Non Resident Indians can open the following type of accounts:
A Non Resident may be an Individual or a Hindu Undivided Family. A Hindu Undivided Family herein after referred to as HUF, is a family which consists of group of persons who lineally descend from a common ancestor and includes their wives and unmarried daughters. This follows the Hindu Law, but a family who follow a different religious belief can also be treated as an HUF. For Income Tax purposes the HUF is treated differently in comparison to an Individual. A HUF can also be a non resident HUF if all the members of the family are non residents, as per the common understanding of the term non resident. The person in charge of the HUF is called a Karta or manager. The management of the affairs of such non resident HUF has to be outside India. All the rules and regulations on an individual regarding non residency are applicable on a non resident HUF.
What applies to an individual non resident applies to a non resident HUF as well. Resident and Non Resident HUFs have certain tax benefits that an individual resident and non residents does not have. A Non Resident individual can open any kind of non resident bank accounts, such as NRE or NRO or FCNR Bank Accounts. HUF is a concept applicable within India only meaning, nobody can form a HUF in any other country and seek to open a HUF account in India. A HUF cannot be formed under a contract , but is automatically formed being a part of a joint family who are lineally decedents of each other. It can be seen that the most important status is that of the Karta or manager of the HUF, while determining the residential status of the HUF. So, NRO account can be opened for HUF. This is confirmed by RBI in the Master Circular for NRO accounts. But there is no mention of NRE account for HUF. RBI has not so far come out with any specific guideline stating that NRE account can be opened for HUF. Non Resident status is for each individual and not for group of people who may be part of a HUF, although all of them are from the same HUF in India. Banks in India are also ill informed about this, so there are a lot of issues in opening non resident HUF bank accounts.
Any individual becomes a non resident if that person during a financial year is out of India for a period of 182 days. When a resident becomes a non resident , all his existing domestic accounts are designated as NRO accounts. Similarly when any member of the HUF returned back to India the non resident status of the HUF will cease and the treatment will be similar to a resident HUF.
Clarifications on the bank accounts are being sought from the Reserve Bank of India ( RBI ) on this matter of NRE bank accounts of non resident HUFs.
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