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5 FEMA Rules Every NRI Should Know

The Foreign Exchange Management Act (FEMA) is a law enacted by the Government of India in 1999 to control the flow of foreign currency across Indian borders.FEMA aims to facilitate external trade and their payments in India, a systematic improvement and continuation of foreign exchange in the Indian market.It’s important for Indians working abroad to understand FEMA rules for NRIs very carefully since it can affect the way they can send and receive funds from India.Let’s look at five FEMA Regulations for NRIs:
1.      Maintaining a Bank Account
You need to operate bank accounts that are specifically designated for NRIs.FEMA rules for NRIs do not allow holding a savings bank account. There are 3 major types of accounts as stipulated by the Reserve Bank of India (RBI)that you can open:
-NRO account - If you want to send money earned abroad back to India.
-NRE account - For repatriable or moveable assets like securities and cash.
-FCNR (B) account - To store money in foreign currency. The NRO and NRE accounts are only used in Indian rupee.
2.      Financial Investment
NRIs are permitted an unlimited amount of investment options through repatriable and non- repatriable transactions. However, as per the FEMA rules for NRIs, they cannot make investments in small saving or Public Provident Fund (PPF) schemes of the government.
3.      Immovable Property
All NRIs and PIOs (Persons of Indian Origin) can purchase any kinds of commercial and residential real estate property in India. However, there are a few exceptions;
- Agricultural land
- Plantation
- Farmhouse
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.      Provision for NRI students
Students going overseas to study are treated as NRIs and are eligible for all facilities available to NRIs under FEMA. They are entitled to receive remittance up to USD 10 lakh a year from their NRE or NRO accounts or profits on property.

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