Any cross-border monetary transaction either to or from India is governed by FEMA (Foreign Exchange Management Act) 1999, which came into effect after the FERA act was repealed and regulates all transactions that deal with foreign exchange. Here are the five most important FEMA regulations every NRI must know.
1.) Maintenance of bank account
Once you become an NRI, you need to open certain bank accounts that are designated for NRIs. These include:
2.) Financial investment options
NRIs are allowed unlimited investment in repatriable or non-repatriable transactions. The only exceptions are small savings schemes or Public Provident Fund (PPF) that aims to mobilize small savings by offering an investment with reasonable returns combined with income tax benefits.
3.) Acquisition and transfer of immovable properties
All NRIs and Persons of Indian Origin (PIO) (excluding those from some countries) can purchase all types of residential and commercial real estate in India. The exceptions are the following:
4.) Repatriation of current and immovable assets
An NRI can send money back to India on foreign repatriable assets such as rent received from a building owned abroad. He is more restricted on immovable assets (such as property and lands), since the NRI can only be repatriated on his originally invested foreign fund. He cannot profit from any sort of ROI that proceeds from these investments.
5.) Income for students
According to the Liberalized Remittance Scheme, Indian students who are NRIs can receive a maximum of US$ 10 lakhs per year from their NROs or NREs, or from any profit gained from properties or estates. NRI students can also receive an amount equivalent to US$ 2.5 lakh per year for caring for close relations.