Member of Nexia International
SKP Tax Trends
14 November 2016
Demonetisation: Way forward for non-resident Indians

Demonetisation of currency notes of INR 500 and 1000 has turned out to be an excellent step taken by the Modi government to curb black money in the economy. This surgical strike on black money in India, a largely cash-based economy, was a brilliant move to tackle the menace of black money and has taken the nation by surprise.

These currency notes would cease to be a legal tender and will now be just a piece of paper. As the old denomination notes have to be exchanged, the government has taken all the necessary steps to ensure that the common man does not suffer too many hardships or any loss.  
For the people residing in India, the deposit or exchange of these notes should not pose much of a problem.  However, non-resident Indians (NRIs) possessing old notes may face some practical challenges.

There is a possibility that NRIs have old currency notes, which are now no longer in circulation. Some of the ways in which NRIs can ensure that they successfully exchange the old notes are:


1) NRIs possessing cash outside India[1]
  • Carry cash to India
If an NRI is planning a trip to India before 30 December 2016, he can bring cash and exchange it at any bank and post office in India. Money can be exchanged at certain RBI offices by providing passport and VISA details, which prove that the NRI was out of the country until 31 March 2017.
  • Send the money with someone
If an NRI is unable to travel to India within specified time, he can send the money with a person who is travelling to India. He can exchange it on behalf of the NRI. It is advisable that NRIs provide an authorising letter along with valid documents like PAN card, Aadhaar card, passport copy, visa copy, etc.
However, the Indian government is also looking for ways to help NRIs deposit the old currency notes at overseas branches of Indian banks.

2) NRI possessing cash in India
  • Deposit old notes in an NRO account
NRIs can deposit notes into his non-resident ordinary (NRO) Savings Account only if the NRI is travelling to India before 30 December 2016.
  • Authorise someone to deposit it on his behalf
If an NRI has old currency notes in India, he may give authority to another person in India to deposit notes into his NRO account. Valid identity proof is required. 

By understanding the gravity and depth of the black money problem in India, the 
demonetisation of currency notes is a powerful solution to curb black money generation, price rise and inflation, corruption, fiscal deficit, unemployment, terrorism and introduce good governance. Although this strategy causes some initial discomfort and inconvenience, this major step will soon be appreciated by NRIs.

 

[1] Please note that as per RBI regulations one can carry currency outside India only up to INR 25,000 per visit.

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