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Legal Guide for NRIs

Written by:
Prachi Darji
Published on

A Non Resident Indian (NRI) is a citizen of India who holds an Indian passport and  has temporarily emigrated to another country for six months or more for employment, residence, education or any other purpose.

A Person of Indian Origin (PIO) is a person of Indian origin or ancestors but who is not a citizen of India and is the citizen of another country. A PIO might hhave been a citizen of India and subsequently taken the citizenship of another country, or have ancestors born in India.

With the world becoming an urban village and more and more Indians travelling to other countries to find better education, job opportunities the number of NRI’s is eventually increasing. All the NRI’s that are staying abroad often invest in real estate in India but the people who want to take advantage of the innocent people always exist and one should very careful while investing. The FEMA (Foreign Exchange Management Act) controls all the real estate dealings by NRIs.

NRIs can invest in and purchase residential and commercial properties only in India. NO agricultural land or farmland could be purchased by an NRI. Many devious people take unfair advantage of lack of knowledge of the NRIs and sell them farmlands and agricultural lands which is void.


Some of the common problems faced by the NRI’s are:-

Land grabbing- NRI’s look to settle abroad and their property which is in the country is often sold illegally or even misused by their relatives they trust in good faith but end up losing out their property by the time they come back to India. Its recommended that NRIs appoint only the people they trust fully to be care takers and often check up on their property themselves if possible. Over the time there’s been an upsurge in the number of land grabbing cases of the NRIs property.

Investing with the wrong builders- Everyone’s money is hard earned with their time and sweat and while investing in real estate extra caution should be played while choosing the right builder in the market, thorough research of the builders in the market with a clean record should be given importance. Once you choose a good builder he will be able guide you in the market properly.We would advise you to have a legal expert and keep these following points in your mind before buying or investing:-

• Buy from a reputed & trustworthy developer • Buy at a prelaunch offer price.

• Buy in a gated community so that your property is taken care off even in your absence.

• Land titles/construction permits/ approvals from authorities.

• Title clearance certificate, EC and marketability certificates.

• POA executed in favor of the Developer if it is a Joint Development.

• Original Construction approval from Planning/Local Area Authority.

• Project approval from leading Home Loan vendors like HDFC, Axis Bank, SBI etc.

• Construction milestones and linked payment slabs.

• Penalty by the builder in case of delay in construction and delivery.

• Cancellation charges and booking amount return terms by the builder.

• Society clearance and transfer of membership (in case of buying from an existing owner).

Problems faced in business sector by the NRIs- Let us understand the options that are available to NRIs who wish to start a business in India.

  • Limited companies- a limited company can have a full fledged presence in India but at the same time the compliances is greater than a foreign company.

  • Limited liability partnership(LLP)- the government has allowed Foreign Direct Investment through LLPs. The conditions that accompany the investment in LLP have been made very stringent.

  • Liaison office- this is the best suitable for companies which neither have nor see much of a presence in India. These offices are restricted in terms of what they can do and are mainly set up as communication medium between the foreign company and its existing customers in India.

  • Branch office- a branch office in India can execute most of the tasks that a Limited company can execute but manufacturing.

  • Project office- its like a temporary branch office set up for a project.

  1. No single person can form a company:- With the coming of the New Companies Act, 2013, a new concept of one person company has come in but the restriction is that that one person should be a resident Indian. NRIs, PIOs, Foreign Nationals are not eligible for forming this type of limited company in India.

  2. Need of Indian resident:- Companies Act, 2013 permits NRIs, PIOs, Foreign Nationals and Foreign Residents to act as directors of an Indian Company. With the removal of OPC from the scene, there are two Limited options left Public and Private Limited.

Public Limited-  has a minimum requirement of 7 persons out of which one needs to be Indian resident and Indian citizen.

Private Limited- has a minimum requirement of 2 persons out of which one should be Indian resident and Indian citizen.

  1. Notarization of documents from Indian Embassy:-In forming a company, the first step is to get the Digital Signature Certificates (DSCs) of the proposed directors and then apply for Directors’ Identification Number (DIN). In all these cases, the ID and address proofs of proposed directors are needed. In case of NR/NRIs, clear instructions have been issued by the government that if the present address of the NR/NRIs is outside India then each document of the person should be notarized from the Indian embassy of the country where the person presently resides.

  2. Non availability of address proof for registered office:- For registered office of the company, the electricity bill/property tax receipts/gas bill, No Objection Certificate from owner will be needed. Inthe initial stage, when a NRI/NR plans to open up a company in India he/she does not have a registered office address proof which is the last step in company incorporation because of their belonging to different nations.

Resolutions to some extent:-

  1. Availability of Indian residents:- Many Indian firms help to introduce NRIs to persons who are willing to work in their company as directors in lieu of some remuneration which takes care of the problem of one resident Indian in the company.

  2. Single Person Company is not viable:- For Foreign Nationals/NRIs, One Person Company is not a viable option as this concept has been introduced by the government to promote registered proprietorship in India and not with the aim to attract foreign nationals or NRIs to invest in India individually.

  3. Availability of registered office address:- The concept of a virtual office in India is new but very effective. A Foreign National/NRI can resolve the registered office problem by opting for a virtual office presence in India. Many startup hubs, incubation centers and  institutions provide this virtual office concept in lieu of some remuneration.

CENOMAR certificate:-  Certificate of No Marriage. This certificate is a certificate of bachelorhood and is needed in some countries to get married. This certificate proves the marital status of a person. It usually contains the seal and signature of the First Class Magistrate , for some countries this certificate has to be attested by the Ministry of External Affairs.

Unique Identification Number:-  Aadhar enrolments of NRIs is the same for the NRIs as it is for all other Indian citizens and a Unique Identification Number is given to NRIs. This number is required for opening bank accounts, making land transactions etc. The application could be filled online. The documents required to apply are Identity proof, Address proof, Date of birth proof and a document proof containing relationship details to head of family.

NRIs remitting their salary to India:- Indians who work abroad invest their money back home. In fact, these remittances from  NRIs  has made it possible for us to bridge the foreign exchange deficit caused by our unbridled love for gold. On its part, the government has also ensured that its remittance and tax laws facilitate investments in India. Investments made from non-resident external (NRE) accounts are fully repatriable. Interest on NRE accounts is also tax-free. NRIs have responded with remittances of Rs 3,50,000 crore ($48 billion) last year. However, the income tax department creates many hurdles in taxing the remittances made to Indian NRE accounts on technical grounds. While some NRIs have access to professional advice and can avoid these, most others are caught. In the case of merchant navy personnel. They serve on Indian and foreign ships in international waters and are usually away for more than six months in a year. They are classified as non-residents under the Income Tax Act. In most cases, they have no residence anywhere else in the world other than India. They are entitled to dollar salaries, which is paid to them from abroad into any bank account anywhere in the world. Most of them want to invest in India and direct their employers to remit the salary to their NRE accounts maintained in India. The investments are then made from these NRE accounts. The I-T department has been trying a lot to tax these amounts for many years now on several technical grounds. Indians working in countries with foreign currency restrictions, such as countries in Africa, face a similar problem as many ask their employers to remit their salary directly into their Indian NRE accounts. They face the same issues. The finance minister, in 2015, had retrospectively amended the definition of what constitutes time spent in India. Yet the tax department is proceeding against this intent by raising hyper-technical arguments. There is a requirement of quick clarity on this topic.

Nativity Certificate:- Many Overseas Citizens of India (OCI) and Persons of Indian Origin (PIO) applicants face difficulties in obtaining documentation showing they are of Indian origin which leads to delay in processing applications, many applicants are denied OCI registration due to lack of proofs.

In the cases where OCI applicants are the children and grandchildren of PIOs who left India before 26th January 1950, may find it difficult to produce the requisite documents as proof of their relationship to show their Indian origin may seek and obtain Nativity Certificate from their respective state governments in India.

Baptism certificate in place of birth certificate issued before October 1955 and attested by Collector/District Magistrate is the alternate of Birth certificate of Nativity Certificate.

Anti-Dowry laws were made for the betterment of the lives of the women who have faced abuse and cruelty but it’s being used as a weapon by in laws to exploit innocent non resident Indian husbands. A lot of cases have emerged where the in laws misuse this law to extort money from the innocent NRI husbands. Well there are methods by which one could prevent himself from being manipulated by getting proper legal advise .

Divorce cases- many a times people get forced into arranged marriages and in the cases of NRIs it’s even more prevalent because of family pressure to marry in the same caste, religion etc. whether it might be the choice of their child or not, sometimes these marriages work and sometimes they don’t and eventually lead to dissolution of marriage through divorce. However, getting a divorce which is recognizable by Indian Laws, while sitting abroad can be very challenging without the right legal representation and support in India.

We at MyAdvo work to find you the best legal help and assistance to protect your rights and interests by providing you step by step guidance. We offer all the services from documentation to finding you the ‘RIGHT’ lawyers experienced in handling NRI legal matters.