Non residents can claim exemption from Aadhaar-based verification

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I am an Overseas Citizen of India (OCI) and hold Canadian citizenship. I stay in Toronto and have NRE/NRO accounts with a bank and mutual fund account under the NRE account. I have invested in mutual funds through the NRE account. I am now getting emails from Computer Age Management Services Pvt. Ltd. about linking my Aadhaar number before 31 March 2018 to keep my account active. Am I eligible for Aadhaar?

—Ravi Jamadgni

As per the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, every ‘resident’ is entitled to get an Aadhaar number by submitting demographic and biometric details. A resident for this purpose has also been defined in the Aadhaar Act itself. Such a ‘resident’ is an individual who has resided in India for a total of 182 days or more in the 12 months immediately preceding the date of application for enrolment in Aadhaar. Therefore, it is unlikely that you meet this criterion for Aadhaar enrolment.

The Unique Identification Authority of India (UIDAI), the body that issues Aadhaar, has clarified in its circular dated 15 November 2017, that non-residents and OCIs may not be eligible to obtain Aadhaar as per the Aadhaar Act. Therefore, it is not mandatory for you to get an Aadhaar. However, the implementing agency may use other means for verification. You may inform your service provider about you being exempt from producing Aadhaar credentials.

I was working in Dubai till 2015 and was a non-resident Indian (NRI) till that year. I returned to India in March 2015 and had less than 182 days in India for every year in the past 10 years or more. Since 2015, I have been living in India. I have some deposits (FCNR-B), which were automatically renewed and are now up for renewal in 2018. I also have some NRE rupee term deposits that matured in the early part of this year, and are due for renewal. All the money for these investments was earned outside India, and I was not taxed in India till now. Can you tell me how many years of resident not ordinarily resident (RNOR) status are accorded to me upon return to India, and whether the tax is payable on the interest income earned on the above deposits.

—Rakesh Sahni

You have returned to India from Dubai in March 2015, prior to which you have been a resident of Dubai for 10 years and more. Therefore, for FY2014-15 and earlier years, your status would be of a non-resident in India for the purpose of Income-tax Act, 1961, of India. From FY2015-16, you have been living in India. However, your status is likely to be that of a resident not ordinarily resident (RNOR) for the years FY2015-16 and FY2016-17, as you qualify as a non-resident of India for 9 out of 10 years immediately preceding the years under consideration, that is, FY2015-16 and FY2016-17.

The possibility of you qualifying as an RNOR for FY2017-18 is remote. However, taxability of your income has been analysed under both scenarios, that is, as a resident as well as an RNOR.

As an RNOR: Interest income earned from deposits maintained in an FCNR account (Foreign Currency Non-Repatriable account) and an NRE account (Non-Resident External account) is exempt from tax up to such period you are a non-resident or RNOR in India.

As a resident: Interest income from deposits maintained in an FCNR account and an NRE account would be taxable in India from the year you qualify as a resident of India.

Archit Gupta is founder and chief executive officer of ClearTax. Queries and views at [email protected]