It is common problem for an Non Resident Indian (NRI) to carry out the necessary operations in India without his presence. He may have own properties in India which provides rental income, bank accounts which provides interest income, etc. must be reinvested and used accordingly when he is not in India. It is not easy for an NRI staying outside the border to invest his income in India. To avoid this situation, he can appoint an Power of Attorney (PoA) to carry out his activities in India on behalf of him. It has its own merits and demerits. This article explores the process to appoint a POA and what are the limitations of this. Subscribe to our future articles here.
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What is Power of Attorney (PoA) for an NRI?
One drawback of being an NRI is you can not be present in India to handle your financial matters. You must appoint a person to handle the financial matters on behalf of you when you are not in India. To give the authority to execute the operations in behalf of you, he must be be trustworthy person for you. There are instances that the person can misuse his power to cheat.
Since NRIs by definition cannot be physically present in India , it is convenient and practically useful for them to issue a Power of Attorney (PoA) to some other person of their choice, say a family member, to act on their behalf. It is perfectly legal to get one’s financial and other business transactions executed through the instrument of PoA. PoA is document which tells that holder to act on behalf of an NRI who gave the PoA. The following sections explains the two types of PoA: General and Specific.
General Power of Attorney (PoA)
If an NRI giving the general PoA, it means that he is giving the complete power to the holder to execute all the operations. he can do all kind of transactions. It is very dangerous to provide the general PoA.
Specific Power of Attorney (PoA)
In the case of a specific PoA, holder can execute the certain operations which is mentioned in the PoA document. For example, it may be restricted to execute only the banking transactions. In this case, PoA holder can not execute any other transactions like investing in the mutual funds or buying the real estate property. This gives the more control to an NRI for restricting the PoA‘s power. This is very useful because giving the complete power would allow him to misuse the wealth of NRI.
The following are few important points about the PoA:
- Power of Attorney Act, 1882 defines PoA as an instrument which empowers a specified person to act for and in the name of the person executing it.
- You can simply give PoA to a person whom you trust.
- The operations carried out by a PoA holder on an NRO account are restricted to all local payments in INR, including payments for eligible investments.
- The PoA holder can not repatriate the funds held in the NRI account other than to the account holder.
- PoA can’t transfer funds by way of a gift to another resident on behalf of the account holder.
I hope this article would be useful to NRI who want to write Power of Attorney (PoA). This article would have provided only the basic details on the concepts, when you are planning to provide the PoA, it is better to consult with your legal adviser. If you have any thoughts, please post it in the comments section.
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