Once you become an NRI, FEMA (the Foreign Exchange Management Act, 1999) -- not the Income Tax Act -- governs which Indian bank accounts you can hold, how you can invest, and how you move money between India and New Zealand. The core obligations are: re-designating resident accounts to NRO/NRE on becoming an NRI, using the correct account type, and following the RBI's remittance limits and reporting requirements.
NRE, NRO, and FCNR accounts -- what each is for
An NRE (Non-Resident External) account holds foreign earnings remitted into India; both
principal and interest are freely repatriable, and interest is tax-exempt while NRI status is maintained. An
NRO (Non-Resident Ordinary) account is for income that arises in India; interest is
taxable, and repatriation is subject to specific limits. An FCNR account holds
foreign-currency term deposits. Continuing to operate an ordinary resident savings account after becoming an
NRI is a FEMA violation -- it must be converted to NRO (or closed).
The USD 1 million repatriation scheme for NRO funds
Under RBI's remittance facility for NRIs, balances in an NRO account can generally be repatriated up to
USD 1 million per financial year, subject to payment of applicable taxes and submission of the prescribed
certificates (Form 15CA/15CB, certified by a Chartered Accountant). The USD 1 million ceiling covers the
combined balance in the NRO account -- including sale proceeds of inherited or purchased Indian property,
accumulated rental income, maturity proceeds, and legacy investments -- so an NRI in New Zealand liquidating
several Indian assets in the same year should plan the timing of each remittance rather than assuming
each asset class carries its own separate limit.
PAN and Aadhaar for NRIs
A Permanent Account Number (PAN) is required for most financial transactions in India. Aadhaar is
generally not mandatory for NRIs the way it is for resident Indians, though banks may still ask for it as
one acceptable form of KYC.
Investment compliance -- what NRIs can and cannot hold
NRIs can invest in most listed securities, mutual funds, and non-agricultural property, and can invest in
Indian companies under the FDI/portfolio investment framework. NRIs generally cannot purchase agricultural
land, plantation property, or farmhouses.
Annual compliance checklist for an NRI with Indian assets
- Confirm accounts are correctly designated as NRO/NRE/FCNR.
- File an Indian income tax return if Indian-sourced income exceeds the applicable threshold.
- Keep Form 15CA/15CB documentation current for any planned repatriation during the year.
- Review whether any FEMA reporting is pending for property, gifts, or business investments.
- Re-confirm residential status for the year under Section 6.
