A.P.(DIR Series) Circular No. 45

December 8, 2003

To

All Authorised Dealers in Foreign Exchange

Madam/Sirs,

Indian Students Studying Abroad – Revision in the Residential Status

The Reserve Bank of India has been receiving representations from Indian students studying abroad putting forth various difficulties on account of their residential status. The matter has been reexamined by us keeping in view the definition of residential status in terms of Section 2(v)(i) of Foreign Exchange Management Act (FEMA). Under Section 2(v)(i) of the FEMA, '’person resident in India’ means- (i) a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include –

(A) a person who has gone out of India or who stays outside India, in either case –

1. for or on taking up employment outside India, or
2. for carrying on outside India a business or vocation outside India, or
3. for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;'

2. It is observed from the representations that when students leave India for prosecuting a course of specified duration, such stay outside India exceeds the period officially intended for various reasons. While taking up studies, or further advance courses, students may have to take up job or seek scholarships to supplement income to meet their financial requirements abroad. As they have to earn and learn, their stay for educational purposes gets prolonged than what is intended while leaving India.

3. Furthermore, the purport of their argument is that though they are students, they are, in reality, not dependent for a dominant part of their expenses on remittances from their households in India. Often they are permitted to work and have to undertake certain related financial transactions. They urge, therefore, that the definition needs to be revised.

4. Having regard to the circumstances stated above, it is clear that on both counts viz. their stay abroad for more than 182 days in the preceding financial year and their intention to stay outside India for an uncertain period when they go abroad for their studies, they can be treated as Non-Resident