How does FEMA impact NRI taxation?

GC Posted by: Gaurav Chatterjee
• 09 January, 2026
3 Reply

According to the FEMA rules for the NRIs, once your resident status changes from an Indian resident to an NRI living outside India, you have to follow some of the FEMA guidelines, which are given below for the NRI taxation. 

According to the FEMA rules and regulations, NRIs are not allowed to hold any Indian savings account; they need to open an NRO account or an NRE account with an Indian bank in accordance with all the rules and regulations of the Reserve Bank of India. 

  • An NRI can open an NRO account, which allows them to receive income from outside India into the Indian NRE bank account. This account can be held by two or more NRIs. 
  • You can open an NRE account, which allows you to transfer money outside India, and it is also repatriated back to the country of residence of the NRI. The income earned through this account will be exempt from taxation.   
  • An FCNR account is another type of account that can be opened by an NRI, where NRIs can easily deposit any type of foreign currency. In this account, you will get a fixed term deposit which is valid for one to five years. 

As per the FEMA guidelines, an NRI cannot be allowed to proceed sale of any two residential houses lifetime. However, they can be allowed to repatriate 1 million USD in a financial year.

Tags : FEMA impact NRI taxation, NRI taxation, FEMA

  • Viraj Oberoi 11 January, 2026

    Here are some of the property rules for the NRIs under the FEMA guidelines. 

    List of the properties that an NRI can purchase under the FEMA rules: 

    • They can purchase any residential property in India. 
    • NRIs can buy commercial properties in India. 
    • Plots for any construction. 
    • Any property which is jointly owned by another NRI and an Indian resident. 

    Properties which you cannot purchase under the FEMA guidelines: 

    • You cannot purchase any agricultural land in India. 
    • Cannot purchase any plantation land in India. 
    • Any farmhouses. 

  • Lokesh 10 January, 2026

    Here are some of the investments that are allowed under the FEMA guidelines: 

    • They can invest in Indian stocks via the portfolio Investment scheme. 
    • Invests in residential and commercial properties. 
    • In mutual funds. 
    • Investment in government bonds and corporate bonds. 

    NRIs cannot invest under the FEMA guidelines: 

    • In any Public Provident fund or a new account. 
    • National savings certificate. 
    • Post services schemes. 
    • In agricultural or plantation lands. 
    • In the post office schemes. 

  • Varun Naidu 10 January, 2026

    According to the FEMA (Foreign Exchange Managnment Act), a person is a resident of India if he is: 

    Stays in India for more than 182 days during a financial year, but it cannot include the following: 

    • for any employment outside India. 
    • carrying out business or a trip outside India. 
    • For other purposes, which involve staying outside India. 
    • A person who visited and stayed in India, otherwise: 

    Any person who has any employment in India.

    • For any business or vacation in India. 
    • for any other purposes, to stay in India for an uncertain time period. 

Join The Discussion

Share Your Thoughts and Connect with Others.

Releated Topics
  • TDS Deducted Twice - What Should I Do? How to Claim the Excess TDS?

    I noticed that TDS appears to have been deducted twice on the same income, and I am not sure whether this is an actual duplicate deduction or just a reporting...

    • 3 Reply
    • 64 Views
  • Can NRIs Get Full TDS Refunds?

    I am an NRI and had TDS deducted from my income in India during the financial year. The amount deducted is quite high compared with the tax I expect to...

    • 3 Reply
    • 61 Views
  • How Long Does a TDS Refund Take in India?

    I am an NRI and had a fairly large amount of TDS deducted from income in India during the financial year. After calculating my actual tax liability, it looks like...

    • 3 Reply
    • 59 Views
  • How Can I Apply for a Lower TDS Certificate in India?

    I am an NRI and I am planning to sell a property in India. I was told that the buyer may have to deduct a significant amount of TDS from...

    • 3 Reply
    • 62 Views
  • Why Was So Much TDS Deducted from My Property Sale?

    I’m an Indian citizen living in Dubai and became a non-resident for Indian tax purposes several years ago. I recently sold an apartment I owned in Pune, and I was...

    • 3 Reply
    • 53 Views
  • What Is the Difference Between RNOR and NRI Tax Status in India?

    I moved abroad several years ago and have been filing my Indian tax returns as a non-resident. This year, however, I spent more time in India because of family and...

    • 3 Reply
    • 52 Views
  • Can I Avoid Paying Tax Twice on Rental Income?

    I am an NRI and receive rental income from a property in India. I currently live and pay taxes in another country, and I am confused about whether I will...

    • 3 Reply
    • 58 Views
  • Is a Tax Residency Certificate Mandatory for DTAA Benefits in India?

    I’m an NRI living and working outside India, and I receive some income from India. I’m trying to understand how the DTAA (Double Taxation Avoidance Agreement) works because I may...

    • 3 Reply
    • 60 Views
  • How Do I Convert My Savings Account into an NRO Account?

    I moved from India to the UK for work last year and have been using the same Indian savings account that I had before moving abroad. I recently found out...

    • 3 Reply
    • 64 Views
  • How Can I Avoid Penalties for Late Tax Filing?

    I missed the income-tax return filing deadline this year and only realised it after checking my tax records. I am an NRI and have some income in India, including bank...

    • 3 Reply
    • 65 Views
comunity img

Join Our Facebook Community of
NRIs/OCIs Like You

Join Community
Join Community