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Confederation of Indian Industry

Returning Indians All that you need to know

Knowledge Partner

Table of contents

Message Preface Executive summary Introduction: all the basics, covered Scope and coverage Classification of returning Indians Purpose of movement Preparing for the move what you need to know before moving in India Landscape Lifestyle Social security Insurance schemes Investment avenues Taxation system in India Forms of self-employment/business Banking in India Remittances outside India Rules specific to NRI/PIO Case Studies Key aspects once you make your decision Welcome to India Work permit and visa Movable asset rules Trailing tax and social security issues Case studies - Tax Case studies Social Security Schemes for Overseas Indians Central Government initiatives Government of Assam Government of Bihar Government of Gujarat Government of Karnataka Government of Kerala Government of Odisha Government of Rajasthan Appendix Frequently asked questions A. TAX B. FEMA C. SOCIAL SECURITY D. IMMIGRATION Useful websites About Ministry of Overseas Indian Affairs About Confederation of Indian Industry About Deloitte About OIFC Key contacts

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Message

Dear Friends, Greetings to all of you! I am pleased to know that the Overseas Indian Facilitation Centre (OIFC) has taken the initiative to bring out a publication, which would illustrate the policies, procedures, case studies and the opportunity areas of investments into India from the perspective of Returning Indians. During my interactions with my Overseas Indian friends on various occasions, some of whom are considering moving back to India, I have felt that uprooting a family is a very complex decision. Many questions haunt their minds which city to move to, what job to take, the decision to start a business, schooling for kids and more. I hope this new publication Returning Indians - All that you need to know will address the questions of Returning Indians and prove to be a useful repository of practical information.

Vayalar Ravi Minister of Overseas Indian Affairs

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Preface

Greetings! On the occasion of the Tenth Pravasi Bhartiya Divas Convention 2012, it gives us great pleasure in bringing out Returning Indians - All that you need to know, a one point reference book for those seeking to return to India. The Ministry of Overseas Indian Affairs (MOIA) is the nodal Ministry for all matters relating to overseas Indians and also handles all aspects of emigration and the return of emigrants. Returning Indians are sometimes intimidated by their new surroundings and require credible support for their basic queries such as what they can bring back to India; pension and social security concerns; taxation matters; what bank accounts they can operate and more. The Overseas Indian Facilitation Centre (OIFC) set up by the MOIA in 2007, in partnership with the Confederation of Indian Industry (CII), is a special purpose vehicle of the MOIA which provides facilitation services to overseas Indians, especially for their economic engagement with India.

With credibility extended under the umbrella of the Government and an institutional industry chamber, coupled with the support of a network of subjectmatter experts, Indian states, Indian missions and Indian diaspora associations, the Centre addresses the queries and concerns of returning Indians, making it easy for them to return to India. I hope that returning Indians will find this reference book a useful guide in their quest for information about the regulatory and practical dimensions in India. We are grateful to Honble Minister of Overseas Indian Affairs Shri. Vayalar Ravi, for his encouragement and guidance in bringing out this book. We also place on record our appreciation for the contribution made by Deloitte Touche Tohmatsu India Pvt Ltd, OIFCs knowledge partner, for this publication.

Parvez Dewan Secretary, MOIA and Chairman, OIFC

Preface

Greetings to all of you! Recession and uncertainties in the regions with large concentration of Indian diaspora population and emerging opportunities in India together have created a growing possibility of reverse migration. Increasingly, Indians abroad see the move to India, at this point in time, as a way to have the best of both worlds. With rapid growth and development, the basic amenities that they are used to in overseas like access to world-class healthcare, international schools, availability of global brands, high quality housing are now available in India. Work experience in India is valued, as having relevant exposure in a growing and developing country adds weightage to your resume. Adding to this, the proximity you can have with your family, relatives and friends are winning propositions.

Confederation of Indian Industry (CII) has been privileged to incubate and support the Overseas Indian Facilitation Center (OIFC), in a Public Private Partnership mode, with the Ministry of Overseas Indian Affairs (MOIA). The OIFC has been playing a proactive and pivotal role in expanding the economic engagement of overseas Indians with India. I hope OIFCs upcoming publication Returning Indians - All that you need to know, with Deloitte Touche Tohmatsu India Pvt Ltd as its Knowledge Partner, will be a useful guide for those Indians who seek to return to India.

Chandrajit Banerjee Director General, CII and Co-Chairman, OIFC

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Executive summary

With a 1.21 billion population one can safely say that there is a bit of India everywhere in the world! India has a considerable population overseas, especially in the USA, the UK, the Middle-East, Australia and Canada. Over the years, Indians have established themselves in their adopted countries and have earned respect through their hard work, dedication, achievements and contributions to society. In recent years, however, an interesting trend has emerged. The oft-heralded term of brain-drain, used to describe talented Indians migrating overseas has seen a balancing force in many overseas Indians opting to return home. Indias growth story, booming opportunities along with focused liberalization measures adopted by the Government have resulted in a large number of foreign corporates setting up operations in India. The decision to move to India may be an emotional one inspired by the need to return to ones roots or a rational one, determined by career opportunities. In both circumstances, it is absolutely essential to be completely aware of the facets of the new environment that one is moving to. Returning Indians has been developed keeping all aspects that would impact an Indian wanting to return home. From the rules and regulations to softer aspects like culture, Returning Indians is the single publication that a returning Indian can refer to for guidance. The publication has been divided into four broad heads for simplicity and convenience. The first part serves as a general introduction and focuses on the scope

and coverage of the publication along with definitions for NRI, OCI and a comparative analysis of the same. The second section is sub-divided into two broad chapters. The first chapter is an overview of the Indian landscape which includes lifestyle, investment avenues, taxation and banking systems. The second chapter in the second section focuses on rules specific to NRIs/ PIOs. A significant and often common area of concern relates to the social security system in India. The US, UK and many European nations, for example, have very developed social security systems in place and Indians typically have queries about the corresponding system, rules and regulations here. These have been explained and examined in this chapter. Finally made the decision to come back to India? The third section gives a preview of the significant steps that need to be taken before you can travel to India. This section will cater to your requirements once you have decided to return to India and zeroed in on your destination city. If you have spent considerable time overseas, you may have trailing issues relating to tax and social security even after you return to India. This section analyses possible issues that you may face together with detailed illustrations. The fourth and last major section of the publication is a brief narrative of the schemes and measures undertaken by the Central and OIFC partner State Governments for the welfare and growth of the overseas Indian community. We hope that you will find all the information given useful and insightful.

Indians abroad see the move to India, at this point in time, as a way to have the best of both worlds. With rapid growth and development, the basic amenities that they are used to overseas like access to world-class healthcare, international schools, availability of global brands, high quality housing are now available in India.

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Introduction: all the basics, covered

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www.mha.nic.in If the person is in India on long term visa of more than one year, he can apply to the specified FRRO or the Joint Secretary (Foreigners) MHA If the applicant is in India, he/she can apply to the specified FRRO or to the Under Secretary, OCI Cell, Citizenship Section , Foreigners Division, MHA

This introduction will dovetail into all the basic details. We will discuss: our motivations to develop this publication, extent of coverage, who the intended target audience is classification categories for returning Indians Scope and coverage Returning Indians has been developed to provide information on the amenities in India, the applicable regulations and their impact, procedures/processes to be complied with and initiatives of the Government for Overseas Indians. Indias growth story and availability of myriad opportunities has encouraged an increasing number of Indians settled abroad to make India home, once again. There are also an increasing number of multi-national

companies who want to set-up shop in India and ensure that they leverage the tremendous opportunities in a growing economy. In all of this, the Government has played a strong role in adopting a liberal and open policy. This publication seeks to provide assistance and guidance on the various aspects that will impact you who are returning from across the globe from cultural to regulatory, from medical to social security and more. Classification of returning Indians A returning Indian can be classified into four broad buckets under immigration laws. The key features and requirements of the categories as specified under immigration laws are tabulated below1:

Particulars Definition

Non resident Indian [NRI] An Indian citizen ordinarily residing outside India and holding Indian passport

Person of Indian Origin PIO card holder [PIO] A person who or whose A person registered as a PIO card holder under any of ancestors was MHAs scheme an Indian national and who is presently holding another countrys overseas citizenship/ nationality Any person who at any time has held an Indian passport or who/either of whose parents or grandparents were born in or were permanently resident in India as defined in Government of India Act, 1935 and other territories forming part of India thereafter provided neither was at any time citizen of Afghanistan, Bhutan, China, Nepal, Pakistan and Sri Lanka or spouse of Indian citizen or PIO PIOs of all countries except Afghanistan, Bhutan, China, Nepal, Pakistan and Sri Lanka Eligible person can apply in prescribed form with enclosures to the Indian Mission/Post in the country where he/she is ordinarily resident2 `15,000 or equivalent in local currency for adults and `7,500 or equivalent in local currency for children below 18 years of age All activities except mountaineering, missionary, research work and existing prohibited/restricted areas which require specific permit As per Citizenship Act; has to reside in India for minimum 7 years before applying for citizenship

Overseas Citizen of India [OCI] A person registered as Overseas Citizen of India under section 7A of the Citizenship Act, 1955

Eligibility

Exclusion

None

None None prescribed

A foreign national who was eligible To become citizen of India on 26.01.1950 or anytime thereafter; or belonged to a territory that became part of India after 15.08.1947 and his/her children and grand children Whose country of nationality allows dual citizenship under local laws Excluding persons who were citizens of Pakistan of Bangladesh at any time PIOs of all countries except Pakistan and Bangladesh Eligible person can apply to the Indian Mission/Post in the country of citizenship or where he/she is ordinarily resident3 US$ 275 or equivalent in local currency. US$ 25 or equivalent in local currency for PIO card holders All activities except mountaineering, missionary, research work and existing prohibited/restricted areas which require specific permit Can obtain citizenship after 5 years from the date of OCI registration provided stays in India for one year before applying for citizenship

Procedure None for prescribed registration Fees for Not applicable application Permitted activities Indian citizenship

Not applicable

All activities are As specified in the visa permitted Already an Indian citizen As per Citizenship Act; has to reside in India for minimum 7 years before applying for citizenship

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Purpose of movement There are many reasons that could influence your decision to move to India. Why would a person move to another location? Why and when would one think of returning to his homeland? Generally, the more rational decision for movement includes career growth, increased remuneration, business opportunities and a better standard of living. India has come a long way since independence in terms of industrial development, infrastructural advancements and new avenues for growth and investment. This has resulted in increased employment opportunities besides opportunities for setting up ones own venture. On the emotional side, there are factors like the desire to be with ones family, to re-connect with ones roots and culture which encourage Indians to return. Increasingly, Indians abroad see the move to India, at this point in time, as a way to have the best of both worlds. With rapid growth and development, the basic amenities that they are used to at overseas location like access to world-class healthcare, international schools, global brands, high quality housing are now available in India. Work experience in India is valued, as having relevant exposure in a growing and developing country which adds a lot of weight to your resume. Further, the proximity to relatives, friends and family members will make it a winning proposition.

The decision to move to India may be an emotional one inspired by the need to return to ones roots or a rational one, determined by career opportunities. Returning Indian has been developed keeping all aspects that would impact an Indian wanting to return home.

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Preparing for the move what you need to know before moving in
India Landscape Lifestyle You would need to make many adjustments while relocating to another location. Key concerns at the time of relocation would revolve around your family. Accommodation, schooling, housing, medical facilities available are typically the most important priorities when you are planning to relocate. This section focuses on the available infrastructure facilities, the prevailing cultural norms and other developments in India today. Location assessment The decision on which city in India you want to settle down in would depend on various factors, including proximity to family, career opportunities, the weather in a particular city, the infrastructure, educational needs of the children, etc. While some factors may be personal, others would be dictated by purely practical reasons such as the location of the work place. Considering that there are many Indian cities that have become cosmopolitan, deciding on a city that best suits your needs should not be too challenging. There is a significant amount of information that is easily available. This along with awareness of the developments in India overseas would help you make the right choice for you! Housing After taking a decision on the city to relocate, the next challenge is identifying suitable accommodation. A major decision that you would have to take is whether to purchase a house, or to stay in a rented property. If you are returning to India for employment, there is a high probability that the employer might take care of your housing facilities. The Indian cities are expanding breadthwise and housing projects are increasing by the minute. With property developers vying with each other to provide a myriad of facilities and benefits, you have a wide option to choose from while deciding on accommodation. From integrated townships to condominiums to bungalows, Indian cities have them all. If the type of accommodation is wide ranging, the building styles incorporating Italian/French and other European designs doesnt lag behind either. You can make a choice even before landing in India just at the click of a button since the real estate sector is omnipresent in the cyber space.

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Certain rules and regulations govern the process of purchase of immovable property, which is explained further in this publication. Renting in the initial years may be a good option, while buying can be contemplated at a later stage. Schooling India has always been known for its sound education system, and many of you would want your children to be exposed to the sort of educational environment that you/your parents grew up in. The rigorous academic grounding, inculcation of values and focus on hard work is what makes the Indian education system so highly valued the world over. Overall, schooling in India involves 12 years, following the "10+2 pattern. Indian education system comprises of the following stages- pre-nursery (popularly referred to as pre-school), Nursery, Primary, Secondary (class 9-10), Higher Secondary (class 11-12), Graduation and Post-Graduation. Some students go into a different stream after Secondary school for 3 Years, opting for technical education. Indian schools can broadly be classified into private and public schools. Private schools are run by private individuals or trusts, while Public schools are run entirely by the Government. Private schools in turn are divided into two types: recognized schools and unrecognized schools. Government schools include the central schools, the state Government schools, and municipality schools. There are a large number of Government-funded schools in India. According to a recent estimate, 80% of all schools are Government schools, making the Government the major provider of education in India. These schools often offer free education, food, uniform, etc. to students. They are affiliated either to the Central Board of Secondary Education (CBSE) or the State Boards. Another category of Government-funded schools are the Kendriya Vidyalayas. The Kendriya Vidyalayas were set up to cater to the educational needs of children of transferable Central Government employees by providing a common programme of education across locations. In addition to Government schools, there are a large number of private schools in India. Most private

schools are affiliated to the CBSE or the Indian School Certificate Examinations (ISCE). While the ISCE and CBSE programmes are well-recognized and respected, the recent years have seen a huge surge in schools offering the International Baccalaureate (IB) programme which is reputed to follow a more flexible programme and caters to the needs of the mobile population. With the recent passing of the Right to Education Act, education has become a fundamental right of all children in the age group of 6-14 years. Private pre-schools in India have become an important aspect for overall development of a child. The pre-schools prepare toddlers for kindergarten and elementary schools, and also help them interact with a world outside their homes. Supporting the pre-school stage, the Government launched the Integrated Child Development Services (ICDS) Scheme, in 1975. The ICDS today represents one of the worlds largest and most unique programmes for early childhood development. ICDS focuses on providing pre-school education and nutrition, especially to the girl child. Acknowledging the importance of skilled manpower requirement for the economic development of the country, the Government of India has accorded great importance to vocational education and training. Under the twelfth five year plan, vocational education has
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received a boost with more funds being allocated for the purpose. Vocational education in India aims to develop skilled manpower through various courses to meet the requirements of mainly the unorganised sector and to instill self-employment skills. Vocational education is imparted through Industrial Training Institutes (ITIs), which are Government-run training organisations, and Industrial Training Centres (ITCs) which are privately-run equivalents. In addition, polytechnics provide undergraduate and postgraduate diploma courses in engineering (or technical) and other vocations. The renowned Indian Institute of Technology (IIT) and the Indian Institute of Management (IIM) personifies the glory of the Indian education system. IITs produce world class engineers and technocrats in India who serve the requirements of the industries the world over. There are fifteen IITs at present, located in Bhubaneswar, Mumbai, Delhi, Gandhinagar, Guwahati, Hyderabad, Indore, Kanpur, Kharagpur, Chennai, Mandi, Patna, Punjab, Rajasthan and Roorkee.

IIMs are India's premier management institute. They were set up with the objective of providing world-class management education, and to assist the industry through research and consulting services. There are about thirteen IIMs located in Ahmedabad, Bangalore, Kolkata, Kozhikode, Lucknow, Indore, Shillong, Ranchi, Rohtak, Raipur, Trichy, Udaipur and Kashipur. India hence offers a vast choice of schools, colleges and professional courses. All the major schools and educational institutes in India have their own website; one can research these on the internet before moving to India, and make an informed choice beforehand, based on ones requirements. Timing for moving is also an imperative aspect. The typical academic year in Indian schools is from June to March. If you are planning to return in the middle of an academic year, you could make enquiries with the educational institutions to ensure that your childs education is not impacted.

Illustrative list of recognized schools A list of some recognized schools in the major cities is given below: Bangalore he International School T allya Aditi International M School irForce School A ational Public School N yan International R School ishop Cotton School B idya Niketan School V asis International O School waminarayan S International School anadian International C School GS International B Residential School E L School B Chennai merican International A School adma Seshadri Bala P Bhavan School AV Senior Secondary D School idya Mandir Senior V Secondary School hettinad Vidyashram C ady Andal L Venkatasubba Rao Matriculation Higher Secondary School ood Shepherd High G School .S. Senior Secondary P School hinmaya Vidyalaya C havans Rajaji B Vidyashram ational Public School N t. Johns Senior S Secondary School Delhi hri Ram School S he Mother's T International School armel Convent School C odern School M otus Valley International L oreto Convent L elhi Public School D othari International K School D Goenka World G School mity International A School lue Bells B agore International T ount St. Marys M Kolkata t. Xaviers Collegiate S School a Martiniere School L t. James School S oreto House L on Bosco School D P Birla Foundation Hr. M Sec School alcutta Boys School C he Heritage School T alt Lake School S uxilium Convent A ssembly of God Church A Mumbai he Cathedral and John T Connon School ombay International B School .B. Petiti High School J cole Mondiale World E School odar World School P ombay Scottish School B amna Bai Narsee School J rya Vidya Mandir A on Bosco High School D VKM International S School ES International School N ingapore International S School hirubhai Ambani D International School merican School of A Bombay

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Medical Facilities The medical facilities in India are rated as one of the best in the world. The increasing paying capacity of Indians and health awareness has triggered exponential growth of very high quality healthcare service. This growth can be understood from the very fact that even for complex treatments like Cardio, India has emerged as a major destination for low-cost medical care at top international standards.Medical tourism is becoming highly popular. We have appended the list of hospitals in the major cities of India for your reference. Every Indian city has Government and private hospitals. Treatment in Government hospitals is accessible to all. These hospitals provide free service to the poor, while charging low rates from others, as compared to private hospitals. Government hospitals give quality treatment at affordable prices, and these hospitals have been consistently ranked amongst the top hospitals in India, in terms of quality, especially the prestigious All India Institute of Medical Sciences (AIIMS)4. India has amongst the best super speciality hospitals spread out over the entire country, both government-run as well as privately managed. Amongst the most renowned are All India Institute of Medical Sciences (AIIMS), Delhi and Post Graduate Institute of Medical Education and Research, Chandigarh in the Government sector, as well the privately-run Apollo hospitals (with branches all over the country), Christian Medical College, Vellore, Breach Candy hospital, Mumbai, Medanta, the Medicity, Delhi and many more. Illustrative list of prominent hospitals in India Bangalore Manipal Hospital Apollo Hospital Narayana Hridayalaya t Johns Medical S College & Hospital Fortis Hospital Mallya Hospital Lakeside Medical Centre Chennai Apollo Hospitals MIOT Hospitals Fortis Malar Hospital Vijaya Hospital Sooriya Hospital Agarwal Eye Hospital Sankara Nethrayala Frontier Lifeline Hospital Delhi ll India Institute of A Medical Sciences Apollo Hospitals scorts Heart Institute & E Research Centre ax Super Speciality M Hospital atra Hospital and B Medical Research Centre Sir Ganga Ram Hospital Kolkata Ruby General Hospital ortis Hospitals & Kidney F Institute eerless Hospital & P B.K.Roy Research Centre pollo Gleneagles A Hospital esun Hospital & Heart D Institute he Calcutta Medical T Research Institute Mumbai aslok Hospital and J Research Centre ombay Hospital B induja Hospital and H Medical Research Centre ortis Hospitals F ata Memorial Hospital T ilavati Hospital L reach Candy Hospital B

Alternative medicines can often work in conjunction with conventional allopathic medicines, and Indians have been relying for centuries on treatments like Ayurveda, Homeopathy, Nature Cure treatment, yoga, Unani and many more. These medicines have increasingly found global acceptance. For many returning Indians who may seek a change from modern health care cures, India will offer vast options in the field of alternative medicines. These medicines have withstood the test of time, and offer a gentle, natural, non-aggressive path to health a path most likely followed by the NRIs parents and ancestors! One can obtain more information from the website of the Department of AYUSH dealing in traditional Indian medicine.

The WEEK/Hansa 2011 ranking

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Culture - India vis--vis the world India is now viewed as a land of opportunities and Overseas Indians are finding the need to connect with their motherland even more. The desire to return to India is cherished by a growing number of Indians settled abroad and the numbers returning to their motherland is growing every year. This relocation gives rise to the challenges of re-adjusting oneself to cultural changes in the homeland. The children, who may have been born and brought up outside India, may face a bigger challenge. Having become accustomed to a certain lifestyle abroad, adapting to a new culture - to the way people dress, dine, work and dwell in a new environment, may take time and effort. However, with globalization, adapting to new geographies has become a reasonably simpler process. Indians returning after a long gap will find remarkable changes in every sphere of life in India. In the recent past, a significant number of Indians have travelled and lived overseas, and with this increased mobility has come exposure to foreign cultures and way of life. In addition to this, access and use of the internet in India has increased phenomenally. The new-age, widely-travelled, technologically savvy Indian is not only tolerant to foreign ideas, but is keen to try out and experiment with different cuisines, clothes, cinema, languages etc. Dress The culture, religion, languages spoken and attire of the people of India are as diverse as the landscape of this vast country. Due to its diversity, India does not have just one dress, which can be called as the National

Dress or Indian Dress. Each of the 28 states has its own unique way of dressing. Indian costumes are vibrant, comfortable and adaptable, according to the climate of that particular region. As anywhere else in the world, the kind of dress you wear in India would depend primarily on the occasion for which it is worn. The attire would be different depending on whether it is a social function, a marriage, a religious function, a business meeting, etc. If you are an Indian returning from the West, you would be accustomed to Western attire and may be anxious about dressing appropriately in India, keeping Indian sensibilities in mind. With globalization, western attires are becoming increasingly popular and common in India, especially amongst the younger generation. You will be pleasantly surprised to find that most of the international brands of clothing which you are accustomed to wear in your host country are easily available at the next door shopping mall! However, it is important to remember that your clothing should be respectful of the local culture. Language The principal official language of the Republic of India is Hindi, while English is the secondary official language. In addition, India accommodates a large number of regional languages as well. You, and more importantly your children, may not be used to English the way it is spoken in India, and may initially face a challenge in adapting to the accent and to the relatively formal use of the language in India. Cultural sensitivities may also need to be kept in mind, including the appropriate way to address your seniors at the

India is now viewed as a land of opportunities, and overseas Indians are finding the need to connect with their motherland even more. The desire to return to India is cherished by a growing number of Indians settled abroad, and the numbers returning to their motherland is growing every year
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workplace and your elders at home. A large number of multinational companies operate in India, and the work culture in these companies, including the language, may be one you are familiar and comfortable with. Many schools in India require the children to learn a second regional language, besides English. This may pose a challenge to the Overseas Indian child who would not be familiar with any such language. Indians show keen interest in learning foreign languages like French, German, Spanish, Japanese, etc. Though these languages are not commonly spoken in India, with the increase in trade with countries where these languages are spoken, the desire to learn these languages has increased, since this would open doors to global job opportunities. Festivals India celebrates a large number of festivals all across the country, throughout the year. Each of the Indian states has its own set of festivals with their unique ways of celebration. Each festival is backed by a unique story/ legend behind its evolution, stories which have been passed down from generation to generation. The tales are equally fascinating and as varied as the celebration itself. Festivals in India are occasions to celebrate with family and close friends. In addition to religious festivals, India is also home to some of the most renowned cultural festivals across the length and breadth of the country. From the Khajuraho dance festival to the Bikaner festival, from Pushkar festival to the Konark festival India can well and truly be lifetimes of rich and diverse experiences combined together. Many of you will agree that one of the greatest joys of coming back to India is the opportunity to once again participate in the revelry and joy of these festivals, with ones own. Food With changing lifestyles, a clear shift to the nuclear family system and busy work schedules, the eating habits of Indians, especially in the metros, has clearly changed. World class malls, multiplexes and shopping arcades with multinational fast food chain of restaurants are common and extremely popular.

You will have the best of both worlds the food you have become accustomed to in the country you have left behind and the home cooked Indian food you so loved while growing up in India. Additionally, there are numerous international hotel chains in India the Taj group, the Oberoi group, Le Meridian group, etc. They offer world-class service that can be expected in any leading hotel in the world, coupled with warm Indian hospitality. Traffic As an Indian returning to your homeland after a hiatus, you may not be used to the volume of traffic on the roads here and may take a little while to get used to it. The volume of traffic on the Indian roads has increased exponentially in the last couple of decades though the Government is taking steps to widen roads and providing alternate routes to ease the traffic congestion. The Bandra Worli sea link, an architectural phenomenon is one such welfare measure to help Mumbaikars reduce their travel times. The Government initiative to partner with the private sector in developing and maintaining highways has met with stupendous success as is evident from the East Coast Corridor. The introduction of metro rail and air conditioned buses in the major cities has also provided an alternative to commuting driving. Public transport rail, buses, metros, etc. - remains the primary mode of transport for most of the population, and India's public transport systems are among the most heavily used in the world. The Government has recently announced the National Common Mobility Card which will facilitate cashless travel in public transport system like railways, metro rail, buses, taxi, besides toll taxes and parking. Rail transport is a commonly used mode of longdistance transportation in India. Almost all rail operations in India are handled by a state-owned organisation, i.e., the Indian Railways, Ministry of Railways. The rail network in India is one of the largest networks in the world. Many cities also have their own dedicated suburban networks to cater to commuters. India also has rail links with Pakistan, Nepal and Bangladesh. India has some of the lowest train fares in the world and rail travel is heavily subsidised. Today, railway tickets can be booked through the internet and via mobile phones.
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Buses form a very important module of public transport in Indian cities, and serve as a cheap and convenient mode of transport for all classes of society. Bus services are typically run by State Government owned transport corporations. In the recent past, various facilities have been introduced like air-conditioned buses and low-floor buses for the differently abled. Another new initiative is the Bus Rapid Transit (BRT) system which already exists in Pune, Delhi and Ahmedabad with new ones coming up in Visakhapatnam, Hyderabad and Bangalore. Buses go a long way in helping decongest the busy Indian roads. The first modern rapid transit in India was the Kolkata Metro, with operations starting in 1984. The Chennai Mass Rapid Transit System was introduced in 1997. The Delhi Metro in the capital city of New Delhi is the third conventional metro which began operations in 2002. The Delhi Metro Rail Corporation (DMRC) project changed the lives of the commuters in the National Capital Region (NCR) of Delhi, covering every area of the Delhi NCR: Delhi, Gurgaon, Noida and Ghaziabad. It is one of the largest metro networks in the world.The Namma Metro in Bangalore is India's fourth operational rapid transit beginning operations in 2011. The main objectives of a mass rapid transport system - which are to reduce traffic on road, make passengers life easy, save their time and cost are met admirably in each of the four cities. Currently, rapid transit systems are under construction or in planning stage in several major cities of India. The Government has opened up the Indian skies to the private sector resulting in diverse players competing with each other to offer the passengers the best in rates, infrastructure and facilities. The airports in the major cities have been revamped and can compare with the best in the world. No wonder the A380s can soon be seen touching down on the Indian runways. Access to brands/shopping While you may get traffic on the way, chances are that if you have the money, you can be driving (or rather, be driven!) in latest model available of a very high-end brand of car and reach a mall where you will find options to all the international brands from a Mango, Aldo, Marks & Spencer to a Guess, Next and Jimmy Choo. And when you are tired and hungry, you can tuck into a Pizza Hut, a KFC or a McDonalds. The beauty of it is the Indian twist, where you can have a vegetarian

Paneer Burger! Theres also the array of ice-cream parlours offering smoothies, sorbets, ice-creams and our very own Kulfi for one to savour. Seeing familiar and recognised brands and having access to sanitised environments also adds to your comfort zone. The Performing Arts Welcome back to a rich world of music, dance, art, theatre and culture! Indian art and culture is one of the oldest in the world, and one you can be justifiably proud of. Given below are very brief outlines of Indian music, dance and other performing arts. Music Indian classical music may be categorized into two types - Carnatic (south Indian) and Hindustani (north Indian). Carnatic and Hindustani music have features in common, but their rendition and articulation are usually distinctive. Dance Dance has always played an important role in India as an integral part of worship, a career option, a pastime and as a part of theatre. Some of the well-known Indian dance forms are - Bharatnatyam, Kathakali, Manipuri, Kathak, Odissi, Kuchipudi and Sattriya. These dance forms date back to many centuries and speak volumes of the countrys rich cultural heritage. There are numerous institutions in India that provide training (both basic and advanced) in the various art forms. Theatre and films Indian theatre has a history going back to more than 5000 years. Indian folk theatre has an ancient and rich tradition, and is distinct to the states from where it originated - Jatra in Bengal, Orissa and Bihar, Tamasha in Maharashtra, Nautanki in Uttar Pradesh and so on. Ramlila is another important form of folk theatre in India, based on the mythological story of an epic battle between Lord Rama and the Demon Ravana, and is staged in the month of Dussera throughout India. The festival symbolizes the triumph of good over evil. Puppetry is another very ancient form of theatre in India. The modern theatre in India is also flourising.

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While theatre has been a very popular art form in India in the past, it is struggling since the arrival of television and movies. More films are made in India than any other country, and films and film music typically forms a large and very important part of an Indian persons life. India is home to some of the most exquisite handicrafts in the world. These handicrafts are showcased in various government-owned state emporiums like Lepakshi (Andhra Pradesh), Manjusha (Bengal), Rajasthali (Rajasthan), Gangotri (UP), Poompuhar, Khadi Kraft (Tamil Nadu) and many others. Cultural centers Sangeet Natak Akademi National School of Drama Sri Ram Center of Performing Arts Lalit Kala Academy Gandharva Mahavidyalaya Prithvi Theater Kalakshetra Exciting times ahead India is taking giant strides in technological advancements and striving to be up there with the best in the world. The Government is tapping the talent pools from public/private sectors towards this end. The Unique Identification Number [UID] is one such ambitious initiative that will go a long way in information gathering and e-governance. If you are from the USA, you could relate this UID to the social security number that is the key to the world of benefits. India has always been known for the depth of its scientific talent and the activities of the Indian Space Research Agency and Defence Research Organizations lend weight to this claim. Also, Indian information technology specialists have designed and developed the first indigenous tablet Aakaash that is said to be the cheapest in the world. India also has a big presence in the area of sports. If you are an avid sports fan, you will find that India has some of the finest arenas/academies today like the Budh International Circuit (for Formula 1 racing), the Pulela Gopichand Academy, the MRF Pace Foundation etc.

Conclusion Many of you, especially, those who have been away for many years, will find enormous changes for the better in the quality of life in India. Many facilities are of international standards, and Indian metros are fast acquiring the status of cosmopolitan international cities. Yet, while Indians have welcomed and accepted these global changes, the uniqueness in attires, festival, food etc. has been fiercely guarded and maintained to cherish the Indian culture. While taking changes in their stride, Indians seem to have abided by Rabindranath Tagores famous philosophy (which was also admired and followed by Mahatma Gandhi): "I would let the winds of the world blow through the doors and windows of my house - but I will not be blown away."

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Social security Social security provides support to citizens in times of need unemployment, illness, disability, death and old age. The social security scheme in India covers the work-force in the organised sector and the employers either solely or jointly contribute with employees for the social security schemes. The Ministry of Labour and Employment has a social security division which mainly focuses on framing policies for social security for the workers of organized sector. Unemployment, medical and health insurance The issue of unemployment is taken care of through the National Rural Employment Guarantee Act (NREGA) for rural area. The concern of medical help and insurance is taken care of by Employees State Insurance (ESI) for employees earning salary lower than the prescribed limit. The Workmens Compensation Act provides compensation for industrial accidents and occupational diseases resulting in disability and death. Provident and Pension Fund The retirals are taken care of by the provident fund and pension fund contributions. The governing legislation for contribution and collection of social security is The Employees Provident Fund and Miscellaneous Provisions Act (PF Act). Under PF, a lump sum amount is available to the employee on retirement or on other contingencies arising to the employee. It is a defined contribution plan funded by monthly contributions by the employer and the employee to the fund. The fund currently earns an interest at 9.5% p.a. on the closing balance. Withdrawal of accumulations will be tax free after 5 years of contribution. In case of early withdrawal, contribution made by employer and deduction availed in the past years will be taxable. An employee can also avail loan facility against the accumulated balances for identified purposes. The pension funds make monthly sums available to the employees on retirement. Such annuity payments are funded by monthly contributions made by the employer and the Central Government. The pension amount would depend on the quantum and the period of contribution made by the employer. Monthly pension will be taxable at the progressive tax rates in the year of receipt.

The social security scheme in India covers the work-force in the organized sector and the employers either solely or jointly with the employees contribute to the social security schemes.
Since both the employer and employee need to contribute towards PF, we shall examine these in detail belowThe PF Act is applicable to all establishments employing 20 or more employees during the year and the compliance of provisions of PF Act are mandatory for all employees earning a basic pay of `6,500 or less p.m. Where the basic pay is higher than `6,500, the employees can opt out of the scheme under certain circumstances. Contribution Under the PF scheme, the employer would have to contribute 12% of monthly pay towards social security contributions. The employee would have to make a matching contribution, though he would have an option to contribute more than 12%5. The contributions for a domestic employee would be as follows: Employers contribution Pension Fund 8.33% of monthly pay subject to a maximum of `541 or `6,500 per annum Provident Fund 12% of monthly pay less pension contribution Total 12% Employees contribution Pension Fund NIL

Provident Fund 12% of monthly pay Total 12%


5 Section 29(2) of the PF Scheme

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Monthly pay is a broad term and covers: basic wages (all emoluments paid or payable in cash while on duty or on leave/holiday); dearness allowance; retaining allowance; and cash value of any food concessions. However, house rent allowance, overtime allowance, bonus, commission or any other similar allowance or presents are excluded from the definition of monthly pay for PF contribution. Tax benefit of contributions The employers contribution upto 12% of monthly pay is not liable to be taxed in the employees hands. The employees contribution would be entitled to be deducted from their total taxable income upto a maximum of `100,000 p.a. Gratuity Gratuity is a gratuitous payment made by the employer to his employees on resignation from employment, death, retirement, termination etc. and is mandated by law. The quantum of gratuity payment will depend on the salary and tenure of employment. It is an important form of social security, though not strictly a retiral benefit. Gratuity is mandatory if the employee has rendered five years of continuous employment with an employer and is covered under the Payment of Gratuity Act. However, the condition of five years continuous service is not necessary for termination due to death or

disablement. Gratuity receipts are taxable as salary and will be exempt to a maximum of `1,000,000. Insurance schemes Based on the varied life styles of the individual, the insurance needs differ from person to person. Insurance is divided into two major categories: Life Insurance and General insurance. There are a number of private and public companies that provide insurance services and most of the policies can be taken online. The typical types of insurance policies are: Life Insurance In this policy, the insurance company pays in case of the demise of the policy holder or at the time of maturity. A Life Insurance plan ensures that the family is financially secure even in the unfortunate event of the demise of the bread earner. Health Insurance Health insurance consists of a package of various types of insurance related to health. Insurance companies offer many products with different policies and prices depending on the needs of the user. It is important to determine what ones requirements are, and what health insurance benefits one is looking for in the plan. For instance, use of regular medications the coverage already provided by ones employer, family history of diseases, are all deciding factors in

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Todays savings is tomorrows investment is an oft repeated saying. The Government is taking various steps to inculcate and promote the habit of savings amongst the people.
determining the premium amount one will pay. Pre-existing diseases can affect your health insurance claim. It is necessary to examine the terms of the policy carefully, so that the claims are not denied later on. Property Insurance This insurance helps you to prevent the losses against theft, fire, burglary or any natural calamity like earthquake, floods etc. resulting in damage to property Auto Insurance The costs of getting a vehicle repaired in the event of damage, or replacing in case it is stolen, can be enormous. A comprehensive auto cover to give one all-round protection is a must, especially keeping in mind that the rate of accidents on Indian roads is higher than average. Auto insurance also covers third party insurance. Travel insurance A Travel Insurance Policy gives an individual comprehensive cover for himself and his family while travelling. A Travel Insurance Policy must go beyond just health insurance and provides the insured person with a wide range of travel-related covers to make his trip stress-free. Loss of personal belongings while travelling, medical coverage, delays in travel are all part of the travel insurance policy. Investment avenues Savings instruments Todays savings is tomorrows investment is an oft repeated saying. The Government is taking various steps to inculcate and promote the habit of savings amongst the people. Towards this end, the Government has provided tax incentives/reliefs for savings made. The most popular savings among the salaried class in India is the PF detailed above. Returning Indians coming to
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India on employment will be covered by this depending on whether they hold an Indian passport. Besides, individuals drawing basic salary in excess of `6,500 may opt out of the PF scheme. The other kinds of popular savings instruments are: Bank fixed deposits Fixed deposits with banks can be opened for varying time periods and quantums. The deposits may be cumulative or non-cumulative. The interest rates are related to the tenure of the deposit and taxable in the hands of the investor. Public Provident Fund [PPF] PPF account (with post offices/banks) is a simple and easy to maintain investment that facilitates recurring savings. The investor can contribute on a monthly basis or once a year up to `100,000 to this account. The account has tenure of 15 years that may be extended and be opened at any branch of the SBI or its subsidiaries, at any post office or at the branches of specially nominated nationalised banks. One can also withdraw from his/her account up to specified limits and subject to conditions. Both the interest accruing annually as well as the withdrawal of the balance on maturity are tax free. Life Insurance The life insurance schemes are detailed earlier in this chapter. They act as tax saving instruments as well as security measures. The amount received from the insurer on death of the insured is tax free. In other instances, the sum received is not taxable provided the premium payable during the policy term does not exceed 20% of the capital sum assured. Equity Linked Savings Scheme [ELSS] Equity Linked Savings Scheme gives you an opportunity to take advantage of the equity market all the while enjoying tax benefits. These schemes have a lock in period during which withdrawal is not permitted. This is a risk and reward scheme that is dependent on stock market movement. The returns from ELSS are tax exempt. Post Office Savings Schemes Individuals may also choose from the savings options provided by post offices. These include a regular savings account, monthly income schemes, National Savings Scheme, National Savings Certificate [NSC], etc. The Government of India uses the deposits made with post

offices for developmental works. Post offices also follow more or less same rules and procedures as banks when an individual opens an account with them. NSC is a savings scheme of the Government and is available at post offices in varying denominations as low as `100. NSCs mature after 5 years and earn interest at prescribed rates. This interest accrues on an annual basis but is paid on maturity. Also, the interest is taxable for the investor though it qualifies for deduction within the overall limit of `100,000. Monthly income schemes provide fixed monthly incomes at the specified rates depending on the sum invested upfront. The interest received on monthly income schemes is taxable while interest on post office savings account is exempt upto prescribed limits. Investments with post offices are safer since the repayment on maturity is guaranteed by the Government. Other investments Individuals can also invest in equity shares/debentures and mutual funds through the stock exchanges. For this purpose, the individual must have a trading account with a depository participant and can then buy and sell online. These investments carry the associated risk of rise and fall in stock index though the returns may be proportionately higher. Taxation system in India Statutory framework The Income-tax Act, 1961 (Act) lays down the frame work for taxation of income. The Central Board of Direct Taxes (CBDT) is the governing body for income-tax and is a part of Department of Revenue in the Ministry of Finance. An individual can resort to the provisions of the Act or Double Taxation Avoidance Agreements (DTAA/tax treaty) whichever is beneficial. To avail such beneficial provisions, the individual should be a tax resident of either India or the treaty partner. Tax Year The Indian fiscal year runs from 1 April to 31 March. The taxable period is referred as previous year/fiscal year/tax year/financial year. Income earned during the taxable period is declared in a tax return in the year following the said tax year.

Tax residence Taxation in India depends on the residential status of a person determined in accordance with the provisions of the Act. In the case of an individual, this is determined based on the number of days of stay in India in a particular fiscal year. In the case of companies, the country of incorporation and place of management determines the residential status. We will move on to the specifics of individual taxation in the ensuing pages. Individual tax Permanent Account Number (PAN) PAN is a 10 digit unique alphanumeric number allotted to tax payers. This is a unique number allotted to an individual only once. If you have obtained a PAN at any point of time, you can continue to use the same number for any interaction with the tax authorities in India. PAN is used as a reference to track income, taxes and financial transactions of a tax payer. An individual can hold only one PAN and obtaining or possessing more than one PAN is a penal offence. It is compulsory to quote PAN in investment/financial transactions. Applying for PAN PAN application can be made either online or by submitting a physical form. The tax authorities have prescribed specific forms for Indians and foreign nationals. While an Indian citizen should apply for PAN in Form 49A, Form 49AA is to be used by foreign nationals. The PAN application form requires details such as name, Need for PAN

Entering into nancial transaction notied by the government

Filing of tax returns

Paying taxes

Correspondences with tax department Quote PAN

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fathers name, date of birth, correspondence address, telephone/mobile number and e-mail address. The forms have been amended in October, 2011 to include a Know Your Client (KYC) section. Besides the completed form, documentary evidences should be enclosed with the application. There is also a stipulated fee (`94 for an Indian address/`944 for overseas address) that is to be paid either by way of cash/ demand draft/cheque at the time of applying for PAN. On submission of the application form and supporting documents, the authorities allot PAN in 3-4 days if the requirements are met. Further, it takes 15 days on an average from the date of application to receive the PAN card. An applicant receives intimation once PAN is allotted at the e-mail address specified in the application form. The applicant may at any time, track the PAN status by logging on to www.tin-nsdl.com by specifying the acknowledgement number provided at the time of filing the application. PAN in case of change in address/loss of existing PAN Card PAN issued once can be used for life and will not get altered due to change of address or loss of card. However, a request may be made for correction/changes to the details provided at the time of initial application or for obtaining a duplicate card (through online/ physical form) quoting the PAN allotted earlier. This application is to be made in the change form together with supporting documents. The fee for any changes remains the same as that of the original application. Can PAN card be delivered overseas? PAN card will be delivered to the overseas address mentioned in the application form provided suitable documentary proof for the overseas address is furnished at the time of application.

Steps for applying PAN Documentary requirements The documentary evidences would differ for an Indian citizen and foreign national. The following are the documentation requirements prescribed by the authorities vide notification dated 17th October 2011. In case any of the documentary proofs are available in foreign language, the same may have to be translated in English and duly attested by the Indian embassy/ High Commission/ Consulate though such requirement is not mandated by the Income tax department. Documentary requirements for PAN application in Form 49A by a Citizen of India Proof of Identity Copy of school leaving certificate; or matriculation certificate; or degree of a recognized educational institution; or depository account; or credit card; or bank account; or water bill; or ration card; or property tax assessment order; or passport; or voter identity card ; or driving licence; or certificate of identity signed by a member of Parliament or Member of Legislative Assembly or Municipal Councillor or a Gazetted Officer, as the case may be. Proof of Address Copy of electricity bill; or telephone bill; or depository account; or credit card; or bank account; or ration card; or employer certificate; or passport; or voter identity card; or property tax assessment order; or driving licence; or rent receipt; or certificate of address signed by a Member of Parliament or Member of Legislative Assembly or Municipal Councillor or a Gazetted Officer, as the case may be.

Fill form 49A/ 49AA The form can be downloaded from www.tin-nsdl.com

Sign and affix passport size photograph Signature should not run outside the box provided and should be in BLACK ink

Pay fees Fees can be remitted through cheque / demand draft or through credit card. Fee would vary according to the communication address.

Submit documents Proof of Identity Proof of Address

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Documentary requirements for PAN application in Form 49AA by a foreign national Proof of Identity Proof of Address Copy ofCopy of Passport; or Passport; or PIO card issued by the Government of India; or PIO card issued by the OCI Card issued by Government of India; or Government of India; or Other national or citizenship Identification Number or Taxpayer Identification OCI Card issued by Government Number duly attested by "Apostille" (in respect of countries which are signatoof India; or ries to the Hague Apostille Convention of 1961) or by Indian embassy or High Other national or citizenCommission or Consulate in the country where the applicant is located; or ship Identification Number or Bank account statement in country of residence; or Taxpayer Identification Number Non-resident External bank account statement in India; or duly attested by "Apostille" (in Certificate of residence in India or Residential permit issued by the State Police respect of countries which are Authority; or signatories to the Hague Apostille The registration certificate issued by the Foreigner's Registration Office showing Convention of 1961) or by Indian Indian address; or embassy or High Commission or Visa granted and copy of appointment letter or contract from Indian Company Consulate in the country where and Certificate (in Original) of Indian Address issued by the employer. the applicant is located. Residential Status An individual is liable to tax in India based on his tax residency during a fiscal year. Depending on the stay in India in a particular fiscal year, an individual will be classified as a resident or non-resident. The tax residential status has no relevance to the residential status as per Foreign Exchange Management Act (FEMA) which is a separate legislation. For a returning Indian, the tax residential status will not be impacted based on his status (OCI/PIO) or citizenship. Determination of residential status Stay in India 182 days in the tax year

Yes

No Stay in India 60 days* in the tax year and Stay in India 365 days in the preceding 4 tax years

Resident Yes Non- Resident for 9 out of 10 previous tax years No Stay in India 729 days in preceding 7 tax years No Resident and ordinarily resident (ROR) Yes

Yes

No

Not ordinarily resident (NOR)

Non-resident (NR)

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Tax landscape An individual will be categorized as a ROR, NOR or NR based on the stay pattern in the particular tax year and the history of stay and income will be taxed accordingly. Tax status ROR NOR NR Income sourced in India Yes Yes Yes Income received in India * Yes Yes Yes Income received outside India Yes No No

* Income received in first instance outside India and subsequently remitted/ transferred to India is not to be treated as 'income received in India'. Sources of Income The Act classifies taxable income and the related provisions into five broad heads detailed as under: 1. Salaries 2. Income from House property 3. Profit and gains of business or profession 4. Capital Gains 5. Income from other sources Salaries Salary income refers to compensation received from the employer or former employer for services rendered by an employee. Salary related to services rendered in India is taxable in India regardless of the place of receipt. Employed individuals are subject to income-tax on the cash salary and non-cash benefits received from employment. Regardless of the nomenclature, all components of salary are taxable and the Act provides specific deduction in case of certain components. Components of Salary Salary Basic salary Overtime salary Location premiums Bonus Allowances / Reimburesment Travel allowance Medical reimbursement House rent allowance Perquisites Rent free accomodation Interest free loan Car facility Stock awards Salary payments are subject to monthly tax withholding by employer. After the end of tax year, an employer should issue a remuneration and tax deduction certificate in Form No.16 and Form 12 BA. This certificate serves as a proof of the income earned by an individual and the taxes withheld on a monthly basis. Flashpoints for returning individuals Salary earned overseas is subject to tax unless exempted by the Act or the tax treaty For NOR and NR, overseas salary pertaining to services rendered outside India will not be taxable in India In cases of double taxation, tax credit can be claimed in India/the resident country as per the provisions of the Act or tax treaty

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Income from House Property Rental income received by an owner of property is subject to tax under this head. Based on the occupancy, house property can be classified as either self-occupied or let out. Self-occupied property vis--vis let out property Particulars Property covered Self-occupied property Occupied by the owner for residential purpose and has not been actually let out A normal residence which cannot be occupied because it is away from the place of work NIL Mortgagte/Loan interest up to ` 150,000 Let out property Let out during the whole or any part of the tax year

Gross income Deductions

Generally, actual rent received will be considered as gross income Municipal taxes paid by the owner Standard deduction at 30% Actual mortgage/Loan interest without any ceiling limit

Flashpoints for returning individuals RORs will be taxed on house properties located outside India NRs and NORs will be taxed on the rental income received from the overseas property if the rental income is received in India in the first instance Income from Profit or Gains From Business or Profession Business income and income derived from professional services are taxable net of deductible expenses. All selfemployed individuals/professionals will be taxable at slab rates. Partnership and LLP forms of business will be separately taxed and hence the share of individuals from such business will be exempt from tax. Scheme of business income taxation Maintenance of books Income or turnover exceeding the ceiling limit in the current tax year or immediately preceding 3 tax years: Individuals carrying out the prescribed professional activities with gross receipts exceeding `150,000 Others - Income exceeding `120,000 or the total turnover or gross receipts exceeding `10 lakhs Audit of accounts Compulsory if the total turnover exceeds `60 lakhs in case of business and `15 lakhs in case of profession (includes law, medicine, accountancy, architecture, technical consultancy, interior decoration, information technology professionals etc Presumptive Income Any person whose total turnover / gross receipts doesn't exceed `60 lakhs has an option to declare 8% of total turnover or gross receipts as income from business irrespective of the actual income. However this option is not available for a person carrying on profession. VAT and Service tax registration VAT registration: VAT is state levy at the point of sale of goods. Every trader or manufacturer who is engaged in selling of goods needs VAT registration according to the respective state VAT laws. Service Tax Registration A service provider has to obtain service tax registration and remit service tax as per service tax rules.

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Capital Gains Generally, gains derived from transfer of capital assets are taxable in the year of disposal. The computation methodology and tax rates differ based on the period of holding of such assets. The period of holding of the asset is reckoned from the date of acquisition to the date immediately preceding its transfer. Key features of capital gains taxation Assets held for more than 36 months are referred to as long term capital assets and those held for not more than 36 months are referred to as short term capital assets. Shares, listed securities or units of UTI, Mutual funds and zero coupon bonds are classified as long term assets if the period of holding exceeds 12 months.

Long term capital gains attracts a special rate of 20% on the gains while short term capital gains are taxed at applicable slab rates.

Gains from equity shares or units of equity oriented fund listed in a recognized stock exchange in India and subject to Securities Transaction Tax: Long-term capital gains are exempt Short-term capital gains are taxable at 15%

Gains can be exempt if investment is made in specified assets (Example: Residential house)

In the case of long term capital assets, the cost of acquisition may be converted to reflect the current prices. This process known as indexation is carried out using defined cost inflation indices. Flashpoints for returning individuals Gains derived from assets held outside India may be considered exempt by applying the provisions of tax treaty as applicable. NRs being Indian citizens and PIOs are taxable at a special rate of 20% for income from investment assets and long-term capital gain from foreign exchange assets. However, no corresponding deduction/indexation benefit would be available on such investment income and capital gains. This special rate would continue to apply for the returning individuals even in the years they become a resident. An individual can also opt out of the applicability of the special provision while filing the tax return. Income from Other Sources All residual income such as investment income (interest/ dividend), winnings and gifts are taxable under this head after deduction of expenses incurred in relation to earning such income. Gifts received in the form of cash or kind above `50,000 are taxable except when it is received from relatives or on occasion of marriage

or other circumstances defined in the Act. Presently, dividend received from an Indian Company or from units of mutual fund is exempt from tax in the hands of individuals from payment of tax. However, foreign dividends are not exempt and are to be offered for tax in the individual hands. Tax computation Personal deductions On aggregation of income from all sources, an individual is entitled to claim the below deductions which are capped at specified limits: Insurance premiums Social security contributions to Provident Fund, Public Provident Fund etc. Principal repayment for a mortgage property Purchase of notified mutual funds Tuition fees for children Donations Medical expenditure Interest on loan for higher education Treatment/maintenance of dependents Computation of tax: An individual is taxed at progressive rates on the net taxable income.

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Applicable tax rates for the tax year 2011-12 Income Slab ` Up to 180,000* 180,000 500,000 500,001 800,000 800,001 or above Rate % Nil 10 20 30

Tax payment Tax on income earned is payable through the following mechanisms Estimation of personal income/income not subject to withholding/income subject to lower withholding Determination of tax liability on the above Payment of tax in three installments Due dates 15th September, December and March of every fiscal year Final tax payment by individual To be paid before filing the return of income Interest levy for default/deferment in payment of taxes

*Exemption limit for resident women below 60 years of age is `190,000, for senior citizens above 60 years but below 80 years is `250,000 and for senior citizens above 80 years is `500,000 Additionally, education cess is payable at the rate of 3 percent of the total tax liability.

Advance Tax

SelfAssessment Tax

Tax Filing Process flow chart Who has to file? Individuals having income more than the exempt threshold View the Annual Tax Statement (Form 26AS) which summarizes the taxes deducted/deposited on to your PAN Exemption from filing Individuals deriving only salary and interest income up to `500,000 Due date for filing Individuals whose books of accounts are to be audited on or before 30th September Other individuals - Tax return has to be filed on or before 31st July every year Consequences of belated filing Belated filing attracts interest and penalties Current year loss may not be permitted to be carried forward

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Wealth Tax Scope of wealth tax: Wealth tax is payable by an individual whose net wealth is in excess of the threshold limit as on 31 March of the relevant tax year. For tax year 2011-12, individuals having net wealth in excess of `3,000,000 as on 31 March 2012 will be liable for wealth tax at the rate of 1% on net wealth exceeding `3,000,000. Weath Tax inclusions and exclusions Incidence of wealth tax and location of asset ROR who is a citizen of India is taxable for global net wealth Foreign nationals/NRIs will be taxable for the assets located in India Special exemption for NRIs and PIOs repatriating for permanent settlement

Assets covered Buildings- residential house, commercial building, guest house, farm house situated within 25kms from municipality limits Motor cars Jewellery, bullion and other articles made of gold, silver or other precious metals Yachts, boats and aircrafts Urban Land Cash in hand in excess of `50,000

Assets to be excluded Residential house let out for 300 days or more in a tax year House occupied for own business or profession Assets held as stock-in-trade in business. Cash up to ` 50,000 Shares and securities of listed/unlisted companies Cash in bank accounts Besides the above assets, the following assets will be exempt for seven tax years from the year of repatriation of an individual: Money and value of assets brought by him to India Assets acquired out of monies brought to India Assets purchased out of NRI account

Any corresponding debt relating to the assets can be claimed as a deduction for arriving at the net wealth. The value of assets should be disclosed through a separate return that is to be filed on or before 31 July of the year following the tax year (i.e. 31 July, 2012 for the tax year 2011-12). The tax due on the return should be paid before filing of the return. Specific exemption available for NRs returning to India for permanent residence: For NRs being Indian citizen or PIO returning to India with an intention to stay permanently, assets bought to India or assets acquired out such assets bought to India or out of NRI account shall be exempted from wealth tax for the period of 7 financial years starting from the year of return. Direct Taxes Code With a view of bringing a simplified and well-structured Tax law, Direct Taxes Code Bill (DTC) was introduced in the Parliament in August 2010 after considering the
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recommendations suggested by people from different sections of society. This proposed code, is expected to come into force from 1st April 2012 as a replacement to the Income-tax Act, 1961. Key proposals: Personal taxation An individual will be classified either as a resident or non-resident. The concept of NOR is removed. However, the conditions for NOR have been retained to determine the taxability of overseas income of an individual. Progressive tax rates would apply for income above `200,000. Income above `1,000,000 will be taxed at 30%. Wealth tax is proposed to be levied at 1% for wealth in excess of `10,000,000. The scope of taxable assets is proposed to be widened. Rental income will be taxed based on actual rent received/ receivable. Taxation of rental income on

notional basis is proposed to be abolished. Standard deduction for repairs and maintenance is to be reduced from 30% to 20%. No special or concessional tax rate for the income of NRs from transfer of specified assets. Listed equity shares or units of equity oriented fund which are subject to STT and held for a period of one year or less will be taxed at an effective rate of 5%, 10% or 15% based on the slab rate of individuals. Forms of self-employment/business India is one of the fastest growing economies of the world. The countrys robust economic growth is driven largely by domestic demand and a rapidly widening consumer base. With rising disposable income; India provides one of the largest markets for manufactured goods and services today. For a returning Indian it is very important to understand the principal forms of doing business/ self-employment in India and choosing the right kind of business or corporate entity which best suits his purposes. The principal forms of doing business in India are: Proprietary concern It is an archaic form of business entity and also the easiest form to set up and most common entity in India. There is no separate legal entity status to a proprietary concern and is not governed by a specific law. However, the laws that apply to an individual such as Income-tax Act, 1961, foreign exchange regulations, etc. would also apply to the proprietary concerns. No registration is required for a sole proprietorship. To form a proprietary concern you simply have to open a bank account with the name & style of the proprietary concern. However, trade related licenses that are mandatory have to be obtained. The concern dissolves on the death of the sole proprietor. Partnership firm A partnership is an agreement between persons to share profits of a business carried on by any or all of them acting for all. The relationship between the partners is defined through the partnership deed. Each partner is liable to indemnify the firm for any loss caused to it by his/her fraud in the conduct of the business of the firm. Each partner is liable jointly with all other partners and also severally for all acts of the firm done while he/she is a partner. Partnership is governed by the provisions of the Indian Partnership Act, 1932.

A partnership firm requires minimum 2 partners and the maximum number of partners is 20. Registration of a Partnership firm is not compulsory, though it is usually done as registration brings many advantages to the firm. For registering a partnership firm an application in the prescribed form is required to be filed along with certain documents with the Registrar. Other trade related licenses that are mandatory also have to be obtained. A tax audit is compulsory under the Indian tax laws based on prescribed turnover/income. Limited Liability Partnership (LLP) A Limited Liability Partnership (LLP) is a body corporate, a legal entity separate from its partners and has perpetual succession. A LLP can be formed by 2 or more persons. The relationship between the partners of a LLC/ LLP is defined through the LLP agreement. An individual or a body corporate can be a partner in a LLP. An LLP is required to have at least 2 designated partners (DPs) who are individuals responsible for compliance with the provisions of the LLP Act and at least one of DP should be resident in India (i.e. present in India for at least 182 days in the preceding year). The DPs must obtain a Digital Signature Certificate (DSC) from the certifying authority for electronic filings and Director Identification Number (DIN) from MCA, Government of India6. As a separate legal entity, an LLP is liable to the full extent of its assets, whereas the liability of LLP partners is limited to their agreed contribution to the LLP. LLPs are governed by the Limited Liability Partnership Act, 2008 and administered by the MCA through the ROC, Company Law Board and Official Liquidator. A partnership firm, private company or unlisted public company can be converted into an LLP.

DPIN is now equal to a DIN

India is one of the fastest growing economies of the world. With rising disposable income, India provides one of the largest markets for manufactured goods and services today.
Returning Indians All that you need to know | 31

A LLP is mandatorily required to be registered with the Registrar of Companies. Memorandum and Articles of Association should also be registered with ROC. Audit is compulsory for LLP with turnover exceeding `4 million or contribution exceeding `2.5 million in a financial year. Annual Statement of Accounts and Solvency & annual return needs to be filed every year. Company Companies incorporated in India are governed by the Companies Act, 1956. Companies are broadly classified as private limited companies and public limited companies. Companies may have limited liability (limited by shares or guarantee) or unlimited liability. Companies limited by shares are a common form of business entity. Public limited companies can be closely held, unlisted or listed on a stock exchange. A private company is one that, by virtue of its articles of association prohibits any invitation to the public to subscribe for any of its shares or debentures; prohibits any invitation or acceptance of deposits from persons other than members, directors or their relatives; restricts the number of members to 50 (other than employees) and restricts the transfer of shares. A private company can be formed with a minimum of two shareholders and paid up capital of `100,000. A private company requires two directors who must be individuals. A Public company is one that is not a private company. Minimum number of members of a public company is 7 and requires 3 directors who must be individual. The minimum paid up capital of a public company is `500,000. Process of forming a private company would involve the following steps Obtain Directors Identification Number (DIN) for proposed Directors of the new Company Obtain Digital Signature Certificate (DSC) for proposed Directors of the Company Filing the proposed name of company for approval to the Registrar of Companies (ROC); Get the Memorandum and Articles of Association vetted by the ROC and printed Present the required documents along with the registration fee and requisite stamp duty to the Registrar of Companies to get the certificate of incorporation Obtain a company seal
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Apply to National Securities Depository Ltd. to obtain a Permanent Account Number (PAN) Obtain a Tax Account Number (TAN) for income taxes deducted at source Register under Shops and Establishment Act, if applicable Register for value added tax (VAT) before the Sales Tax Officer of the ward in which the company is located, if applicable Register for Profession tax, if applicable Register with Employees' Provident Fund Organization, if applicable Register with ESIC (medical insurance), if applicable A company is mandatorily required to be registered with the Registrar of Companies (ROC). Memorandum and Articles of Association should also be registered with ROC. Audit is compulsory for a company. Annual Accounts and Annual return need to be filed with the ROC. Banking in India If you are returning to India for the purposes of employment or vocation, you would be considered resident as per FEMA provided you satisfy the 182 days stay condition in the previous year. In such case, you would be permitted to open regular bank accounts in India as are available to resident citizens. These are Savings bank account This is a common account which can be opened by a person in any bank. Most banks will offer a nominal rate of interest of around 3 - 4.5%. A minimum balance is required to be maintained to operate this account. Most Indian companies have a tie-up with the banks where a salary account is maintained to enable e-transfer of remuneration Current account - The depositor is at liberty to operate the current account any number of times in a day unlike savings accounts where only limited number of transactions are allowed. This account is opened by people who are engaged in trades, businesses and professions. Fixed deposits (time deposits) - Fixed deposit accounts are fixed in terms of maturity period, rate of interest payable and the amount of deposit. However, with increasing competition in the banking sector, fixed deposit accounts are also offering a lot of flexibility to give you extra benefits. Recurring deposits As the name suggests these are fixed term deposits where the account holder would

choose to deposit a fixed sum of money every month which will be added to the deposit amount. The rate of interest would be slightly lower or equal to that of a simple fixed deposit. Most banks would offer services like e-transfer of funds, auto bill pay, online payments, debit and credit cards etc. to its account holder. You could choose a deposit with a nationalised bank, a co-operative bank or a private bank. While nationalised banks would provide you with a greater comfort in terms of security, the co-operative and private banks may offer a higher rate of interest and wide ranging services. Remittances outside India A person resident in India is permitted to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if the same was acquired when he was resident outside India or inherited from a person who was resident outside India. A resident individual can obtain/remit foreign exchange within specified limits for one or more purposes without RBI approval under the FEMA (Current Account Transaction Rules. An illustrative list of such transactions is as underNRI/PIOs can remit through authorised dealers upto USD 1 million out the balances in their NRO acccount

net of India tax withholding and subject to other conditions. Remittances are also permissible net of taxes of sale proceeds of assets acquired out of foreign exchange earnings or by way of inheritance/gift. Fresh investments outside India for a person resident in India Liberalised Remittance Scheme (LRS) for resident individuals Resident individuals (including minors) are allowed to freely remit up to USD 200,000 per financial year (without prior approval) for any permitted current and capital account transactions, including acquisition of property and investments outside India. The remittances can be made in any freely convertible foreign currency equivalent to USD 200,000 in a financial year. The facility under LRS is in addition to those already available for private travel, business travel, studies, medical treatment, etc., as described under FEMA (Current Account Transactions) Rules. The LRS can also be used for these purposes. However, remittances for gift and donation cannot be made separately and have to be made under LRS only. Accordingly, resident individuals can remit towards gifts and donations up to USD 200,000 per financial year under LRS.

S. No Purpose Foreign travel (other than Nepal & Bhutan) Personal Business Medical treatment abroad Higher education Employment Donations/gifts Maintenance of close relatives abroad

Limit

1.

USD 10,000 (per visit) USD 25,000 (per visit) USD 100,000* USD 100,000 per academic year or fee whichever is higher USD 100,000 Upto USD 5,000 per financial year per remitter or donor other than resident individual USD 100,000 per year per recipient subject to conditions No limits provided the employee is working with a subsidiary in India of a foreign company or of an Indian company in which direct and indirect foreign equity is not less than 51% and the shares are offered by such a foreign company under the ESOP Scheme globally on uniform basis. One other condition is that the Indian company has to submit an Annual Return to RBI through the Authorized dealer bank giving details of remittance / beneficiaries etc.

2. 3. 4. 5. 6.

7.

Stock option purchase

* Additional amount of USD 25000 would be permissible for maintenance of the patient or the person accompanying the patient

Returning Indians All that you need to know | 33

Remittances can be made for the following purposes under LRS: Acquisition and holding immovable property or shares or debt instruments or any other assets outside India Purchasing objects of art subject to the provisions of other applicable laws such as the extant Foreign Trade Policy of the Government of India. Acquisition of ESOPs in addition to the acquisition of ESOPs linked to ADR / GDR and acquisition of qualification shares subject to limit and conditions; Units of Mutual Funds, Venture Funds, unrated debt securities, promissory notes, etc. For this purpose, investment can be made out of the bank account opened abroad under the LRS; An individual who has availed of a loan abroad while as a non-resident can repay the same on return to India under LRS as a resident The resident individual investors can retain and re-invest the income earned on investments made under the LRS. The residents are not required to repatriate the funds or income generated out of investments made under the Scheme. The remittance facility is not available for the following: prohibited capital and current account transactions remittances directly or indirectly to Nepal, Bhutan, Mauritius and Pakistan purchase of lottery tickets/sweep stakes margins or margin calls to overseas exchanges / overseas counterparty purchase of FCCBs issued by Indian companies in the overseas secondary market setting up a company abroad

Rules specific to NRI/PIO Who is an NRI/PIO/OCI as per FEMA? NRI - Please refer Residence under FEMA for definition of NRI. PIO - A PIO is a citizen of any country (other than Bangladesh or Pakistan), if he has at any time held an Indian passport, he or either of his parents or grandparents were at any time citizen(s) of India as per the Constitution of India or the Citizenship Act the individual is a spouse of an Indian citizen or a person referred herein above. However, spouse of an Indian citizen will not be a PIO for transactions involving immovable properties. Besides, the definition is further restricted for certain types of transactions specified under FEMA. OCI - OCIs are not specifically defined under FEMA. Acquisition or transfer of immovable property in India Under the FEMA, NRIs/PIOs are permitted to deal with immovable property as under: In case of NRI and PIO, the following is allowed: Purchase of residential/ commercial property in India (excluding farm house, agricultural land or plantation) Acquisition of immovable property in India (other than agricultural land, plantation or a farm house) through gift or inheritance from a person resident in India or a NRI or a PIO who acquired the property in accordance with FEMA. However, NRI / PIO who are citizen of any of the following countries viz, Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan requires prior approval of RBI for acquiring immovable property in India through inheritance; Renting of immovable property is permitted provided rent is credited to NRO/NRE/ FCNR account Transfer of immovable property A NRI may transfer any immovable property in India to a person resident in India. He may transfer any immovable property (other than agricultural land or plantation property or farm house) to an Indian Citizen resident outside India or a PIO resident outside India;

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A PIO can transfer any immovable property in India (other than agricultural land / farm house / plantation property) by way of sale to a person resident in India. He may transfer agricultural land / farm house / plantation property in India, by way of gift or sale to a person resident in India, who is a citizen of India. A PIO may also transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India, who is a citizen of India or to a PIO resident outside India. A person who had bought the residential or commercial property or agricultural land or plantation property or farm house in India when he was a resident, can continue to hold such immovable property without approval of RBI after becoming an NRI/PIO. Sale proceeds, if any of such immovable property can be credited to NRO account of the NRI / PIO. From the balance in the NRO account, NRI/PIO may remit up to USD 1 million per financial year subject to payment of applicable taxes and other applicable conditions. Other investments7 Investments on repatriation basis NRIs are permitted to invest in shares and convertible debentures of Indian companies under FDI Scheme on repatriation basis, subject to the condition that the amount of consideration for such investment shall be made only by way of inward remittance in free foreign currency through normal banking channels. Few sectors such as tea sector including tea plantation, defence production, asset reconstruction companies, broadcasting and print media would require approval. However, citizens of Pakistan or Bangladesh are not permitted to make these investments. NRI/PIO can also acquire existing shares from Indian shareholders or from other non-resident shareholders subject to certain conditions. Another investment option that can be explored is the domestic Venture Capital Funds registered with SEBI subject to conditions. In all the above cases specified conditions such as pricing guidelines, reporting requirements, mode of payment, minimum capitalization norms, etc. needs to be complied with.

A person who had bought the residential or commercial property or agricultural land or plantation property or farm house in India when he was a resident, can continue to hold such immovable property without approval of RBI after becoming an NRI/PIO
Further, NRI/PIO can invest in Government securities or treasury bills, units of domestic mutual funds, bonds issued by public sector undertakings in India, non-convertible debentures of a company incorporated in India, investment in shares in PSUs under divestment offer and perpetual debt instruments and debt capital instrument issued by banks in India. Investments on non-repatriation basis As an NRI/PIO, you can also invest in units of money market mutual funds, capital of a firm or proprietary concern in India (that is not engaged in any plantation or agricultural activity or real estate business), units of domestic mutual funds, commercial paper issued by an Indian company, shares and convertible debentures of Indian companies other than under the Portfolio Investment Scheme, deposits with a company registered under the Companies Act, 1956 including an NBFC registered with the RBI or a body corporate, a proprietorship concern or a firm out of rupee funds that do not represent inward remittances or a transfer from NRE/ FCNR (B) accounts into the NRO account. However, these are to be done on a non-repatriable basis. Portfolio Investment Scheme [PIS] NRI/PIO can invest in shares/convertible debentures under the Portfolio Investment Scheme provided the total paid up value of the shares/convertible debentures does not exceed 5% of paid up capital of the Indian Company. Additionally, the aggregate paid up value of investments by NRIs/PIOs cannot exceed 10% of the paid up value of the Indian Company. Investments in PIS scheme can be done on repatriation or non-repatriation basis. The sale proceeds of the repatriable investments can be either remitted outside India to the foreign currency bank account of the NRI/PIO or credited to the NRE/NRO etc. accounts of the NRI/PIO whereas the sale proceeds of non-repatriable investment can be credited only to NRO accounts.

The regulations are subject to change from time to time. Therefore, it may be advisable to consult with your adviser before making an investment.

Returning Indians All that you need to know | 35

Savings instruments NRIs cannot open a new PPF account though they can continue to deposit into an existing account. Further, they cannot apply for extension beyond the maturity period. NRI cannot invest in post office savings schemes or NSC. Banking The banking sector extends a beneficial treatment in terms of NRI accounts to Indians remitting their foreign exchange earnings to India.There may be different categories of Indians who are settled abroad but yet are keen to invest in India. You may be the first generation Indians who have gone abroad for employment or second generation Indians who are the children/grandchildren of Indians settled abroad. Most of you would have taken up citizenship overseas. The Government is ensuring that you receive favoured treatment as against foreigners. Permissible Bank accounts8 NRIs are permitted to hold certain types of bank accounts in India. The permissible bank accounts would differ based on the category of non-residents and type of remittances - some more privileged than the rest. Foreign Currency Non- Resident account - FCNR Account Non-Resident External - NRE Account. Non-Resident Ordinary NRO Account Foreign Currency Non- Resident account - FCNR Account As the name suggests this is a foreign currency account which can be opened through overseas remittances through normal banking channels. NRIs/PIOs (except individuals/entities of Bangladesh/Pakistan nationality/ ownership) are permitted to open and maintain these accounts with Authorized Dealer CategoryI banks (AD banks). Returning Indians need to remember that once they become a person resident in India, deposits may be allowed to continue until the maturity period at the contracted rate of interest. However, such deposits shall be treated as resident deposits from the date of the account holders return to India barring the exception of the rate of interest applicable to the deposit and a few other requirements.

Non-Resident External - NRE Account This is a Rupee designated account which can be opened through overseas remittances through normal banking channels. NRIs/PIOs (except individuals/entities of Bangladesh/Pakistan nationality/ownership) are permitted to open and maintain these accounts with AD banks. These accounts need to be designated as resident accounts on change of the residential status of the individual under FEMA. Visitors however are permitted to continue with their NRE accounts even during the stay. Non-Resident Ordinary - NRO Account This is an account which can be opened with permitted overseas remittances through normal banking channels and also legitimate dues of the account holder in India. Any person resident outside India, including an NRI/ PIO (except individuals/entities of Bangladesh/ Pakistan nationality/ownership) is permitted to open an NRO account with AD banks. When a person resident in India leaves India for another country (other than Nepal or Bhutan) for employment, conducting business, or any other purpose, indicating intention to stay outside India for an uncertain period, his existing accounts are designated as a Non-Resident (Ordinary) accounts. Likewise NRO accounts are re-designated as resident rupee accounts on the account holders return to India for employment, conducting business or any other purpose, indicating their intention to stay in India for an uncertain period. Where the account holder is only on a temporary visit to India, there is no need to redesignate the account.

The banking regulations are subject to change from time to time. It is advisable to always check with your respective bankers before taking any decisions. Authorised dealers may undertake with the depositor a fully covered swap in which currency against the desired designated currency. Such a swap may also be done between two designated currencies

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Features of the various accounts Comparative Please find below the comparative analysis of the various types of accounts permissible for NRI/PIO/OCI. Particulars Account holder Joint account of two or more Nominee Joint account with another person resident in India Currency denomination FCNR account NRIs/PIOs/OCI Permitted Not permitted NRE account NRIs / PIOs/OCI Permitted Not permitted NRO account NRIs / PIOs/OCI Permitted Permitted

Repatriation: Principal Interest earned on deposits Foreign Currency Risk

Pound Sterling, US Dollar, Japanese Yen, Euro, Australian Dollar and Canadian Dollar. Depositor desiring to place a deposit for any convertible currency other than designated currency can do so if permitted by the authorized dealers9. Freely repatriable Freely repatriable Account holder is protected against changes in ` value vis--vis the currency in which the account is dominated Term Deposits only

Indian Rupees

Indian Rupees

Freely repatriable Freely repatriable Account holder is exposed to the fluctuations in the value of `.

Not repatriable except in certain cases Freely repatriable Account holder is exposed to the fluctuations, in the value of ` .to the extent of interest amount.

Type of accounts

Period for Fixed Deposits Nomination facility Rupee loans in India against the security of the funds held in the account Permitted credits

For terms not less than 1 year and not exceeding 5 years Available Loans up to specific limits are permissible against security of funds held in FCNR account. FCNR accounts are permitted to be opened with funds remitted from outside India through normal banking channels Funds received in rupees by debit to the account of a non-resident bank or funds that are of repatriable nature Transfer of funds from existing NRE/FCNR accounts.

Current Savings Recurring Fixed Deposits For the periods as announced by the deposit taking bank. Available Loans up to specific limits are permissible against security of funds held in NRE account. Proceeds of remittances to India in any permitted currency. Transfers from other NRE/FCNR accounts. Interest accruing on the funds held in the account. Interest on Government securities and dividend on units of mutual funds, provided the securities/ units were purchased by debit to the account holder's NRE/ FCNR account or out of inward remittance through normal banking channels. Certain types of refunds

Current Savings Recurring Fixed Deposits For the periods as announced by the deposit taking bank. Available Permissible

Proceeds of remittances from outside India through normal banking channels received in foreign currency which is freely convertible. Any foreign currency, which is freely convertible, tendered by the account holder during his temporary visit to India. Rupee funds should be supported by encashment certificate, if they represent funds brought from outside India. Transfers from rupee accounts of non-resident banks. Legitimate dues in India of the account holder. This includes current income like rent, dividend, pension, interest, etc. Sale proceeds of assets including immovable property acquired out of rupee/foreign currency funds or by way of legacy/inheritance.

Returning Indians All that you need to know | 37

Particulars Permitted debits

FCNR account

NRE account Local disbursements. Permissible remittances outside India. Transfer to NRE/FCNR accounts of the account holder or any other person eligible to maintain such account. Investment in shares/securities/ commercial paper of an Indian company or for purchase of immovable property in India provided such investment/ purchase is covered by the regulations made, or the general/ special permission granted, by the Reserve Bank. Any other transaction if covered under general or special permission granted by the Reserve Bank.

NRO account All local payments in rupees including payments for investments in India subject to compliance with the relevant regulations made by the Reserve Bank. Remittance outside India of current income like rent, dividend, pension, interest, etc. in India of the account holder. Remittance up to USD One million, per financial year (April-March), for all bonafide purposes, to the satisfaction of the authorized dealer bank. All remittances of income need to be net of applicable India taxes

Investments after coming into India A person resident in India (other than citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan) is allowed to freely make investments in India (immovable property, securities infrastructure bonds, commodities, retail sector, etc.) without any restrictions under FEMA. However, any other restriction under other applicable law in India as applicable to a person ordinarily residing in India would be applicable to a returning Indian resident in India. Further the persons resident in India are permitted to purchase immovable property in India including farm house, agricultural land or plantation in India. For further information on investment avenues for residents, please refer the Indian landscape section. Residence under FEMA Under the FEMA regulations, an individual will be resident in India if he/she satisfies the following tests: (a) Basic test of physical presence in India The individual must have resided in India during the preceding financial year (April to March) for more than 182 days

(b) Additional tests indicating purpose In addition to the basic test, the individual must be residing in India for either of the following purposes: For or on taking up employment in India; or For carrying on a business or a vocation in India; or For any purpose in such circumstances as would indicate his intention to stay in India for an uncertain period. The following individuals would be treated as non-residents despite satisfying the basic condition of 182 days stay in the preceding financial year A person staying/ going outside India for Taking up employment outside India Carrying on business or vocation For any other purpose for an uncertain period A person staying/coming in India, otherwise than for Taking up employment in India Carrying on business or vocation For any other purpose for an uncertain period

Based on the above, it may be noted that an individual may be resident as per FEMA depending on length of stay in India during the previous financial year. For instance, residential status under FEMA for financial year 2011-12 (1 April 2011 to 31 March 2012) is dependent on stay in India during financial year 2010-11.

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Illustrations: 1. Mr. and Mrs. X come to India for the first time on 15th January 2011. Mr. X would take up an employment in India, whereas Mrs. X is accompanying her husband and intends to go back after 2 months, as their children are studying overseas. In this scenario, both Mr. and Mrs. X will not be persons resident in India for the fiscal year 2011-12 since Mr. X has not stayed for more than 182 days in the preceding year even though he has taken up employment in India and Mrs. X has not been in India for more than 182 days.

2. Mr. Y leaves India on 14th November 2011 to take up employment outside India for the first time. What will be residential status as per FEMA? Mr. Y would be considered to be a non-resident under FEMA from 14th November 2011 as he is covered by the exclusion tabulated above. This is irrespective of the fact that he was residing in India for more than 182 days during the previous year.

Retention of holdings outside India You may continue to have assets/ investments outside India even after you return to India. As per FEMA, you are allowed to hold and own your assets/ investments outside India (such as securities, immovable property etc) if the same were acquired when you were resident outside India or inherited from a person who was resident outside India. Therefore, you can continue to retain your holdings outside India and are not required to dispose them even when you become resident in India as per FEMA. Special considerations for returning Indians Overseas remittances for defined purposes Please refer the section on Remittances outside India for details on permitted remittances under LRS, private/ business travel, education, medical treatment etc. Foreign currency bank accounts Residents in India may maintain foreign currency bank accounts in India under the following schemes Resident Foreign Currency Accounts (RFC) PIOs or NRIs returning to settle permanently in India should convert their NRE accounts to a resident account. An individual can open a RFC account out of the foreign exchange received from specified income in foreign exchange and can transfer the balances in NRE and maintain funds in foreign currency like US$, Euro, GBP.

Returning Indians can continue their FCNR (B) deposits till the original maturity date and on maturity can transfer funds to RFC accounts. No loans/advances are allowed whether directly or indirectly against balance in an RFC account. If you intend to return overseas to become an NRI, the balance in the RFC account can be converted to NRE/FCNR account. Permissible debits and credits to RFC account Key aspects on withdrawals For bonafide payments abroad (transfer to personal account abroad, travel, investment etc.) Withdrawals/Payments other than foreign currency remittance abroad shall be made in equivalent Indian Rupees only

Some allowed credits to RFC account Foreign exchange received as pension or any other superannuation or other monetary benefits from the employer outside India; Remittances from abroad being sales proceeds of assets held abroad or income earned abroad; Proceeds of life insurance policy claims/maturity/ surrender values settled in foreign currency from a permitted insurance company in India; Proceeds of foreign currency notes / travellers cheques brought to India. Interest in RFC account

Interest income on RFC deposits is taxable when the NRI loses NOR (resident not ordinarily resident) status and becomes an ordinary resident.

PIOs or NRIs returning to settle permanently in India should convert their NRE accounts to a resident account
Returning Indians All that you need to know | 39

Resident Foreign Currency (Domestic) Accounts Returning Indians can also open Resident Foreign Currency (Domestic) Account and can retain balances in permitted foreign currency. This account will be maintained in the form of a current account and hence will not yield any interest on the accumulations. Foreign currency withdrawals are possible for permitted transactions. Remittance of salary outside India Foreign/Indian nationals, employed by a foreign company outside India and on deputation to the office/ branch/ subsidiary/ joint venture in India of such foreign company, may open, hold and maintain a foreign currency account with a bank outside India and receive the whole salary payable to him for the services rendered to the office/ branch/ subsidiary/ joint venture in India of such foreign company, by credit to such account, provided that income tax chargeable under the Act is paid on the entire salary as accrued in India. Also, foreign nationals employed with Indian companies can remit their salaries net of statutory deductions outside India. Repatriation of sale proceeds of residential property purchased by a NRI/PIO out of foreign exchange Repatriation of sale proceeds of immovable property purchased by NRI / PIO in India is permitted to the extent of the amount paid for acquisition of immovable property in foreign exchange received through banking channels. In case of residential property, the facility is restricted to not more than two such properties. The balance amount can be credited to the NRO account and can be remitted under the USD one million limits. Documentation and Income-tax clearances An authorized dealer shall require any person desiring to transact in foreign exchange to make such a declaration and to give such information as will reasonably satisfy him that the transaction will not involve and is not designed for the purpose of any contravention or evasion of the provisions of the FEMA or any rule, regulation, notification, direction or order issued there under. Remittances from India will be permissible by the Authorized Dealer banks on production of an undertaking by the remitter and a certificate from a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes, Ministry of Finance.
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Case Studies Mr.Y an Indian citizen had purchased a residential property in India. He is now a NRI, who has come to India on employment. He plans to purchase one flat and one commercial property from amounts repatriated from USA. Is it possible? Further, he plans to sell the newly acquired flat while going back. Would it be possible for Mr. Y to repatriate the proceeds on his return to USA? For the purpose of FEMA, Mr. Y will be considered as a person resident in India only if he stays in India for more than 182 days in the previous year (even though he comes to India for employment purpose). This is possible only in or after year 2. If he is considered as a person resident in India, there is no restriction on the purchase of residential and commercial property. On sale, he can remit the sale proceeds of the residential property and commercial property as specified under FEMA subject to payment of India taxes on capital gains, through the normal banking channels. Mr. Y is permitted to repatriate up to USD 1 million per financial year (April-March) from his NRO account inclusive of the sale proceeds of immovable property. There is no lock in period for sale of immovable property and repatriation of sale proceeds outside India. Mr. S, OCI cardholder, plans to invest in Indian stock market. Can he do so? Will the fact that he has come to India for the first time and has not filed any tax returns matter? Mr. S may invest in Indian stock market. The fact that he has not filed his tax returns would not matter. However Mr. S would need to comply with the KYC (Know Your Customer) norms and apply for a Permanent Account Number (PAN) without which, investment will not be permissible. Can Ms. X, an NRI - open joint accounts in India? Ms. X can open some joint accounts. The norms are as below: Type of Account NRO NRE FCNR

Mr. Z is an Indian national employed with an Indian company. Mr. Z wishes to purchase shares of ANC Inc. USA which are currently being traded at a very competitive price. Can Mr. Z go ahead and invest in the shares of ABC Inc. Are there any limits applicable? Further is trading permitted? Mr. Z could avail of the Liberalized Remittance Scheme (LRS) which allows remittances for permitted activities by residents. Under this scheme, a resident could invest in shares abroad upto a limit of USD 200,000 p.a. out of the bank account opened abroad under this scheme. Mr. Z needs to note that the limit of USD 200,000 is all inclusive i.e. the total remittance under the scheme should not exceed USD 200,000. Trading in investments is permitted. Mr. Z can retain and re-invest the income earned on investments made under the LRS. Repatriation is not necessary. Mr. A is an Indian employee working with an Indian company American International India. This is a subsidiary of a US listed company. The US Company has issued stock options to the employees of its subsidiary and Mr. A has received 30,000 stock options. Can Mr. A exercise his options, the exercise price being USD 10 per option? Mr. A is permitted under the exchange control laws to invest in stock options of the holding company. Under FEMA (Transfer or Issue of any Foreign Security) Regulations, an individual resident in India who is an employee of a subsidiary in India of a foreign company or of an Indian company in which direct and indirect foreign equity is not less than 51%, may acquire shares offered by such a foreign company under the ESOP Scheme offered by the issuing company globally on uniform basis. One other condition is that the Indian company has to submit an Annual Return to RBI through the Authorized dealer bank giving details of remittance / beneficiaries etc. Joint Account with non-resident Indians Yes Yes Yes

Joint account with resident Indians Yes No No

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Social Security International Worker provisions The Ministry of Labour and Employment amended the Provident Funds Scheme in October 2008, to extend its applicability to International Workers [IW] with effect from November 2008. An International worker is an Indian employee having worked or going to work in a foreign country with which India has entered into a social security agreement [SSA] and being eligible to avail the benefits under a social security programme of that country, by virtue of the eligibility gained or going to gain, under the said agreement. An employee other than an Indian employee, holding other than an Indian passport, working for an establishment in India to which the Act applies; Excluded employee has been defined to be an International Worker, who is contributing to a social security programme of his/her country of origin, either as a citizen or resident, with whom India has entered into a social security agreement on reciprocity basis and enjoying the status of detached worker for the period and terms, as specified in such an agreement. Specific provisions have inserted in the Provident Fund Act and Scheme which are specifically applicable to international workers vis--vis the domestic workers. If you are a PIO/PIO card holder/OCI and are coming to India on employment, you will be categorised as an international worker and the special regime will become operative.

Social Security Agreements (SSAs) In most countries, the coverage under social security programme is regulated under domestic social security laws. In cases, where the tenure is permanent or reasonably long, the coverage under social security programmes of the host country would apply. As mentioned above, where the employee is on a deputation for a short duration, the social security benefits in the host location may not be available in spite of making contributions to the host schemes. In order to address this aspect and ensure that the benefit of social security is available to the employees un-interrupted, the Indian Government has been negotiating and working out social security agreements with various countries. It is necessary for both the countries to notify the date from which it would be effective. Currently India has notified SSAs with Belgium, Germany, Switzerland, Denmark, Luxembourg, France, South Korea and Netherlands. India has also signed SSAs with Hungary, Norway, Czech Republic though these are yet to be notified. Benefits available under the SSA Benefits generally available under SSAs are: Detachment Can continue to be associated with home country social security without having to contribute in the host country. Exportability of pension - Export of benefits /pension due under the legislation of one country to another country, where the member might choose to live, will be possible. Totalization - Period of service in the host country will be considered for determining the eligibility of benefits.

SSAs NOTIFIED and IN FORCE Period of Detachment 60 months 48 months 60 months 72 months 60/36 months 60 months 60 months 60 months upto 60 Months

County Name Belgium Germany Limited Comprehensive Switzerland Denmark Luxembourg France Republic of Korea Netherlands
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Effective Date September 1, 2009 October 1, 2009 Awaited January 29, 2011 May 1, 2011 June 1, 2011 July 1, 2011 November 1, 2011 December 1, 2011

Detachment Yes Yes Yes Yes Yes Yes Yes Yes Yes

Exportability Yes No Yes Yes Yes Yes Yes Yes Yes

Totalization Yes No Yes No Yes Yes Yes Yes No

Coverage of SSAs In the Indian context old age and survivors pension and permanent total disability pension are the benefits covered by most SSAs. SSA provisions for Indian/foreign passport holders The PF regimes would differ depending upon whether an individual returning to India for employment holds an Indian passport or not. A comparative study of the applicable provisions is presented below: Indian passport holders (other than individuals returning from assignment) Employers Contribution 12% Pension Fund 8.33% of `6500 (i.e. `541) Provident Fund balance Employees Contribution 12% to Provident Fund Optional for persons earning a basic pay exceeding `6500 subject to internal rules of the company and mutual agreement between employer and employee On retirement at 55 years On migration from India On being unemployed for a period of 2 months Not applicable No No

Sr. No. 1.

Particulars Contribution

Foreign passport holders Employers Contribution 12% Pension Fund 8.33% Provident Fund 3.67% Employees Contribution 12% Mandatory

2.

Applicability

3.

Withdrawal conditions

On retirement after attaining of 58 years As covered by SSA Medical grounds Restriction of withdrawal from pension funds

4. 5. 6.

Benefit of Detachment Benefit of totalization Export of benefits

Available if covered by the SSA and the employee holds a certificate of coverage Available if covered by the SSA Available if covered by the SSA

India has notified SSAs with Belgium, Germany, Switzerland, Denmark, Luxembourg, France, Korea and Netherlands. India has also signed SSAs with Hungary, Norway, Czech Republic though these are yet to be notified.

Planning for repatriation In case you decide to leave India for an uncertain period of time or employment, an important question that often arises is whether you would be able to repatriate the funds outside India or would be eligible to continue to hold assets acquired in India. As per FEMA, NRIs/PIOs are allowed to remit/ repatriate the following outside India: Current income like rent, dividend, pension, interest, etc. in India is a permissible debit to the NRO account An amount up to USD one million, per financial year, out of the balances held in his NRO account / sale proceeds of assets (inclusive of assets acquired by way of inheritance or settlement), for all bonafide purposes, on production of an undertaking by the remitter and certificate from a Chartered Accountant Sale proceeds of shares and securities provided the security has been held on repatriation basis and appropriate tax clearances are obtained
Returning Indians All that you need to know | 43

Sale proceeds of immovable property is allowed to be repatriated outside India to the extent of the amount paid for acquisition in foreign exchange received through banking channels. In case of residential property, repatriation of sale proceeds is restricted to two such properties. The balance amount can be credited to the NRO account and can be remitted upto USD one million per year, subject to payment of applicable taxes Sale proceeds of immovable property purchased by a person when he was resident in India (or out of rupee funds) is allowed to be be remitted after becoming an NRI/ PIO, up to USD one million, per financial year, out of the balances held in his NRO account subject to payment of applicable taxes. Retention of holdings in India At the time of repatriation from India, a NRI/ PIO may continue to hold the investments/ assets aquired while they were resident in India and are not mandatorily required to dispose off the same.

An individual repatriating from India can also keep his India bank account open for receiving statutory dues (tax/PF refunds). However, the account has to be designated as a NRO account by giving a declaration to the concerned bank. The declaration should also provide details of credits expected into the account. On receipt of the same, the individual should repatriate the funds overseas and close the account. Repatriation of sales/maturity proceeds You can repatriate sale/maturity proceeds of NSC/ Government securities that were purchased out of funds remitted from abroad or out of NRE/FCNR accounts. Sale/maturity proceeds of securities purchased out of funds in NRO accounts can only be credited to NRO accounts and cannot be remitted abroad. However, you can remit interest earned to the extent permitted by Reserve Bank.

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Key aspects once you make your decision Welcome to India


Once you decide to relocate to India, you would set about making a to do list. Relocating to a different location, even if its your homeland is a lengthy process and you would want to ensure that you dont miss out on any important issue. On the top of your to do list will be entry into India and associated requirements followed by transporting your precious collections. In this section, we would address these key aspects of relocation revolving around the visa regulations, work permit and baggage rules. In addition, you would have concerns about the tax and social security issues in your current location post relocation as also the impact of these in India. We would provide an overview of possible issues that you could face and the options available to overcome these. Work permit and visa Its a small world goes the saying that has indeed come true with the advent of technology. Travel across countries and continents is a lot quicker and less strenous than it was a few decades back. Yet, there are a few restrictions that are in place and permissions need to be taken to travel across nations. The Indian immigration regulations detail these requirements visa, residential permit and so on. The visa and FRRO registration requirements would depend on which of the following categories the returning Indian falls in: Indian citizen An Indian citizen who is ordinarily residing outside India and holds an Indian Passport does not require a visa to travel to India or FRRO registration to stay and work here. An NRI will fall under this bucket and can take a flight to India without having to go through the above formalities. The PIO card holder A PIO card allows the holder to enjoy visa-free travel in and out of India and to freely engage in work or study in India. Such visa-free travel facility can be enjoyed for a period of 15 years from the date of issue of the PIO card. Also, the PIO card holder can apply for Indian citizenship after the minimum seven-year residency requirement is fulfilled. With this, the PIO card holder may be able to travel in and out of India without any visa restrictions for life. PIO card holder will be exempt from the requirement of FRRO registration if his stay on any single visit in India does not exceed 180 days. The registration requirement will step in for extended stay and the PIO card holder will have to comply with the requirement within 30 days of the expiry of 180 days. The Overseas Citizenship of India (OCI) card holder OCI allows visa free travel to India for the life time of the individual. Although often referred to as Indian 'Dual Citizenship' it is important to note that India itself does not support dual citizenship and that OCI, whilst offering many benefits, is not a full grant of citizenship. OCI Cardholders are exempted from registration with FRRO for any length of stay in India. Others This category covers returning Indians who hold foreign passports, but who do not possess a PIO or OCI Card. They would require a specific visa depending on the purpose of visit to India. Listed below are details of some of the commonly used visas required, categorized on the basis of visit to India. Indian Visa types and features Type Employment Visa Entry Visa (X Visa) Duration Normally one year Purpose of Visit to India Employment in India with an organization in India or other cases of working in India Spouse/child of person of Indian Origin and/or spouse/dependent family member accompanying foreign citizen coming to India on a long term visa Business

Co-terminus with the period of visa granted to the principal visa holder

Business Visa

One year or more with multiple entries, but stay limited to a maximum of 6 months in a single visit Valid for the period of study as approved by the educational institution in India It is a multiple entry visa. The initial duration of the visa is up to a year or the period of the treatment, whichever is less. The visa will be valid for a maximum of 3 entries during the one year

Student Visa

Pursue regular studies at recognized institutions

Medical Visa

Medical treatment in reputed / recognized specialized hospitals / treatment centres in India.

Returning Indians All that you need to know | 45

FRRO registration The above category would also need to register themselves with the FRRO office within 14 days of arrival in India. A list of FRRO offices in India with contact details is given hereunder: Location Delhi Mumbai Chennai Kolkata Amritsar Address East Block VIII, Level 2, Sector 1, R.K. Puram, New Delhi 110 066 Badruddin Tayyabji Marg, Mumbai 400 001 Shastri Bhavan Annexe 26, Haddows Road, Chennai 600 006 237, A.J.C. Bose Road, Kolkata Telephone +91-011 26711384 +91-022 26571998 +91-044 28232642 +91-033 22470549 +91-0183 2508250 +91-040 27900211 +91-080 25202052

arrival, the passenger is first cleared by immigration and takes delivery of baggage of his/her and passes through the Customs. For the purpose of Customs clearance, a two channel system has been adopted - a Green Channel for passengers not having any dutiable goods and Red Channel for passengers having dutiable goods. The Customs officer on duty at the Red channel countersigns/stamps the disembarkation card and scrutinizes the passport/travel documents. Duty is assessed based on the declared values and clearance is provided on payment of the duty. Baggage rules vary according to the passenger's duration of stay abroad, the country he or she is coming from and the age of the passenger. Usually all passengers get a duty free allowance within which they can bring various goods without payment of any duty. When the total value of the goods exceeds the duty free allowance, customs duty at a flat rate has to be paid only on the value exceeding the duty free allowance. Presently, the effective customs duty on Baggage is 36.05%. Duty free allowances in case of transfer of residence Transfers of residence entitlements are applicable to Indian nationals as well as foreigners transferring their residence to India after a stay abroad of at least two years. However, the passenger or any member of his family should not have availed this concession in the preceding three years. This allows the returning Indians family to import personal and house hold articles free of duty or at concessional rate

D-123, Ranjeet Avenue, Amritsar Bureau of Immigration, Besides Vijaya Bank Counter, Rajiv Hyderabad Gandhi Terminal, Begumpet Old Airport, Hyderabad 55, Double Road, Indiranagar, Bangalore Bangalore

Movable asset rules All individuals entering India by international flights will be given a disembarkation card to declare the quantity and value of goods that they are bringing into the country. On Baggage rules for individuals transferring residence to India Used personal articles and household effects Items required for day-to-day personal use (Example: shirts, suits, spectacles, hair dryers, blouses) are allowed duty free. Certain household effects are dutiable (Example: Dish washer, music system, oven, air conditioner) and do not comprise articles allowed duty free. Generally, individuals transferring the residence are eligible for concession up to value of `5 lakhs exclusive of value of his personal effects and other household articles. Import of jewellery An Indian passenger who has been residing abroad for over one year is allowed to bring jewellery, free of duty in his bonafide baggage up to an aggregate value of `10,000/- (in the case of a male passenger) or `20,000/(in the case of a lady passenger). The limit is not applicable if the passenger produces evidence (Export Certificate from Customs at the time of departure) that the Jewellery was in fact, taken out of India by the passenger or his family. Import of foreign exchange/currency An individual can bring into India foreign exchange without any limit. Declaration of foreign exchange in Currency Declaration Form is required for foreign currency notes beyond USD5000 or where the value of foreign exchange exceeds USD 10,000 (in the form of travellers checks, bank notes or currency notes). However, import of Indian currency is prohibited.

Laptops One laptop brought as baggage by the passenger over 18 years of age is exempt from customs duty.

Import of passenger Unaccompanied baggage cars Baggage does not include motor vehicles. Hence, duty concession will not be applicable for import of motor cars. Individuals transferring residence into India are permitted to bring cars having engine capacity less than 1600 cc (for new cars) while there is no cc limit for old and used cars, already in possession for more than 1 year. Baggage rules will also apply for the unaccompanied baggage of passengers sent through cargo. However, no free allowance is admissible for unaccompanied baggage and only used personal effects can be imported free of duty. The baggage may be dispatched within one month or before 2 months of the arrival or within such period allowed by Assistant/ Deputy Commissioner. Unaccompanied baggage is subject to Customs duty of 36.05%.

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The taxation of this overseas pension benefit in India would be a matter of concern to the returning Indian. The pension amount would be liable to tax in India in the year the individual becomes ordinarily resident for tax purposes. He/she would need to examine the provisions of the DTAA between India and the overseas location to determine if the pension amount is taxable in India, and if any relief is available under the DTAA. Trailing tax issues Dual taxation of income residence vs. citizenship Another concern for the returning Indian, having stayed abroad for many years is taxability in both the host country where he/she has lived, and in India, where he/she intends to settle down permanently. This issue is particularly relevant where the individual retains the citizenship or permanent resident status of the country he/she has left, and when he continues to earn income in that country. While India follows physical presence as the residency criteria, many countries treat citizenship or permanent residence as the benchmark for determining the residency. On returning to India to settle here permanently, the individual would become a ROR as per the Act, generally in the third or fourth year of returning. In that event, he/she becomes liable to pay taxes on global income in India. However, the returning Indian can avail credit for taxes on the doubly taxed income if India has a DTAA with the concerned overseas country. To take an example - Mr. X (holding a US passport) is moving to India for good from the US, along with his family. He would continue to be taxed globally in US, based on his citizenship. He would become a ROR after a period of time in India. Once his residential status in India changes to ROR, he would be taxed globally in two countries, in India and the US. Under the India-US DTAA, tax relief in the form of foreign tax credit may be availed in one of the two countries, for taxes paid in the other country, so as to avoid double taxation. Even in the absence of a DTAA with the concerned country, foreign tax credit may be claimed on the doubly taxed income under the Act in India.

of duty. Separate rules apply for passengers returning from Nepal, Bhutan, Myanmar or China. The table on page 46 relating to baggage rules gives the general regulations applicable for individuals transferring their residence to India. Trailing tax and social security issues Trailing Social security issues As a person living and working in an overseas location, the returning Indian may have contributed to the social security scheme there. Having contributed to the scheme for many years, he/she may be eligible to receive benefits such as pension, at the time of returning to India for settling down permanently.

Returning Indians All that you need to know | 47

Case studies - Tax Since childhood, Mr. X has been living in US with his parents. He has come to India in August 2011 for employment with an Indian aeronautical research company. He has earned and received interest income in US. Is this taxable in India? If so, is he running the risk of paying taxes on the same income in both locations? Based on the details provided, this is Mr. Xs first year of stay in India. Thus his stay in India during the previous year is more than 183 days. As such for the current year, his residential status would be Resident but Not Ordinarily Resident (NOR). In the case of a person who is NOR in India, only the following incomes are liable to tax in India is received or is deemed to be received in India in such year by or on behalf of such person ; or accrues or arises or is deemed to accrue or arise to him in India during such year. Thus as long as Mr.Xs residential status is NOR in India, the income earned in the US would not be taxable in India. However once his residential status is Resident and Ordinarily Resident (ROR), he will be taxable in India on his global income. India has a Double Taxation Avoidance Agreement (DTAA) with USA. In such case, if the income is taxed in USA as well as in India, like in this scenario, the provisions of DTAA between India and US would have to be analysed to see whether the income would be taxed in India or in the US or can credit for taxes could be claimed in one of the countries. Ms. Y has been living in US for the past 2 years. She has ancestral properties and certain investments (bank deposits) in India. Every year, she used to come to India for about six to seven weeks to meet her relatives and to work with her auditor for tax filings. This year her case was selected for scrutiny assessment and it so happened that she had stayed in India for about 100 days. Would this alter her tax position in India? Ms. Y is currently staying in USA for the purposes of employment. Her stay in India for the current year is less than 182 days. As per the explanation provided to Section 6(1) of the Income tax Act, since she has come to India on a visit, her

residential status for the current year would continue to be Non-Resident. In the case of a non-resident only income that accrues or arises in India or that is received in India is subject to tax in India. Hence there is no change in Ms. Ys residential status as well as her India tax position on account of her stay in India in the current year. Since, returning to India for good in February 2010, Mr. Z has been regularly following up with the stock market. On January 8, 2011, he purchased shares of Indian companies worth `75, 000 from the stock market. He proposes to sell these shares by December 15, 2012 through the stock exchange. Does he lose out any tax benefits? During the financial year 2012-13, when Mr. Z proposes to sell the shares, he would be a resident and ordinarily resident in India presuming that he has been in India throughout since February 2010. Mr. Z proposes to sell the shares (which have been acquired in January 2011) in December 2012. The total period of holding the shares is more than 12 months. As such, the shares will be treated as a long term capital asset. Since he has traded on Indian stock market, securities Transaction Tax (STT) would be paid by him. When Mr. Z sells the shares through the stock exchange, he would pay STT. Hence long term capital gains would be exempt from tax. Mr. A has a house property in the US which was vacant for the past 3 years since he returned to India. Now, he is proposing to let this out to a corporation in US for a monthly return of $1000. He will incur maintenance costs @ $250 per month. Its a debt free property. Is Mr. A required to pay any tax in India on the property? As long as the residential status in India is NOR, income earned in the US would not be taxable in India. Once Mr.As residential status is ROR, his global income will be taxable in India. As such the house property income would also be subject to India taxes. The computation of house property income would be undertaken as per the India tax provisions. India has a Double Taxation Avoidance Agreement (DTAA) with USA. In such a case, if the income is taxed in USA as well as in India, the provisions of DTAA between India and US would have to be analysed to see whether the income would be taxed in India or in the US or can credit for taxes be claimed in one of the countries.

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Case studies Social Security Mr. A is a US citizen and OCI card holder. He contributes to social security in the US. He is transferred to an Indian company for 4 years and is on the payroll of the Indian company. Would he be required to contribute to Provident Fund in India? Mr. A is a non-Indian passport holder; hence he would be classified as an International Worker (IW) as per the Provident Fund Act. In the case of an IW, the contribution towards the India PF is mandatory. Hence PF would have to be contributed by him at 12% of the salary. Mr. X is a UK Citizen and OCI card holder. He is on deputation to the Indian company for 4 years and is on the payroll of the Indian company. He has contributed to PF under the India PF laws. Can he repatriate the proceeds back to the UK as and when he goes back? Mr. X is a non-Indian passport holder, hence he would be classified as an International Worker (IW) as per the PF scheme. In the case of IWs the withdrawals from PF account are permitted in the following situations On retirement from service in the organization at any time after the attainment of 58 years of age On retirement on account of permanent and total incapacity for work due to bodily or mental infirmity, duly certified by an authorized medical officer. On such grounds as specified in such SSA. Currently India does not have a social security agreement with UK. Hence in normal circumstances, Mr. X would be able to withdraw the balance lying in his PF account only on retirement at the age of 58 years. Ms. C is a German citizen and is on assignment to India for 2 years. She continues to contribute to social security in Germany. Is it mandatory for her to contribute to PF in India also? India has a social security agreement (SSA) with Germany. The India-German SSA provides for detachment benefit in certain cases. Hence pursuant to this agreement, if Ms. C is contributing towards a social security in Germany, then she can apply for a Certificate of Coverage (COC) from the German social security authorities. This would need to be submitted to the India PF authorities to be exempted from contribution to PF in India. Would the response to the above change if C is directly employed by the Indian company?

In case Ms. C is directly employed by the Indian company, her contributions in Germany would stop. Hence she would not be able to obtain a certificate of coverage (COC) from German social security authorities and hence would need to contribute towards Indian PF. Mr. Z is an Indian residing in Australia for the last 6 years. Mr. Z holds an Indian passport and an Indian PAN card. He is deputed to an Indian company for 2 years. He is on the payroll of the Indian company. All employees of the Indian company earn a basic salary of more than `6500 p.m. The Indian company as a policy provides an option to its employees on whether they would like to have coverage for PF or not? Can the company provide Mr. Z with this option? Applicability of PF provisions are not mandatory for a person who is earning more than `6500 provided the individual is not an International worker. In the instant case Mr. Z is an Indian passport holder, hence he would not be classified as an International Worker (IW) as per the Provident Fund Act. In such case the company can offer Mr. Z the option of choosing whether to contribute to PF or not if his basic salary is more than `6500 p.m. Mrs. B is an Indian residing in USA for the last 3 years. Mrs. B holds an Indian passport. She returns to India and commences work with an Indian company. Three months ago, she has got married and left her India employment. Post marriage she prefers to be a home maker. Can she withdraw the balance lying in her PF account? What would happen if she chooses not to withdraw? Mrs. B is an Indian passport holder. As such she will not be treated as an international worker for the purposes of Indian PF Act. In such case, a withdrawal from PF is permitted in the following circumstances On retirement at 55 years On migration from India On being unemployed for a period of 2 months Other medical grounds Since she is unemployed for the last three months, her case falls within the purview of eligible circumstances for withdrawal. In case she chooses not to withdraw, then after three years from her last contribution, the account would be treated as a dormant account and no interest would accrue to this account.
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Schemes for Overseas Indians

The Central Government has launched various initiatives for the welfare of the non-resident Indians. These are carried out through the MOIA which is the nodal Ministry for all matters relating to Overseas Indians. The measures are intended to promote a mutually beneficial engagement between the Overseas Indians and India in economic, social and cultural arena. Besides, various State Governments have also put welfare measures in place for Overseas Indians especially those from their respective states. All these and more are captured in the ensuing pages for your ready reference. Central Government initiatives Initiatives: Investment facilitation and knowledge networking The MOIA has set up an Overseas Indian Facilitation Centre (OIFC) in partnership with Confederation of Indian Industry (CII) as a one stop shop for the following: Promoting Overseas Indian investment into India and facilitating business partnerships by giving authentic and real-time information. Establish and maintain a diaspora Knowledge Network Functioning as clearing house for all investmentrelated information Assisting States in India to project investment opportunities for Overseas Indians; and Providing a host of advisory services to PIOs and NRIs including consular questions, stay in India, investment and financial issues. The governments of Assam, Bihar, Gujarat, Karnataka, Kerala, Orissa and Punjab have partnered with OIFC to appraise the diaspora about investment opportunities in their respective states. Bilateral Labour Co-operation India has entered into bilateral MOU with all the major destination countries for the protection and welfare of Indian emigrants. Besides, the MOIA has also signed SSAs with 13 countries and is conducting/concluding negotiations with many others. The Government is also entering into Human Resource Mobility Partnerships to position international labour mobility as a win-win for
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the countries of origin, the countries of destination and the migrant workers. Global Indian Network of Knowledge (Global Ink) MOIA has developed a diaspora knowledge network called Global Indian Network of Knowledge (Global INK) as an electronic platform that seeks to connect people of Indian Origin from a variety of disciplines, recognized as leaders in their respective fields, not just in their country of residence but globally as well, with knowledge users at the national and sub-national levels in India. India Development Foundation of Overseas Indians India Development Foundation of Overseas Indians provides a credible window for Overseas Indian Philanthropy in Indias social development. The objective of the Foundation is to facilitate philanthropic activities by Overseas Indians including through innovative projects and instruments such as micro-credit for rural entrepreneurs, self-help groups for economic empowerment of women, best practice interventions in primary education and, technology interventions in rural health care delivery. Scholarship Programme for diaspora Children (SPDC) The SPDC was launched in 2006-07 and is open to NRIs/ PIOs from 40 countries with significant diaspora population. Under this scheme, 100 scholarships of up to USD 3,600 per month are awarded to PIO and NRI students for undergraduate courses in engineering, technology, humanities, liberal arts, commerce, management, journalism, hotel management, agriculture and animal husbandry, besides other courses. The SPDC scheme is open to NRIs and PIOs from more than 40 countries with a substantial Indian population. It is implemented by Educational Consultants India Limited EdCIL (India) Ltd., which is an autonomous body under the Ministry of Human Resource Development. The students have to apply for the scholarship and applications of those who meet the eligibility criteria are evaluated and shortlisted by a selection committee of officer from the concerned departments, viz. the Ministry of Human Resource Development, EdCIL (India) Ltd. and MOIA. Besides, the Government has also decided to scrap the Common Entrance Test for selecting the eligible candidates for the scholarship.

Direct Admission to Students Abroad (DASA) DASA is a Government of India run scheme that provides deserving foreign nationals/PIOs/NRIs direct admission to undergraduate programs. EdCIL administers the scheme, which offers students the opportunity to pursue programs at the National Institute of Technology and other centrally funded institutes (other than the Indian Institutes of Technology, or IITs). Reservation for NRIs at Indian educational institutions The Government of India has approved a scheme to enable a supernumerary quota of 15% seats at all higher education institutes for foreign nationals/PIOs/children of Indian workers in the Gulf countries. There shall be no NRI fee and, in fact, the children of Indian workers in the Gulf countries shall be treated as equal to resident Indian citizens. For this purpose, the Government has drawn up a list of institutes along with the courses offered. The same can be viewed in the MOIA website. Assistance for problems relating to Overseas Indian Marriages The issue of Overseas Indian marriages falls within the purview of private international law that requires careful and meticulous handling. MOIA has taken initiatives to create awareness of problems associate with Overseas Indian marriages. The Ministry has brought out a report on problems relating to NRI marriages titled Nowhere Brides that contains information on issues with NRI marriages, Indian legal precedence and so on. MOIA has launched a scheme to provide financial assistance to women deserted by their Overseas Indian spouses for obtaining counseling and legal services. These services would be provided through Indian Womens Organizations/Indian community Associations and NGOs that are on the panel of the Indian Missions/Posts in the USA, UK, Canada, Australia, New Zealand and the Gulf. The Ministry has empanelled 25 NGOs with the Indian Missions/Posts overseas for this purpose and has disbursed a sum of `2,753,696 to the NGO through whom 47 women have benefited. Voting Rights to Non-resident Indians The Government has taken steps to have the Representation of People (Amendment) 2010 notified to provide voting rights to Overseas Indians. Through this, Overseas Indian passport holders can register their names in the electoral roll of the constituency where the
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address mentioned in their passport falls. Pursuant to this, the overseas electors can participate in the Indian electoral process. For registering in the electoral rolls, overseas Indian passport holders have to apply in the prescribed form to the concerned registration officer either directly or through post. The registration rules permit the overseas Indians to attest the supporting documents themselves. Overseas Citizenship of India Dual nationality has been a persistent demand of the Indian diaspora that was addressed through the OCI scheme in 2005. This scheme provides for registration of all PIOs provided they were citizens of India on or after 26th January, 1950; or they were eligible to become citizens of Indian on 26th January, 1950 and are citizens of other countries, except Pakistan and Bangladesh. Under the OCI scheme, a registration certificate is given together with Universal visa sticker to the PIOs. The OCI scheme facilitates multiple entry, multi-purpose life-long visa to a registered PIO for visiting Indian and also provides exemption from registration with FRRO. The OCI registration provides other benefits also such as parity with NRIs in inter-country adoption of Indian children, entry fee for visiting national monuments and museums, practicing specified professions [doctors, dentists, nurses, pharmacists, advocates, architects and chartered accountants] and with resident Indians in domestic air tariffs. However, it is to be noted that OCI is not dual nationality.

PIO University The PIO University would be set up under the Innovation Universities Act (after approval) with support coming in the form of research support and student scholarships. Indian Community Welfare Fund (ICWF) The Government of India had set up an Indian community welfare fund in Indian missions in 17 ECR countries to provide assistance to Overseas Indians tide over difficult times. It has since been decided to extend this fund to all the Missions around the world since it has been found to be very useful by the Indian Missions to help the Overseas Indian Community in distress. The ICWF is designed to provide onsite, off-site and social security services to Overseas Indian workers. The range of services of ICWF includes: Boarding and lodging for distressed Overseas Indians in household / domestic sectors and unskilled labourers; Expenditure on and incidental to airlifting mortal remains to India or the local cremation or burial of the deceased Overseas Indians in such cases where the concerned person is either unable or unwilling to bear the cost; Extending emergency medical care to Overseas Indians; Providing air passage to stranded Overseas Indians; Providing initial legal assistance to Overseas Indians in deserving cases. Tracing their roots PIOs who want to trace the roots of their ancestors in India can apply through the Indian mission or post in the country of their residence.

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India has entered into bilateral MOU with all the major destination countries for the protection and welfare of Indian emigrants. Besides, the MOIA has also signed SSAs with 13 countries and is conducting/ concluding negotiations with many others.

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OIFC Partner State initiatives

The Governments of Assam, Bihar, Gujarat, Karnataka, Kerala, Odisha and Rajasthan have partnered with OIFC to expand the engagement of the Indian diaspora with their respective States. Initiatives taken at organizational set up level for some of the select States are:-

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Government of Assam
To bring the NRI from Assam closer to the people of the State and reinforcing their emotional bonds, the Govenrment of Assam is proposing to start an NRI cell. The progressive NRI community of the state desires to actively participate in the development of the state and work as a goodwill ambassador for the region. The State Government welcomes investment initiatives by the NRIs of the State. Useful contact details:The Industrial Investment Secretariat Cell (IISC) Department of Industries & Commerce Government of Assam, Block C, 3rd Floor, Assam Secretariat, Dispur, Guwahati - 781 006 Phone/Fax: +91-361-2237256 E-mail: info@investinassam.com Website: http://investinassam.com

Government of Bihar
There is a Bihar Foundation which is an initiative of the Government of Bihar to realize the dream of a Better Bihar through the participation of Non Resident Biharis (NRB), NRIs, PIOs and others. Conceived to act as a platform to facilitate interaction between the Government of Bihar and the diaspora at multiple levels, the Foundation solicits ideas, investments and knowledge resources across sectors and verticals that can help in the development of Bihar. The Foundation endeavors to unite Biharis and form local chapters of NRBs in regions which have substantial population of people of Bihari origin. Policy reforms undertaken by the administration has enabled the people of Bihar to embrace a better and brighter future. The Foundation works with an objective to communicate realities in Bihar and endeavors to let the user know, why and how. It has, in a very brief period of the time become one of the fastest growing economies in India. Useful contact details:Bihar Foundation 6th Floor, Indira Bhawan, R.C.S. Path, Patna Phone: +91-612-2521371 Email: satyajit@biharfoundation.in Website: www.biharfoundation.in
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Government of Gujarat
There is a NRI Division set up by the Government of Gujarat with a view to establish effective communication with NRIs of Gujarati origin in various parts of the world. The main objectives of the Division are to: Prepare and maintain a comprehensive database about NRIs of Gujarati origin. Study from time to time social and cultural issues of NRI of Gujarati origin and take steps to formulate schemes for meeting their requirements. Take effective steps to survey and assess the technical and professional skills of NRIs and to dovetail the same in the developmental efforts of the State. Create a database on Non-Resident Gujaratis (NRGs), highlighting the professional areas of interest. Enable Government of Gujarat and its agencies to communicate with NRGs with relevant interest. Facilitate Government of Gujarat to initiate steps to address the specific needs of NRGs in different fields. Tap the technological, managerial and financial resources of the NRI so as to upgrade the technical and professional skills and the human resources of the State, for the economic and industrial development of the State. Channelize the savings and surplus financial resources of the NRIs in to the developmental efforts of the State for mutual benefits. Monitor the general welfare of the NRI and, in times of crisis, identify specific problems of Gujarati Non Resident Indians groups and take up the same with and through Government of India. In order to facilitate the achievement of above objectives, the Government has in addition set up the 'Gujarat State Non-Resident Gujaratis' Foundation (NRGF)'. Useful contact details:Gujarat State Non-Resident Indian Department General Administration Department Block No.7/1st Floor, Sardar Bhavan Sachivalaya, Gandhinagar Ph: +91 79 23250474, 23250478 Email: ds-nri-gad@gujarat.gov.in Website: www.nri.gujarat.gov.in Gujarat State Non-Resident Gujaratis Foundation Office - Block No.16, 3rd floor, Udhyog Bhavan, Gandhinagar-382011 Phone: +91 79 23238278, 23251314 Email: nrgfoundation@yahoo.co.in. Website: www.nri.gujarat.gov.in For more information, log on to www.gujarat.gov.in

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Government of Karnataka
The Government of Karnataka has set up NRI Forum to forge a symbiotic relationship between Karnataka and its diaspora. The Forum will provide information on socioeconomic activities of Karnataka State and its development and also coordinate investment in the state across all potential sectors. India has emerged as the country which attracts the largest quantum of investment from its diaspora. With the State having earned a reputation as the most sought after destination for multinational corporations, especially in the technology area, the NRI forum has been formed to attract more investment to the State. The NRI Forum will facilitate investors among NRIs (Non-Resident Indians) in setting up their ventures in the state. The main aim of NRI Forum is to assist NRIs: With their requirements in India; Motivate NRIs for development and promotion of Karnataka's literature, cultural and heritage activities overseas; and, Encourage NRIs for adoption of Educational Institutions in the backward areas of Karnataka so as to provide quality education to the children. The NRI Forum also hopes to draw up on the knowledge reservoir of diaspora for development of the State. Useful contact details:NRI Forum Karnataka No. 6 & 7, Vikasa Soudha, Bangalore 560 001 Ph: +91 80 22034057, 22034058 Email: info@nriforumkarnataka.org Website: www.nriforumkarnataka.org For more information, log on to www.karnataka. gov.in

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Government of Kerala
In order to ensure the welfare of the Non Resident Keralites, redress their grievances and safeguard their rights the NORKA, the Non Resident Keralites Affairs Department was set up by the Government of Kerala in 1996. Since then, NORKA has been playing a vital role in the lives of NRKs, supporting them in times of need and lending them a helping hand in every possible means. Norka-Roots is the field agency of the Department of NORKA, set up in 2002. It acts as an interface between the Non-Resident Keralites and the Government of Kerala and a forum for addressing the NRKs problems, safeguarding their rights and rehabilitating the returnees. Its major objectives are: Welfare of NRK's Heritage village for parents of NRK's Promotion of Malayalam language and culture Cultural exchange programme between the natives and Malayalees settled abroad. Promotion of regional development with the active participation of NRK's Social Security Network for NRK's A relief fund for rendering immediate assistance to NRK's in need Organization of annual meets for NRK's Resettlement and reintegration of NRKs returning to Kerala Employment mapping To facilitate the creation of a high calibre human resource pool Upgrading of skills of jobseekers Data Bank of NRK's Channelising investments to the State Prevention of illegal recruitment. Useful contact details NORKA Department, Government Secretariat Thiruvananthapuram 695 001 Ph: +91 471-2518182, 2518061 Email: ds@norka.kerala.gov.in Website: www.norka.gov.in NORKA-ROOTS 4th Floor, Centre Plaza, Vazhuthacaud Thiruvananthapuram 695 014 Ph: +91 471- 2332416, 2332452 Email: mail@norkaroots.net Website: www.norkaroots.net For more information, log on to www.kerala.gov.in

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Government of Odisha
In Odisha, the Non Resident Oriya Facilitation Center (NROFC) is an organization that works in liaison with the NRO Cell of Government of Odisha to help the Non-Resident Oriyas (NROs) in the following ways: Collection of information on NROs and creation of database, mailing lists, discussion forum etc., Exchange of information of all manner with NROs,Government and people of the locality, representation of the interests of the Members including providing information, Voluntary gathering of all Oriyas residing outside Odisha and abroad interested in the development of the state of Odisha in all conceivable forms, Organization of designated events such as Pravasi Oriya Divas, Annual Orissa Development Symposium, Facilitation of NRO projects by providing relevant information and help with Government interface, All other related activities with active support of the Government via the NRO cell in the Government departments. Useful contact details:Team Odisha IPICOL House, Janpath, Bhubaneswar-751022 Orissa (India) Ph: +91 674-2542601/02/03 E-mail: info@teamorissa.org Website: www.teamorissa.org Non-Resident Oriya Facilitation Center D-3,B.J.B. Nagar, Bhubaneswar-751014 Ph: +91 674 2432251, Email: sahadevas@yahoo.com Website: www.nrofc.org For more information, log on to www.orissa.gov.in

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Government of Rajasthan
Rajasthan Foundation, an organization set up by Government of Rajasthan that works in the noble direction of strengthening bonds between Non Resident Rajasthani community and the state of their origin. Rajasthan Foundation is a platform through which eminent pravasi Rajasthanis like Shri L.N Mittal, Shri Kumar Mangalam Birla, Shri Rahul Bajaj have participated in the journey of Socio-Economic development of the state. Today there is hardly any field of activity, be it business, public welfare, education, art, literature, culture, sports, politics, science, medicine or engineering where Rajasthanis have not achieved remarkable and unprecedented success. No matter, where they went, Rajasthan remained in their hearts and emotions; their deep attachment to Rajasthan has kept the bond strong between the land and its people. The establishment of Rajasthan Foundation reflects the state government's determination to nurture its interaction with its noble sons and they are committed to promote and facilitate every step taken by our Non Resident Rajasthanis to contribute into the growth and development of Rajasthan. Useful contact details:Rajasthan Foundation, Government of Rajasthan Yojana Bhavan, Yudhister Marg, C-Scheme, Jaipur, Rajasthan, India Ph: +91-141-2229111, 2229444, 2229091 Email: rajfound-rj@nic.in Website: www.rajasthanfoundation.gov.in For more information, log on to www.rajasthan. gov.in

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Appendix

AD ADR BPO CBDT CBSE CII COC DASA DIN DIPP DMRC DP DSC DTAA DTC ECNR ECR EdCIL EPF ESIC ESOP FCCB FCNR FDI FEMA FRRO GDR ICWF IIM IIT IPICOL ISCE IT ITC ITI IW JV KYC LLP LRS

Authorized Dealer American Depository Receipts Business Process Outsourcing Central Board of Direct Taxes Central Board of Secondary Education Confederation of Indian Industry Certificate of Coverage Direct Admission to Students Abroad Director Identification Number Department of Industrial Policy and Promotion Delhi Metro Rail Corporation Designated Partner Digital Signature Certificate Double Taxation Avoidance Agreement Direct Taxes Code Emigration Check Not Required Emigration Check Required Education Consultants India Limited Employees Provident Fund Employees State Insurance Corporation Employees Stock Option Plan Foreign Currency Convertible Bonds Foreign Currency (Non Resident) Account Foreign Direct Investment Foreign Exchange Management Act Foreigners Regional Registration Office Global Depository Receipts Indian Community Welfare Fund Indian Institute of Management Indian Institute of Technology Industrial Investment Promotion Corporation of Orissa Limited Indian School Certificate Examination Information Technology Industrial Training Centre Industrial Training Institute International Worker Joint Venture Know Your Customer Limited Liability Partnership Liberalized Remittance Scheme

MCA MHA MNC MOIA MOU MRTS NCR NGO NOR NORKA NR NRB NRE NREGA NRG NRGF NRI NRK NRO NROFC NSC OCI OIFC OWRC PAN PF PIO PIS PPF PSU RBI RFC ROR SEBI SME SPDC SSA STT TAN VAT

Ministry of Corporate Affairs Ministry of Home Affairs Multinational Company Ministry of Overseas Indian Affairs Memorandum of Understanding Mass Rapid Transit System National Capital Region Non-Government Organization Not Ordinarily Resident Non Resident Keralites Affairs Department Non Resident Non Resident Bihari Non Resident External account National Rural Employment Guarantee Act Non Resident Gujaratis Non Resident Gujaratis Foundation Non Resident Indian Non Resident Keralites Non Resident Ordinary Rupee account Non Resident Oriya Facilitation Centre National Savings Certificate Overseas Citizen of India Overseas Indian Facilitation Centre Overseas Workers Resource Centre Permanent Account Number Provident Fund Person of Indian Origin Portfolio Investment Scheme Public Provident Fund Public Sector Company Reserve Bank of India Resident Foreign Currency Resident and Ordinarily Resident Securities and Exchange Board of India Small and Medium Enterprises Scholarship Programme for diaspora Children Social Security Agreement Securities Transaction Tax Tax Deduction Account Number Value Added Tax

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Frequently asked questions

A. TAX Can an individual hold two permanent account numbers (PAN)? No, an individual can have only one PAN. If an individual has applied and been allotted a second PAN, he must surrender the same. If a person fails to comply, then, the tax authorities can impose a penalty of `10,000. How can taxes due on other income (apart from salary) be settled? Taxes due on other income to the extent not settled by way of deduction at source by the payer need to be estimated in advance and paid in installments during the financial year in which such income is earned. 30% of the tax dues are to be remitted by September 15, 60% by December 15 and 100% by March 15. The requirement for payment of advance tax arises only when the tax dues are over `10,000. Alternatively, a salaried employee can estimate and provide his other income details to his employer, thereby requiring the latter to deduct tax dues on such income from monthly salary.

What are the methods for deposit of tax? An individual can deposit taxes either through a designated bank branch or through the e-payment facility of authorised banks. In both the cases, the tax payer should fill the tax challan with the details of PAN, assessment year and remittance mode. Cash/cheque/demand draft payments can be made through any designated bank branch. On receipt of cash/realization of cheque, the bank will hand over the acknowledgment counterfoil of challan stamped with Challan Identification Number (CIN). The CIN is a unique identifier and to be quoted in the tax return as proof of tax payment. Alternatively, tax payers who have net-banking account with any of the Authorized Banks can remit the taxes online. For this, one needs to log on to www.incometaxindia.gov.in, select Pay Taxes Online option, fill the ITNS 280, submit the form and provide the net-banking account details for transfer of funds. On e-payment, an acknowledgement is generated by tax website quoting the CIN. When will a returning Indian be taxable for overseas income in India? An individual who has stayed in India for more than 729 days during the previous seven tax years will be liable to tax on global income. Keeping this in mind, a returning Indian who has not made any frequent visits to India will be NR/NOR in the first two tax years. From the third tax year, an individual may turn out to be a ROR and is taxable for overseas income in India. How can an individual check his/her tax credit in India? Income tax department enables tax payers to check their credits online through the Annual Tax Statement in Form 26AS. This form provides complete details of tax paid by/tax withheld on account of a tax payer for a particular tax year. Example: Form 26AS captures the details of tax deduction by employer, tax deduction by banker on deposits, advance/self-assessment tax deposited by the individual. This form helps an individual to verify the taxes deducted/paid through various sources to tax department. Commonly, individuals check their credit by registering the PAN in e-filing portal or using the net banking facility. No fee is charged for availing this facility.

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What are the areas in tax a returning Indian should be aware of while taking up self-employment in India? Self-employed professionals have an option to follow either cash or mercantile system of accounting. Tax payers following the cash system pay taxes only on those incomes which have been actually received. Further, they are allowed deduction for expenditures actually incurred. Under a mercantile system, profits are accounted on an accrual basis. It is mandatory for professionals/businessmen to maintain books of account and get the same audited by a Chartered Accountant once the gross receipt/ turnover exceeds prescribed limits. Tax payers subject to tax audit should deduct taxes at source on certain payments Example: On salary paid to employees, consultants, contractors etc. A self-employed individual should estimate taxable income, arrive at the tax liability (after considering the tax deduction from various sources) and remit advance tax within scheduled dates. A taxpayer should remit interest for the failure or short-fall in payment of taxes within the scheduled dates. How can an individual claim tax deduction? An employed individual has the option of claiming deductions through his/her employer (by submitting documentary evidences) and can reduce the tax impact at source stage. However, there are other one-off deductions for treatment/maintenance of dependents which can be claimed only in the tax return. In such cases, the deduction can be used for adjustment with personal income or can be claimed as refund. Selfemployed individuals can claim deductions directly in the tax return. No documents need be enclosed with the tax return in support of the claim for deduction. However, such details must be produced when called for by tax office. Is there any restriction for non-residents to claim tax deductions? Fixed deduction of `100,000 is available for certain investment/expenditure irrespective of the residential status and period of stay in India. How/where to file the tax return? Tax return can be submitted either physically or electronically. Physical return can be filed at the tax office having jurisdiction over the correspondence address mentioned in the tax data base. Against this, electronic submission

can be made from anywhere through the tax portal (www.incometaxindiaefiling.gov.in). What are the consequences for non- filing of the tax return? Tax returns need to be filed before due dates failing which interest at 1% per month would apply on the pending liability till the period of default. Tax authorities may also levy a penalty of `5,000. Is it mandatory for an individual having PAN to file tax return in India? Tax returns are mandatory only if the income exceeds the threshold limit. Hence, an individual having income below the tax limit or no refund claim from the tax office need not file the tax returns. Which are the incomes generally exempt from tax in India? The below is an illustrative list of income exempt from tax: Dividend from an Indian company and specified mutual funds Long term capital gains from sale of equity shares/ equity oriented fund provided the transaction has suffered Securities Transaction Tax (STT) Withdrawals from retirement benefits like recognized provident fund subject to conditions Interest from NRE accounts of individuals who qualify as resident outside India as per FEMA or who are permitted by RBI to maintain such accounts Interest from FCNR deposits of NRs and NORs Interest on notified securities/bonds specified by central Government subscribed in convertible foreign exchange Are stock option benefits taxable in India? If yes, what is the taxation scheme? Yes, stock option benefits are taxable in two stages. At the time of allotment by the employer, the benefit (difference between fair market value and the cost paid by employee) is taxable as employment income and the employer has to withhold appropriate tax. On sale of shares, the resulting profits (difference between sale value and the fair market value considered by employer) are taxable as capital gains. The rate of taxation of the gains will vary based on the holding period and whether the transaction is subject to Securities Transaction Tax in India.

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Stock options are taxable in India at the time of allotment. If such options are also taxable in another country, can such taxes be used for set-off against the taxes payable in India? Technically, an individual can claim credit in India based on his/her treaty residence (residential status as per the provisions of DTAA) and subject to the conditions for tax relief. One may have to examine the treaty provisions in detail if taxes are paid in a different year or the benefit is characterized differently in the other country. B. FEMA Under the applicable foreign exchange regulations, who has general permission to purchase immovable property in India? Are there any limits on the number of properties that can be purchased? General permission under the FDI policy is available to a person resident outside India who is a citizen of India (NRI) and to a PIO only for purchase of residential or commercial property in India. A person resident outside India cannot purchase agricultural land, plantation property or farmhouse in India. There is no restriction on the number of residential or commercial properties an NRI or PIO can purchase under general permission.

To whom can an NRI sell residential or commercial property without seeking any specific approval? An NRI can sell residential or commercial property in India to a person resident in India or to an NRI or a PIO. Can a PIO sell residential or commercial property without any prior approval? A PIO can sell residential or commercial property in India only to a person resident in the country. For transfer to any other person prior approval from the RBI is required. To whom can an NRI or a PIO sell his agricultural land, plantation property or farmhouse in India without any prior approval? Under general permission, NRI/PIO may sell his agricultural land/plantation property/farm house in India to a person resident in India who is a citizen of India. Can an NRI or a PIO mortgage, their residential or commercial property to an authorized dealer or housing finance institution in India? Yes, this is permissible. Can an NRI or a PIO mortgage their residential and commercial property in India to a party abroad? No, this is not permissible. Prior approval of the RBI is required for such transfer.

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Under general permission available what is the payment mode for the purchase of residential or commercial property in India by an NRI or a PIO? Under general permission, an NRI or PIO may purchase residential or commercial property in India out of funds remitted to India through the normal banking channel or funds held in his NRE/FCNR (B)/ NRO account. No consideration shall be paid outside India. Can an NRI or a PIO take a loan from an authorized dealer against the security of funds held in their NRE Fixed Deposit account/FCNR (B) account for the purpose of acquisition of flat/house in India for his own residential use? Yes, subject to certain terms and conditions as provided in the applicable provisions of the FEMA regulations. Can an NRI or a PIO take a housing loan in Rupees from an authorized dealer or housing finance institution in India approved by the National Housing Finance Bank for the purchase of residential accommodation or for repairs/renovation/ improvement of residential accommodation? Yes, subject to certain terms and conditions. The borrower can repay such loans through inward remittance through the normal banking channel or by debit to their NRE/FCNR (B)/NRO account or out of rental income derived from renting out such property. Such loan can also be repaid by the borrowers close relatives through their accounts in India by crediting the borrowers loan account. Can an NRI avail of a Rupee housing loan from his employer in India? Yes, subject to certain terms and conditions. Can an NRI or a PIO repatriate the sale proceeds of residential or commercial property in India acquired through inward remittance via the normal banking channel or by debit to an NRE/FCNR (B)/NRO account? If so, what is the quantum? In case of sale of immovable property other than agricultural land / farm house / plantation property in India, the amount to be repatriated does not exceed: the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels; or the amount paid out of funds held in Foreign Currency Non-Resident Account; or the foreign currency equivalent (as on the date of payment) of the amount paid where such payment

was made from the funds held in Non-Resident External account for acquisition of the property; and In the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties. NRI/PIO may repatriate up to USD 1 million per financial year (April-March) from their NRO account which would also include the sale proceeds of immovable property. There is no lock in period for sale of immovable property and repatriation of sale proceeds outside India. The Rupee loan availed by an NRI for the purchase of residential accommodation was repaid either by inward remittance or by debit to the NRE/FCNR (B) account. Can the sale proceeds of such property be repatriated? Yes. Loan repayment in foreign exchange is considered equivalent to the foreign exchange received for the purchase of residential accommodation. Is there any lock-in period for the sale of residential or commercial property purchased out of inward remittance/debit to NRE/FCNR (B) account? No lock-in period is applicable for the sale of such property. Is there any restriction on the repatriation of sale proceeds of residential property purchased by an NRI or a PIO out of funds remitted to India through the normal banking channel or funds held in their NRE/FCNR (B) account? Yes. The repatriation of sale proceeds is restricted to not more than two residential properties. Can an NRI or a PIO rent out residential or commercial property purchased out of foreign exchange/Rupee funds, if not required immediately? Yes. As current income, rent received may be credited to an NRO/NRE account or remitted abroad. Can an NRI who had acquired immovable property - residential or commercial property, agricultural land, plantation property or a farmhouse - in India while he was a person resident in India continue to hold or transfer such immovable property? In which account should the sale proceeds be credited? An NRI who had acquired immovable property in India while he was a person resident in India may continue to hold such property. Under general permission, he may
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transfer through sale or gift, agricultural land/ plantation property/farm house in India to a person resident in India who is a citizen of the country and may transfer, through sale or gift, residential/commercial property in India to a person resident in India or to an NRI or a PIO. The sale proceeds may be credited to an NRO account. Can a PIO who had acquired immovable property residential/commercial property/ agricultural land/ plantation property/farm house - in India while he was a person resident in India continue to hold or transfer such immovable property? In which account should the sale proceeds be credited? A PIO is permitted to continue holding the immovable property in India that was acquired while he was a person resident in India. Under general permission, a PIO may: Transfer by way of gift or sale, any immovable property agricultural land, plantation property or a farmhouse in India to a person resident in India who is a citizen of the country Sell any residential or commercial property in India to a person resident in India who is a citizen of the country Gift any residential or commercial property in India to a person resident in India or a person resident outside India or a PIO. However, if a PIO is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, they should seek prior approval of the RBI for the transfer of such immovable property in India. The sale proceeds may be credited to an NRO account. Can a resident extend local hospitality to a nonresident? A person resident in India is free to make any payment in Indian Rupees towards meeting expenses on account of boarding, lodging and services related thereto or travel to and from and within India, of a person resident outside India, who is on a visit to India. Can remittance be made under LRS Scheme for acquisition of ESOPs? The Scheme can also be used for remittance of funds for acquisition of ESOPs.

Can a resident individual invest in units of Mutual Funds, Venture Funds, unrated debt securities, promissory notes, abroad etc., under LRS? A resident individual can invest in units of Mutual Funds, Venture Funds, unrated debt securities, promissory notes, etc. under this Scheme. The resident can invest in such securities out of the bank account opened abroad under the Scheme. Can an individual, who has availed of a loan abroad while as a NRI repay the same on return to India, under LRS as a resident? This is permissible. Is it mandatory for resident individuals to have PAN number for sending outward remittances under LRS? It is mandatory to have PAN number to make remittances under the Scheme. Can remittances by a resident under the Liberalized Remittance Scheme be made only in US Dollars? The remittances can be made in any freely convertible foreign currency equivalent to USD 200,000 in a financial year. Can an NRI/PIO/OCI upon becoming resident in India invest in sectors / businesses allowed for citizens of India residing in India? Any person resident in India (other than citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan) is allowed to freely make investments in India (immovable property, securities infrastructure bonds, commodities, retail sector, etc.) without any restrictions under FEMA. Hence, any NRI/PIO upon becoming a person resident in India in accordance with the definition of person resident in India provided under FEMA can freely invest in India without any restrictions. (Note: The defintion of PIO shall be further restricted for certain types of transactions specified under FEMA) C. SOCIAL SECURITY Who is an IW? An International worker is An Indian employee having worked or going to work in a foreign country with which India has entered

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into a social security agreement [SSA] and being eligible to avail the benefits under a social security programme of that country, by virtue of the eligibility gained or going to gain, under the said agreement. An employee other than an Indian employee, holding other than an Indian passport, working for an establishment in India to which the Act applies. Excluded employee has been defined to be an International Worker, who is contributing to a social security programme of his/her country of origin, either as a citizen or resident, with whom India has entered into a social security agreement on reciprocity basis and enjoying the status of detached worker for the period and terms, as specified in such an agreement. How many countries does India have a SSA which is in force? Currently India has notified SSAs with Belgium, Germany, Switzerland, Denmark, Luxembourg, France, South Korea and Netherlands. When can an IW withdraw the funds from the PF authorities? How is it different from a domestic Indian employee? An IW can withdraw the Funds lying in the PF account only in the following circumstances On retirement after attaining of 58 years As covered by SSA Medical grounds Restriction of withdrawal from pension funds In the case of a domestic worker the funds can be withdrawn On retirement at 55 years On migration from India On being unemployed for a period of 2 months For medical reasons Is the contribution made by an IW to the PF Act different from that of a domestic employee? Both the IW as well as the domestic employee would need to contribute 12% of their base salary towards PF and pension fund. The employer also needs to make a matching 12% contribution. The difference is in the break-up towards PF and pension contribution. This is highlighted as follows:

For an IW the contributions would be as follows: Employers Contribution 12% Pension Fund 8.33% Provident Fund 3.67% Employees Contribution 12% towards PF contribution For a domestic worker the contributions would be as follows: Employers Contribution 12% Pension Fund 8.33% of `6500 (i.e. `541) Provident Fund balance Employees Contribution 12% to Provident Fund contribution D. IMMIGRATION Does a PIO/OCI card holder require a visa for visiting India? PIO card holders can visit India without a visa for 15 years from the date of issue of the PIO card. The OCI card holder can visit India without visa for life. Whether every foreigner is required to be registered? A foreign national who holds a valid visa (student, research, employment, missionary medical and medical attendant) for a period which is more than 180 days is required to register himself with the concerned office within 14 days of his first arrival in India. However in some locations, a registration is required for E-visa holders. A foreign national who holds other categories of visa, including a business visa would not require registration if he does not intend to stay in India for more than 180 days on each visit. If he intends to stay for more than 180 days on a single visit, he should get himself registered well before the expiry of 180 days. Children below 16 years of age do not require registration, on any type of visa. Where can a foreigner register himself? A foreigner is required to get himself registered with the FRRO (in case of Delhi, Mumbai, Kolkata, Amritsar, Bengaluru, Chennai and Hyderabad); or In FRO cum District Superintendents of Police (SP), at other places where the foreigner intends to stay.

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Who can get PIO Card? PIO cards can be obtained under the following circumstances: If a foreign national holds an Indian passport at any time. He/ She or either of his/her parents or grandparents or great grandparents was born in India or was permanently resident in India, and provided that neither was at any time a citizen of any other specified country (Pakistan, Bangladesh, Afghanistan, Nepal, Bhutan, China, and Sri Lanka ). He/ She is a spouse of a citizen of India, or a person of Indian origin Iranian nationals of Indian Origin can seek PIO card with the approval of MHA. What are the documents requiremed to obtain a PIO card? The requirements are as follows: Previous Indian Passport, or Birth Certificate and parents Indian passport, or Marriage certificate and copy of spouses Indian passport Photocopy of the foreign passport presently held (Front page i.e. photo page and visa page). Photocopy of the initial visa, with which registered with FRRO/FRO cum Superintendent of Police. Photocopy of all the pages of Registration certificate issued by the FRRO/FRO office. Four recent passport size photographs. Who can get an OCI Card? A foreign national who was eligible to become citizen of India on January 26, 1950, or was a citizen of India on or at any time after January 26, 1950, or belonged to a territory that became part of India after August 15, 1947 and his/her children and grandchildren, provided his/her country of citizenship allows dual citizenship in some form or other under the local laws, is eligible for registration as Overseas Citizen of India .Minor children of such person are also eligible for OCI. However, if the applicant had ever been a citizen of Pakistan or Bangladesh, he/she will not be eligible for OCI. Whether a person can travel for purposes other than that covered by the visa? It is advised that one should always travel with the type of visa that is most appropriate for the travel purpose. Immigration officials may deny entry if the type of visa does not match the purpose of the visit.
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Can a person hold two active Indian visas at the same time? No, the Indian Government will not permit two valid visas at the same time. The currently active visa will need to be cancelled upon approval and issuance of a second visa. Whether a new visa is required upon a name change? One can travel with marriage certificate or proof of name change if the new passport is yet to be obtained and the old passport and visa with the prior name have not expired. If a new passport has been issued in the new name, and you still have your previously issued passport (with a valid visa), please request transfer of visa and submit a copy of your marriage certificate or proof of name change. If you do not have your previously issued passport, please apply for a new visa with your new passport. Do children require a visa to visit India? Yes, all travelers including children must have a valid visa to travel to India. A separate application for each child is required. For minors, the parents should sign the application. If a child is born to a registered foreigner in India, can the newly born child be given stay visa? While in India, the first visa is only granted by the Ministry of Home Affairs. The foreigner needs to approach the ministry first and seek visa orders for the child. The same visa orders would be endorsed by the concerned FRRO/FRO cum Superintendent of Police on the passport of the child. Thereafter, subsequent visa extensions can be made by FRRO/FRO cum Superintendent of Police on co-terminus basis to the childs parents. What type of visa is granted to the family members of foreigners holding E type (Employment) visa? Family members are granted X (entry) visas, with a validity co-terminus with the validity of their spouses visa (or for such shorter period as required). On every approved visa extension of a foreigner on Employment visa, their spouse and children can seek visa extension on co-terminus basis.

Useful websites

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Particulars Ministry of Home Affairs Bureau of Immigration Central Board of Secondary Education Council for The Indian School Certificate Examinations Department of Education & Literacy Department of AYUSH Indian Railways Delhi Metro Rail Corporation Bangalore Metro Rail Corporation Limited (namma metro) Airports Authority of India Air India Jet Airways Go Airlines (India) Ltd. Indigo Unique Identification Authority of India Employees State Insurance Corporation Employees Provident Fund Organization Insurance Regulatory and Development Authority India Post Income Tax Department of India Directorate of Income Tax [e-filing of tax return] National Securities Depository Limited Ministry of Corporate Affairs Reserve Bank of India Central Board of Excise and Customs Securities and Exchange Board of India Maps of India India Brand Equity Foundation Justdial timescity.com

Website www.mha.nic.in www.immigrationindia.nic.in cbse.nic.in www.cicse.org http://education.nic.in http://indianmedicine.nic.in www.indianrailways.gov.in; www.indianrail.gov.in; www.irctc.co.in www.delhimetrorail.com http://bmrc.co.in www.aai.aero http://home.airindia.in www.jetairways.com www.goair.in http://book.goindigo.in http://uidai.gov.in http://esic.nic.in www.epfindia.com www.irda.gov.in www.indiapost.gov.in www.incometaxindia.gov.in https://incometaxindiaefiling.gov.in www.tin-nsdl.com www.mca.gov.in www.rbi.org.in www.cbec.gov.in www.sebi.gov.in www.mapsofindia.com www.ibef.org www.justdial.com http://timescity.com

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About Ministry of Overseas Indian Affairs


The Ministry of Overseas Indian Affairs is a young ministry established in May 2004. It is the focal Ministry for all matters relating to Overseas Indians comprising Persons of Indian Origin (PIO), Non-Resident Indians (NRIs) and Overseas Citizens of India (OCI). Vision Proactively engage with Overseas Indians to meaningfully serve India. Mission Establish a vibrant institutional framework based on three value propositions: Through multi-skilled market driven entities promoted by the Ministry and managed by knowledge partners. Policy coherence in strategic engagement with Overseas Indians. Enlisting the States as partners in emigration management and Overseas Indian related initiatives. Objectives 1. Facilitate sustained, symbiotic and strategic engagement of Overseas Indians with India and offer them a wide variety of services in economic, social and cultural matters. 2. Extend institutional support for individual initiatives and community action to harness the knowledge, skills and resources of Overseas Indians to supplement the national development efforts. 3. Transforming management of emigration through appropriate domestic interventions and international cooperation. 4. Optimize service delivery of the Ministry. 5. Improve the Engagement with the professional bodies/associations of Overseas Indians. Ministry of Overseas Indian Affairs Government of India Akbar Bhawan, Chanakyapuri New Delhi- 110 021 (India) Tel : +91 11 24197900 Fax : +91 11 24197919 Email: info@moia.nic.in, Website: www.moia.gov.in

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About Confederation of Indian Industry


The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the growth of industry in India, partnering industry and government alike through advisory and consultative processes. CII is a non-government, not-for-profit, industry led and industry managed organisation, playing a proactive role in India's development process. Founded over 116 years ago, it is India's premier business association, with a direct membership of over 8100 organisations from the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over 90,000 companies from around 400 national and regional sectoral associations. CII catalyses change by working closely with government on policy issues, enhancing efficiency, competitiveness and expanding business opportunities for industry through a range of specialised services and global linkages. It also provides a platform for sectoral consensus building and networking. Major emphasis is laid on projecting a positive image of business, assisting industry to identify and execute corporate citizenship programmes. Partnerships with over 120 NGOs across the country carry forward our initiatives in integrated and inclusive development, which include health, education, livelihood, diversity management, skill development and water, to name a few. CII has taken up the agenda of Business for Livelihood for the year 2011-12. This converges the fundamental themes of spreading growth to disadvantaged sections of society, building skills for meeting emerging economic compulsions, and fostering a climate of good governance. In line with this, CII is placing increased focus on Affirmative Action, Skills Development and Governance during the year. With 63 offices including 10 Centres of Excellence in India, and 7 overseas offices in Australia, China, France, Singapore, South Africa, UK, and USA, as well as institutional partnerships with 224 counterpart organisations in 90 countries, CII serves as a reference point for Indian industry and the international business community. Confederation of Indian Industry The Mantosh Sondhi Centre 23, Institutional Area, Lodi Road, New Delhi 110 003, India Tel: 91 11 24629994-7 Fax: 91 11 24626149 Membership Helpline : 91 11 43546244 / 91 9910446244 CII Helpline Toll free No: 1800-103-1244 E: info@cii.in W: www.cii.in

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About Deloitte

Globally Deloitte provides audit, tax, consulting and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloittes more than 182,000 professionals are committed to becoming the standard of excellence. Deloittes professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from cultural diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloittes professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities.

India Deloitte is spread across 13 locations and its 18000 professionals take pride in their ability to deliver to clients the right combination of local insight and international expertise.

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About OIFC

The Overseas Indian Facilitation Centre (OIFC) set up by the Ministry of Overseas Indian Affairs (MOIA) in 2007, in partnership with the Confederation of Indian Industry (CII), provides facilitation services to the Overseas Indians, especially for their economic engagement with India. The OIFC is governed by a Council of prominent Overseas Indians, Industry leaders and senior policy makers from the Government. With the credibility extended under the umbrella of the Government and an institutional industry chamber, coupled with the support of a network of Knowledge Partners, Indian states, Indian missions and Indian diaspora associations, the Centre serves as a focal point, especially, for the diaspora professionals and small/ mid-sized entrepreneurs to build strong inter linkages with India, enabling them to expand their economic engagement with India.

Currently OIFCs activities include, query addressal on various issues faced by the NRIs & PIOs, a robust online business networking portal, projection of member states projects, 16 X 5 live facilitation services, road shows through investors interactive meets in various countries, Market Place business forums in India and overseas, and a Global Indian Network of Knowledge portal. Overseas Indian Facilitation Centre C/o Confederation of Indian Industry 249-F, Sector 18, Udyog Vihar, Phase IV Gurgaon-122 015. Haryana (India) Tel: +91 124 401 4055/56 Fax +91 124 430 9446 Email : oifc@cii.in Website: www.oifc.in

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Key contacts

Ministry of Overseas Indian Affairs Akbar Bhawan, Chanakya Puri, New Delhi 110021 Phone: 91 11 24197900 Fax: 91 11 24197919 Email: info@moia.nic.in website: www.moia.gov.in Confederation of Indian Industry CII Headquarters, Mantosh Sondhi Centre, 23, Institutional Area, Lodi Road, New Delhi - 110003 Phone : 91 11 24629994 - 7 Fax :91 11 24626149 / 24633168 Email : info@cii.in Website: www.cii.in Overseas Indian Facilitation Centre C/o Confederation of Indian Industry, 249- F, Sector 18, Udyog Vihar, Phase IV, Gurgaon -122 015, Phone: 91 124 4014055 Fax: 91 124 4309446 Email: oifc@cii.in Website: www.oifc.in Ministry of External Affairs A - Wing, Shastri Bhavan, New Delhi - 110001 Phone: 91 11 23383371 / 3373 Fax: 91 11 23384319 Email: jsxp@mea.gov.in / usxps@mea.gov.in Website: www.mea.gov.in Ministry of Finance North Block New Delhi - 110 001 Phone: 91 11 23092947 Website: www.finmin.nic.in Department of Industrial Policy & Promotion Udyog Bhawan, New Delhi - 110 011 Phone: 91 11 2306 1204 / 2306 1222-29 Fax : 91 11 23062626 Website: www.dipp.nic.in

Reserve Bank of India Central Office Building, 18th Floor, Shahid Bhagat Singh Road, Mumbai-400 001. Website: www.rbi.org.in Passport Office Trikoot - 3, HUDCO Building, Bhikaji Camaji Place, R.K.Puram New Delhi 110066 Phone : 91 11 26187075 / 26166292 / 26192409 Fax - 011-26165870 / 26161783 Email: rpo.delhi@mea.gov.in Website: www.passport.gov.in National Securities Depository Limited 3rd Floor, Sapphire Chambers, Near Baner Telephone Exchange, Baner, Pune - 411 045. Phone: 91 20 2721 8080 Fax: 91 20 2721 8081 Email: tininfo@nsdl.co.in Website: www.tin-nsdl.com Ministry of Home Affairs North Block, Central Secretariat, New Delhi - 110 001 Phone: 91 11 23092161 / 23092011 Fax: 91 11 23093750 / 23092763 Email: websitemhaweb@nic.in Website: www.mha.nic.in Office of the Director General of Income Tax (Systems) E-2 ARA Centre, Ground Floor, Jhandewalan Extn New Delhi 110055 Phone: 91 124 2438000 Email: ask@incometaxindia.gov.in Website: www.incometaxindiaefiling.gov.in

Securities and Exchange Board of India Plot No.C4-A,'G' Block, Bandra Kurla Complex, Bandra (East), Mumbai- 400051 Phone: 91 22 26449000 / 40459000 Fax : 91 22 26449016-20 / 40459016-20 Email : sebi@sebi.gov.in Website: www.sebi.gov.in Ministry of Corporate Affairs 'A' Wing, Shastri Bhawan, Rajendra Prasad Road, New Delhi - 110 001 Phone: 91 11 23384158, 23384660, 23384659 Email: hq.delhi@mca.gov.in, oandm.dca@ sb.nic.in Website : www.mca.gov.in Department of Commerce Udyog Bhawan, New Delhi - 110 01.1 Phone: 91 11 23062261 Fax: 91 11 23063418 Website: www.commerce.nic.in Insurance Regulatory and Development Authority 3rd Floor, Parisrama Bhavan, Basheer Bagh, Hyderabad - 500 004 Phone:91 40 23381100 Fax: 91 40 6682 3334 Website: www.irda.gov.in Foreign Investment Promotion Board Department of Economic Affairs, North Block, New Delhi 110001 Phone: 91 11 2309 5123/4031 Website: www.fipbindia.com

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Overseas Indian Facilitation Centre C/o Confederation of Indian Industry, 249-F, Sector 18, Udyog Vihar, Phase IV, Gurgaon-122 015. Haryana, India Tel: +91 124 401 4055 / 56, Fax: +91 124 430 9446; Email: oifc@cii.in ; Website : www.oifc.in The Publication has been prepared by Deloitte on behalf of OIFC.

Deloitte Touche Tohmatsu India Private Limited 7th floor, Building 10, Tower B, DLF Cyber City Complex, DLF City Phase II, Gurgaon, Haryana, 122002, India Email : indiawebsite@deloitte.com; Website : www.deloitte.com/in

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. This material and the information contained herein prepared by Deloitte Touche Tohmatsu India Private Limited (DTTIPL) is intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). None of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the Deloitte Network) is, by means of this material, rendering professional advice or services. The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser. No part of this Journal / publication may be reproduced in any manner whatsoever or translated in any other language without permission of DTTIPL. The publisher shall be obliged if mistakes are brought to their notice for carrying out appropriate corrections. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this material. 2011 Deloitte Touche Tohmatsu India Private Limited Member of Deloitte Touche Tohmatsu Limited

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