NRIs can invest in any insurance plan in India

Can a non-resident Indian, or NRI, (now a US citizen) invest in Indian insurance plans since his family continues to reside in India?
— Ashok Kumar Dube

Yes, an NRI or a PIO (person of Indian origin), has been granted general permission to invest in any insurance plan in India. As per the current tax policy, the premium paid during the year are eligible for a tax deduction up to ¤100,000. The maturity proceeds (if the plan is other than term insurance where there is no maturity value) are fully tax-free and can be remitted abroad with a ceiling of ¤10 lakh per financial year (April-March).

I am a 58-year-old NRI woman born in India. I hold a green card and am working in the US. My husband passed away 10 years ago. I have two sons --- one aged 32 years was born in India and another who is 26 years was born in the US. My older son is a naturalised citizen, working in USA and the younger one is born US citizen, a part-time worker and a college student. My husband’s parents are deceased. My in-laws' property in India was transferred (as per the will made) to my two sons. I have the power of attorney (PoA) to take care of the property on behalf of my sons. We are getting a rental on the property Rs19,000 per month. We pay house tax yearly. I have a non-resident ordinary (NRO) account in my name in India. Rental money goes into my NRO account with my additional income coming from the small investment. How are my sons or myself liable to taxes. What are the necessary steps to follow the rules/ procedures and guidelines? I have not filed tax in India. How will it benefit my sons if they become persons of Indian origin (PIOs) or overseas citizens of India (OCI)?   
— Pachu
Income tax (and consequently the obligation to file a tax return) in India only comes into the picture if one’s taxable income is more than Rs1,60,000. In the case mentioned, the total rent for the year would be Rs228,000. There is a 30% standard  deduction available due to which the amount will fall to Rs1,59,600. Since the house is now in your sons’ names, each would be entitled to half the income and hence be out of the tax net.

But, the rental income should be credited to your sons’ NRO account and not yours. It is the owners of the property who are entitled to the rent and
though you have a PoA on their behalf, the money should be ultimately transferred to their account.

It would be advisable to regularise this as soon as possible. If and when taxes have to be paid, the tax return too should be filed individually by them and not by you. On account of the PoA, you may sign their tax return, but the persons mentioned in the respective returns should be your sons.

OCI status is a facility provided by the government of India for those persons of Indian origin who have taken up foreign citizenship or are foreign citizens by birth. But PIOs are given that status on account of their parents being originally from India (your second son).

With OCI status, a foreign passport holder is entitled to the following:
1. Multiple-entry, multi-purpose, life-long visa to visit India. The holder of the OCI certificate would still need to carry his/her foreign passport, but a visa ‘U’ (Universal) sticker would be affixed on the foreign passport;

2. Exemption from reporting to police authorities for any length of stay in India;

3. Parity with NRIs in financial, economic and educational fields except in relation to acquisition of farm and plantation properties.

Apart from the above, for everyday routine transactions in India, there are no additional benefits an OCI status accords.

— The writer is director, Wonderland Consultants, a tax and financial planning firm. He may be contacted at sandeep.shanbhag@gmail.com