NRIs HOLDING DEMONETISED Rs. 500/- & Rs. 1000/- CURRENCY
On the 8th November 2016 Government of India demonetised high value currency notes of Rs. 500/- and Rs. 1000/- with an intention of curbing the menace of fake currency which were used for antinational and illegal activities by terrorists and anti national elements and also to curb hoarding of black money. This demonetization of Indian currency notes called specified cash currency have serious repercussions not only for Indians residing in India but a pinch is also felt by Indians residing abroad.
It is quite normal for NRIs to leave India with a few 1,000/- and 500/- unspent Indian Rupee specified currency notes after a tiring shopping fiesta or as a small change left in the pockets or purses.
But in a few cases NRIs do have specified cash currency of Rs. 500/- and Rs. 1000/- being withdrawn from Banks for celebration, marriages, etc. and not being deposited in Bank for want of time or so.
Now these specified cash currency of Rs. 500/- and Rs. 1000/- should not cause a great worry as the Indian Government and Reserve Bank of India (RBI) have addressed such issues allowing NRIs to freely deposit any amount of legitimate Rs. 500/- and Rs. 1,000/- specified currency notes in their Non Resident Ordinary (NRO) account.
Although the Government has not defined legitimate balance the same will include balances of or out of:
- Currency notes withdrawn from Bank account during visits to India.
- Currency notes withdrawn by Power of Attorney Holder to meet domestic expenses and disbursements.
- Gifts received during visit to India from close relatives e.g. Diwali Gifts to children by Uncles and Aunts.
- Currency notes received from sale of miscellaneous assets such as second hand furniture , fixtures , motor car , etc.
- Currency notes received on sale of foreign currency to Bank or Authorized Money Changer etc.
No doubt Reserve Bank of India has clarified that NRIs can deposit currency notes in NRO accounts and the Finance Ministry has also clarified that cash currency deposit to the extent of Rs. 250,000/- by Housewives and others will not be reported to Tax Authorities. However this should not be taken casually and even for deposit of amount below Rs. 250,000/- supporting evidences for withdrawal will be appropriate.
If one does not have such evidence Bank may be requested for certificate of withdrawal. The withdrawal will be reflected in the Bank passbook or statements.
Ideally NRI himself should visit India and deposit the cash currency in his NRO account. However, if he does not have the convenience to travel he can authorize any person to deposit such currency in his NRO account. The Authority Letter in original should ideally be notarized or should be signed in presence of Overseas Banker who should affix bank seal.
If the specified cash currency is in India then NRI's problem can be solved by visiting India or Authorizing an Indian Resident. However if the specified cash currency is abroad bringing the same into India can create dicey issues. The Law of Foreign Exchange Management Act, 1999 (FEMA) and Customs provide for carrying of Indian currency outside India up to Rs. 25,000/- only by an NRI or Resident of India. Therefore traveling by an NRI himself for depositing an amount of Rs. 25,000/- or less will be a costly affair and may not cover the cost of travel which will be more than such balance. On the other hand presently there are no specific provisions for import of currency into India by an Authorized Person i.e. a person other than NRI.
Having specified cash currency abroad is going to be a challenge for quite few NRIs which needs to be addressed and the Government of India should allow an Authorized Representative to travel with an NRI's specified cash currency for depositing into NRO account.
Reserve Bank of India has clarified that in case one cannot deposit the currency before 31st December 2016 will be given an opportunity to deposit and exchange the same at Reserve Bank of India's Offices up till such time as notified by Reserve Bank of India.
Hope the contents are found useful and if there are any queries please write whereupon we will be happy to address the same to the best of our ability.