Emigrating Residents and Returning NRIs

1. This article is a part of the series of articles on income-tax and FEMA issues faced by NRIs and deals with issues faced by individuals when they change their residential status. A resident who leaves India and turns non-resident is termed as a “Migrating Resident”; while a non-resident of India, who comes to India and becomes a resident of India is termed as a “Returning NRI” in this article.

2. Both Migrating Residents and Returning NRIs have to consider implications under income-tax and FEMA before taking any decision for change of residence. We have come across several instances where such a person has not taken due care before change of residence leading to unnecessary and avoidable legal issues. After the advent of the Black Money Act¹, there are instances where corrective action is quite difficult under law. Further, resolution of violations under FEMA can be difficult or costly to undertake.

1. Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015

3. Key to the above concern is the fact that residential status definitions under the Income-tax Act (ITA) and FEMA are separate and different. While under ITA, the definition is largely based on number of days stay of the individual in India; under FEMA, it is based on the purpose for which the person has come to, or left India, as the case ma