investment tools for investors. What makes GIFT IFSC bank deposits even more appealing is their global structure, higher return potential, and flexibility that is unmatched by domestic banking systems. As per the rule governing FD investments in GIFT IFSC,

“Any PROI (NRI or OCI or PIO or Foreigner) can open a bank account and invest in any deposit accounts with any banks set up in GIFT IFSC. The interest rates are not regulated and the banks are allowed to keep interest rate as per the situation, circumstance, interest rate environment, internal demand/supply of foreign exchange. The deposits can be created for 7 days to even 10 years. The RBI cap limit for interest and tenure related to FCNR deposit account does not apply to the banks in IFSC.”

Together, these regulations create a unique environment that enhances accessibility, allows banks to offer competitive interest rates, and provides unmatched flexibility in deposit tenure, making Bank FDs in GIFT IFSC increasingly attractive for global investors.

Who can invest?

The rule is very clear and extremely inclusive:

“Any PROI (NRI or OCI or PIO or Foreigner) can open a bank account and invest in any deposit accounts with any banks set up in GIFT IFSC.”

This means:

NRIs living anywhere in the world

Overseas Citizens of India

Persons of Indian Origin

Foreign nationals with no Indian origin

All of the above can enjoy direct and equal access to banking products in GIFT IFSC.

Why this matters:

No need to be physically present in India to open the account

Documentation is streamlined, often fully digital

Foreign nationals who normally cannot open domestic Indian FDs can invest through IFSC

Global investors can diversify into India-linked assets, while staying within international regulatory norms

This makes GIFT IFSC one of the most inclusive banking gateways in India’s financial framework.

Interest rates on Bank FDs in GIFT IFSC

The next rule is: “The interest rates are not regulated and the banks are allowed to keep interest rate as per the situation, circumstance, interest rate environment, internal demand/supply of foreign exchange.”

In simpler terms:

Banks can offer higher interest rates if global markets demand it.

Rates can quickly adjust to foreign currency liquidity.

Investors benefit from dynamic, competitive pricing.

IFSC banks may offer 1-2% higher than equivalent FCNR or NRE deposits in domestic banks.

This structure ensures that Bank FDs in GIFT IFSC remain flexible, competitive, and aligned with global financial conditions.

Why deregulated rates matter:

Unlike traditional FCNR deposits, where RBI imposes ceilings, IFSC banks operate independently, ensuring:

Better returns

More responsive market-linked pricing

Attractive opportunities during periods of high FX demand

This makes IFSC FDs especially appealing for investors seeking stable returns, without compromising liquidity.

Highly flexible tenure options

Coming to the next point: “The deposits can be created for 7 days to even 10 years.” This flexibility allows investors to align their deposits with different financial objectives:

Short-term liquidity needs

Medium-term financial goals

Long-term wealth preservation strategies

Unlike most global banking products, which offer limited options for foreign currency deposits, IFSC banks provide:

7-day ultra-short deposits for treasury needs

30-90 day deposits for tactical strategies

1-3 year deposits for income stability

5-10 year deposits for long-term compounding

Such flexibility makes GIFT IFSC FDs extremely attractive for HNIs, family offices, and business owners operating across multiple geographies.

No RBI Caps: A standout advantage over FCNR deposits

Finally, the last, but major advantage of Bank FDs in GIFT IFSC is: “The RBI cap limit for interest and tenure related to FCNR deposit account does not apply to the banks in IFSC.” This creates a significant competitive edge over traditional NRI banking options. Unlike FCNR deposits, which have strict RBI-defined interest caps, limited tenure, and often deliver lower returns due to global rate differentials, IFSC banks enjoy:

No tenure restriction beyond 7 days-10 years

No interest rate ceiling

No currency exposure restrictions

The ability to innovate and price deposits dynamically

This positions GIFT IFSC banking on par with offshore jurisdictions while maintaining Indian regulatory protection and transparency. All in all, GIFT IFSC is a huge competitive advantage over traditional NRI banking frameworks.

Why IFSC Bank FDs are emerging as a global alternative

All IFSC banks operate under IFSCA – a unified regulator with globalized standards. This means:

Transparent processes

Compliance aligned with FATF and global KYC norms

Strong bank-grade security and reporting

Protection comparable to advanced financial hubs

Competitive FX opportunities

Because the deposits are foreign-currency based:

Investors avoid INR risk

Returns are linked to global interest cycles

FX availability determines bank pricing

This allows savvy investors to time deposits based on currency strength and global interest rate shifts.

Family offices and HNIs use IFSC deposits for:

Liquidity parking

Yield enhancement

Diversification away from single-currency exposure

Estate planning

Holding structures for global investment flows

This is exactly why GIFT IFSC is rapidly gaining traction.

How to open an FD in GIFT IFSC

Opening a Bank FD in GIFT IFSC is designed to be easy and often fully digital. The typical steps include:

Completion of online KYC (passport + OCI/PIO card + overseas address proof)

Opening a PROI bank account (USD/EUR/GBP, etc.)

Transfering funds into the IFSC bank account

Creating deposits instantly via online banking

Many banks offer concierge onboarding support for NRIs and foreign nationals to further simplify the process.

GIFT City has grown into a world-class financial hub, with GIFT IFSC offering global competitiveness under Indian regulatory oversight. Bank FDs in GIFT IFSC stand out for unrestricted interest rates, flexible tenures, and freedom from RBI caps that limit traditional FCNR deposits. Supported by a rapidly expanding ecosystem of banks, brokers, and fund managers, GIFT IFSC provides NRIs, OCIs, PIOs, and foreign investors with a safe, high-yield, and versatile platform for wealth creation, portfolio diversification, and participation in global financial markets. For those looking to understand and explore Gift City investment opportunities in more detail, ExpertNRI serves as a trusted guide, helping NRIs, OCIs, PIOs, and foreign nationals open bank accounts, create FDs, and navigate regulatory and tax advantages in GIFT IFSC, ensuring a seamless and fully compliant investment experience.

Read more article: GIFT City Fixed Deposits – A Global Investor’s Guide

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Understanding NRO To NRE Fund Transfer – A Complete Guide To Compliance & Tax Requirements

For NRIs, managing funds between Indian and overseas accounts can often be complicated due to the regulatory and tax obligations involved. Among the most frequent transactions is the transfer of money from a Non-Resident Ordinary (NRO) account to a Non-Resident External (NRE) account. These transfers are governed by stringent guidelines under the Income Tax Act and the Foreign Exchange Management Act (FEMA). To ensure transparency and compliance, the Central Board of Direct Taxes (CBDT) has prescribed specific procedures and documentation requirements for such transactions. This blog provides a clear and comprehensive understanding of the process, rules, and forms involved in NRO to NRE fund transfer, helping NRIs carry out their remittances smoothly and in full compliance with the law.

Understanding the CBDT Circular 93/2015

Effective from April 1, 2016, the CBDT Circular 93/2015 dated December 16, 2015, substituted Rule 37BB, which specifies the reporting requirements for any person responsible for paying to a non-resident or a foreign company any interest or salary or any other sum chargeable to tax under the provisions of the Income Tax Act. This rule mandates the furnishing of Form 15CB and Form 15CA for such transactions. However, the forms and their requirements were changed significantly through this circular, simplifying procedures in certain cases and clearly defining when these forms are required.

Understanding Form 15CA

Form 15CA is a declaration by the remitter (transferor) and serves as a tool for collecting information regarding payments that are chargeable to tax in the hands of the non-resident recipient. Form 15CA, whether Part A, B, C, or D, must be electronically submitted to the Income Tax Department. After submission, an acknowledgement of the Form 15CA is generated and made available online. The remitter (transferor) must then verify the form electronically using net banking or Aadhaar or DSC – Digital Signature Certificate. This verification completes the electronic submission process, enabling the remitter to provide the acknowledgement to the bank for processing the remittance.

Understanding Form 15CB

Form 15CB is the prescribed certificate issued by a Chartered Accountant (CA). In this form, the CA certifies that the tax, if any, on the payment to an NRI or on the transfer of funds out of the NRO account has been deducted and/or paid in accordance with the provisions of the Income Tax Act. The Form 15CB must be digitally signed by the Chartered Accountant and submitted to the bank processing the fund transfer. This certificate is an essential part of the compliance process, as it ensures that all taxes related to the source of funds have been properly addressed before remittance.

Revised structure of Form 15CA

Form 15CA has been revised and divided into four parts (A, B, C, and D), each applicable under specific circumstances:

Part A:

For any payment chargeable to tax, if the aggregate of such payments during the financial year does not exceed ₹5,00,000, Form 15CA Part A is to be submitted.

Part B:

For any payment exceeding ₹5,00,000, if a certificate or order from the Assessing Officer is obtained, Form 15CA Part B must be submitted.

Part C:

For any payment that is chargeable to tax, and the amount of payment or sum of payments exceeds ₹5,00,000 during the year, and where no order or certificate from the Assessing Officer is obtained, a Chartered Accountant’s certificate in Form 15CB and Form 15CA Part C are required. The CA certificate in Form 15CB must be submitted electronically.

Part D:

For any payment that is not chargeable to tax and is not included in point #1 (the specified list), Form 15CB and Form 15CA are not required. However, Form 15CA Part D is to be submitted.

When Form 15CA and Form 15CB are not required

Forms 15CA and 15CB are not required when the payment being made to a non-resident is not taxable in India. In other words, if the remittance does not represent income that is chargeable to tax – such as personal transfers, gifts, or maintenance expenses – these forms need not be furnished. They are also not required when the Reserve Bank of India (RBI) does not mandate prior approval for the transaction, or when the remittance falls under the general permissions granted by FEMA for non-taxable transfers. In short, if the payment does not give rise to taxable income in India, Form 15CA and Form 15CB are not applicable.

RBI’s view on CBDT procedures

In light of CBDT Notification 67/2013, the Reserve Bank of India (RBI) reviewed its policy and decided that it would no longer issue instructions clarifying any tax issues under FEMA. The RBI has placed the responsibility on Authorized Dealers (banks) to comply with the requirement of the tax laws. In other words, banks must ensure that all necessary tax documentation, including Forms 15CA and 15CB, is duly furnished before processing remittances. RBI also instructed Authorized Dealers to approach the CBDT for any clarification, if needed.

What does “any payment chargeable to tax” mean?

The CBDT circular changed the rule so that the furnishing of 15CA or 15CB or both, as the case may be, is required only for the payment that is chargeable to tax under the Income Tax Act. Any payment that is not chargeable to tax – for example, gifts from close relatives, inheritance, or fund transfers between personal accounts – may not require 15CB/15CA. Also, it is important to note that tax can only be levied on the income, and there is NO tax on the transfer of funds between accounts, be it –

NRO to NRO

NRE to NRE

NRO to NRE

NRO to an account outside India

However, whether the source of funds in NRO is after payment of tax or not, needs to be verified before transferring to NRE or abroad.

Example: How tax compliance works for NRO to NRE transfer

To understand how this rule applies in practice, consider the following example:

Mr. Anup Pal, an NRI from Canada sold an immovable property for Rs 4,500,000 resulting in a gain of Rs. 1,000,000. The buyer did not deduct TDS and the funds were credited to his NRO account. Now, if he wants to transfer the funds from NRO to NRE, while there is no tax on the transfer, the source of funds in the NRO account is taxable and he can transfer the funds to his account in Canada or to an NRE account only after the payment of tax and furnishing information in 15CB/15CA in India.

Need help with NRO to NRE transfers?

NRIs often face challenges ensuring proper documentation, tax payment, and regulatory compliance before remitting funds abroad. ExpertNRI provides complete assistance for every stage of your NRO to NRE fund transfer – from verifying tax-paid sources and coordinating with Chartered Accountants to preparing and submitting Forms 15CA and 15CB. Their experienced professionals ensure your transfer process is accurate, efficient, and fully compliant with Indian income tax and FEMA regulations. With ExpertNRI’s guidance, you can move your hard-earned money seamlessly and confidently, knowing your international remittance meets every legal and procedural requirement.

Transferring funds from an NRO to an NRE account is a legitimate and routine process for NRIs, provided it adheres to tax and regulatory guidelines. While the transfer itself is not taxable, the source of the funds must be verified and taxes, if applicable, should be duly paid. By complying with CBDT Circular 93/2015 and correctly submitting Forms 15CA and 15CB, NRIs can ensure transparent, lawful remittances. Clear coordination with the authorized dealer bank and proper documentation safeguard against scrutiny or delays, enabling smooth, compliant fund transfers while maintaining full alignment with Indian income tax and FEMA regulations.

Read more article: Understanding NRO To NRE Fund Transfer – A Complete Guide To Compliance & Tax Requirements

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Who Is Your Relative? Why Does It Matter In NRI Financial Management?

For most NRIs, financial connections to India are deeply rooted in family – from supporting parents to gifting money to siblings or investing jointly in property. However, when it comes to managing finances between India and abroad, the term “relative” carries more than emotional meaning; it carries legal, tax, and compliance significance. In fact, the way Indian laws define “relative” can directly impact how NRIs send money, receive gifts, manage inheritances, or transfer property. Misunderstanding this definition could unintentionally lead to tax liability or even regulatory non-compliance under the Foreign Exchange Management Act (FEMA). Let us explore how the term “relative” differs under key Indian regulations and why it’s vital for NRIs to understand these definitions when planning their financial affairs.

Who is your relative?

The definition of “relative” is different in different Acts and also for different provisions. So while your brother’s wife is not a relative under the Income Tax Act, she is a relative for gift tax purposes under the Income Tax Act. However, she is not a relative under FEMA. Also, grandparents or grandchildren are a relative under Income Tax Act, including for gift tax purposes, however, they are not a relative under FEMA. Also, the definition changes based on the point of view. For example, if Umang is Aanya’s mother’s brother; Umang is a relative to Aanya but Aanya is not a relative to Umang. This could easily confuse anyone. So come, let us understand the definition of relatives as per the Income Tax Act, for gift and under FEMA.

Relative under the Income Tax Act

As per the Income Tax Act: Section 2(41), “relative”, in relation to an individual, means the spouse (husband / wife), brother or sister or any lineal ascendant or descendant of that individual. This definition is important because it determines whether gifts or money transfers between individuals are tax-free or taxable. For NRIs, this can directly influence how they structure remittances to family members in India. For example, a gift from an NRI to their parents or children, all of whom qualify as “relatives”, would be exempt from tax in India. But if the gift is made to a cousin, nephew, or friend, the recipient may need to include it as taxable income if it exceeds ₹50,000. Understanding this clause helps NRIs avoid unexpected tax implications while supporting family financially.

Relative under Gift Tax (Section 56(2))

As per Gift Tax under Section 56(2), a ‘relative’ includes the following: the spouse of the individual; the brother or sister of the individual or of the spouse; the brother or sister of either of the individual’s parents; any lineal ascendant or descendant of the individual or of the spouse; and the spouse of any of the relatives mentioned above. This expanded definition allows NRIs greater flexibility in gifting money or property to close family members without triggering gift tax liabilities. For example, if an NRI gifts money to their brother-in-law or mother-in-law, those relationships are covered under the above clause, making such gifts tax-free for the recipient in India. However, the moment a gift is made to someone outside this circle, such as a cousin or uncle, the amount becomes taxable if it exceeds ₹50,000.

Relative under FEMA

FEMA relies on the definition in the Companies Act. As per Section 2(77) of the Companies Act, 2013, a person is considered related to another if they are members of a Hindu Undivided Family (HUF), if they are husband and wife, or as may be prescribed. According to Rule 4 of the Companies (Specification of Definition Details) Rules, 2014, the term ‘relative’ includes the father and mother, the son and daughter and their respective spouses, and the brother and sister. For NRIs, this definition is particularly important because FEMA governs cross-border transfers, remittances, and investments. Under FEMA regulations, an NRI can transfer or gift funds or assets to a relative (as defined above) without prior RBI approval. However, transferring assets or money to anyone not qualifying as a “relative” could require RBI permission and might trigger compliance scrutiny. Understanding FEMA’s narrow definition of “relative” helps NRIs avoid unintentional violations when transferring property, shares, or money between India and abroad.

The one-way nature of relationship definitions

In our example of Umang and Aanya, as mother’s brother is a relative for the purpose of a tax-free gift, Umang is Aanya’s relative and any gift from Umang to Aanya would be considered as a gift from a relative and would not be taxable for Aanya. However, as sister’s daughter is not a relative, Aanya is not Umang’s relative. Any gift by Aanya to Umang would be considered as a gift from a non-relative and added to Umang’s income if it is more than Rs. 50,000. It is also important to note that Umang is not Aanya’s relative for any other purpose under the Income Tax Act or under FEMA. This asymmetrical definition can easily confuse NRIs who assume that a family relationship automatically means tax exemption both ways. Understanding this distinction prevents costly compliance mistakes.

Why this matters for NRI financial management

Tax-free gifts and remittances

For NRIs, gifting money to family is common, but tax treatment depends on the legal definition of “relative.” Gifts to relatives under the Income Tax or Gift Tax Acts are fully tax-exempt, while those to non-relatives above ₹50,000 become taxable. Identifying eligible relatives ensures efficient, tax-compliant remittance planning.

FEMAa compliance

Under FEMA, the definition of “relative” determines what transfers can occur without RBI approval. NRIs can transfer property, shares, or funds freely to FEMA-defined relatives, while transactions involving non-relatives may require additional documentation or permissions. Understanding these parameters ensures smooth cross-border transactions and protects against unintentional regulatory non-compliance.

Estate and succession planning

When NRIs prepare wills or plan inheritance, knowing who qualifies as a relative simplifies property transfers and repatriation. Inheritance from relatives is tax-exempt, reducing administrative burdens. Aligning succession planning with FEMA and Income Tax definitions ensures wealth distribution remains legally valid, tax-efficient, and dispute-free for beneficiaries in India and abroad.

Each law interprets “relative” differently, affecting how the same transaction is treated. For example, a grandparent is a relative under the Income Tax Act but not under FEMA. Understanding which law applies before making gifts or transfers helps NRIs maintain clarity, avoid conflicts, and manage finances confidently across jurisdictions.

Navigating the financial landscape as an NRI requires balancing multiple regulations, from tax residency and FEMA compliance to the varying legal definitions of “relative” across Indian laws. While family and finances often overlap, not every emotional relationship aligns with the legal framework – a niece, grandparent, or in-law may or may not qualify as a “relative” depending on the Act in question. Understanding these nuances ensures your gifts, remittances, and inheritances remain legally valid, tax-efficient, and free from regulatory complications. A well-informed strategy, guided by experts, can help structure cross-border transfers correctly, simplify compliance, and prevent unnecessary taxation. ExpertNRI, with its deep knowledge of NRI financial management services in India, can help you plan and execute every aspect of your wealth management confidently, ensuring that your financial intentions translate seamlessly into compliant, efficient outcomes.

Read more article: Who Is Your Relative? Why Does It Matter In NRI Financial Management?

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Exploring Diverse Opportunities For NRI Investment Across Equity And Managed Funds

NRIs today have access to almost every investment avenue available to resident Indians – from direct equity to managed portfolios and private equity. Each investment option, however, carries its own set of rules, benefits, and risk profiles. It is therefore important for NRIs to understand these nuances before deciding where to invest. Let’s explore the various investment options available for NRIs, focusing particularly on equity and equity-related tools.

Understanding equity investments

Investment in ownership interest or the risk capital in any organization is considered as an equity investment. Equity investment is risky and the return is unpredictable, unstable, and can also be negative (loss). An equity investor buys and holds the shares of stock in a company in anticipation of dividends and/or capital gains. As equity investing is risky, return on equity is typically higher than debt to compensate for this higher risk over a long-term period.

Investing in direct shares of companies in the stock market, indirect investment through equity mutual funds, investing in an equity-based Portfolio Management Service (PMS) or Alternative Investment Fund (AIF) or investing in unlisted stocks, start-up companies as an angel, private equity or venture capital investor are all examples of equity investments. For directly investing in equity, an investor should have sufficient knowledge of the company, its business, and the effect of other factors on the company’s profitability or price. Else, it is advisable to invest indirectly in equity through Equity Mutual Funds.

Portfolio Investment Scheme (PIS)

The PIS is a facility notified by RBI to accommodate buying and selling of Indian equities by non-resident Indians (NRIs) and Overseas Citizens of India (OCI) on repatriation basis (i.e. from NRE, FCNR or inward remittance). For non-repatriation basis, an NRI or an OCI is allowed to invest in Indian equities directly from the NRO account without going through the PIS route. Under PIS, an NRI or OCI can invest directly in equity shares of listed Indian companies, in recognized stock exchanges, on delivery basis, through a designated Authorized Dealer, and up to a ceiling prescribed by RBI for that company.

Depository Participant (DP)

In India, there are only two depositories – National Securities Depository Ltd. (NSDL) and Central Depository Service Ltd. (CDSL), which facilitates transactions in the securities. A “Depository Participant” (DP) is an agent of the depository who is authorized to offer depository services, such as dematerialization or rematerialization, transfer of securities and settlement of trades to investors. A bank can also be a DP provided it is an agent of CDSL or NSDL. RBI has specified the ceiling up to which the NRI investment is allowed for each company and monitors the investments in equity shares by NRIs and OCIs. Once the aggregate investment reaches the cut-off point, further purchases require RBI approval. Sale orders have no restriction. Equity investment generates dividend income and capital gains, taxed as per slab rates.

Equity Mutual Fund

Mutual Fund is an investment tool that pools the money from thousands of investors and invests in various securities as per the scheme objective and is managed by the professionals. Equity Mutual funds invest in equity shares and related instruments of various companies so the risk and return will be close to investing in the equity market while diversifying the investments. Various equity funds are available based on Market capitalization, sectors and industries, investment style, etc. Equity mutual funds are a good option to invest in equity on a risk adjusted basis.

Portfolio Management Service (PMS)

Portfolio Management Services is a mutual fund for special clients with a twist. Like mutual funds, the portfolio is managed by a professional money manager to meet specified investment objectives. However, unlike mutual funds, the investor does not own a unit but owns individual securities in his / her name. PMS is regulated by SEBI, which has mandated a minimum investment amount of Rs 50 lakhs. The PMS usually have an entry load, fund management charges (1-2%) and profit sharing (e.g. 20% above 10%). PMS may also charge Custodian fees, Demat account charges, brokerage and accounting / audit charges. Income from PMS is taxed as per nature of income or business/profession.

Specialized Investment Fund (SIF)

As there is a big gap between minimum investment in Mutual Fund (MF) of Rs. 100 and Portfolio Management Service (PMS) is 50,00,000, SEBI has introduced Specialized Investment Fund (SIF) with minimum investment amount of Rs. 10,00,000. SIF may also open systematic options like Systematic Investment Plan (SIP), Systematic Withdrawal Plan (SWP) and Systematic Transfer Plan (STP) provided minimum investment criteria of 10 lakhs is met. SIFs can be open-ended, close-ended, or interval-based investment strategies. SIF is regulated by SEBI and minimum investment of Rs 10 lakh per investor must be maintained across all investment strategies at the PAN level. SIFs may have a dual fee structure of 1-2% management fees plus 10-20% performance-based fees. Income from SIF would be in the nature of dividend or capital gain, taxed as per slab rates or applicable capital gain tax rates.

Alternative Investment Fund (AIF)

AIF refers to any fund established or incorporated in India which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors. AIF is regulated by SEBI (Alternative Investment Funds) Regulations, 2012 and needs to be registered in one of the following three categories:

Category I AIF, which invests in start-up or early stage ventures, social ventures, SMEs, or other sectors considered socially or economically desirable.

Category II AIF, which is not covered by category I and III, and do not take any leverage or borrowing for investments.

Category III AIF, which employs diverse or complex trading strategies or take leverage or invest in derivatives.

AIF schemes under Category I & II shall be close ended for a minimum of three years. Category III may be open or close ended. AIF charges include account setup, fund management, and profit sharing. Income belongs to the investor and can be interest, dividend, capital gain, or profit, with tax pass-through applicable.

Private Equity and Venture Capital

Private Equity is the capital invested in a company that is not publicly listed whereas Venture Capital is the funding given to the startups that show potential for long term growth. The key difference is private equity investor invests in the companies which are already established and matured and venture capital investor invest in new ventures or startups. For equity investments in private equity or venture capital, there are ceiling limits placed by the RBI beyond which NRIs/OCIs, and other foreign investors, cannot invest. Investing in PE or VC is highly risky and the investment required is large, so it is only for High Net Worth Individuals (HNIs). Income from PE/VC can be interest, dividend, capital gain or share of profit. Interest and dividends are taxed as per slab rates. Share of profit from LLP or Partnership firm after the firm has paid income tax is tax free for the investor.

Investing in India offers NRIs diverse opportunities across equity, mutual funds, PMS, AIFs, private equity, and venture capital. Each option carries unique features, risks, and regulatory requirements, making informed decision-making critical. ExpertNRI, as trusted NRI investment in India consultants, can guide investors in aligning their financial goals with suitable investment avenues while ensuring compliance with FDI, PIS, and SEBI regulations. With professional advice and strategic planning, NRIs can optimize returns, manage risks effectively, and participate in India’s growth story confidently. Partnering with ExpertNRI ensures a structured, risk-aware, and rewarding investment journey in India.

Read more article: Exploring Diverse Opportunities For NRI Investment Across Equity And Managed Funds