My son earns in USD while studying abroad. Can he open an NRE account and save tax in India?

If your child has moved abroad for studies and is earning money online in foreign currency, you may wonder whether they qualify as an NRI and can open an NRE or NRO account in India.

A reader recently asked whether his 20-year-old son, who has been living outside India for over a year and earns in US dollars through online game editing work, can open an NRE account and reduce his tax liability in India. Here's what the rules say.

Today's Q&A explains such details in response to a query by a reader.

A person becomes non-resident under FEMA once he leaves India to take up employment outside India or to start a vocation outside India or leaves India for an indefinite time period.

So the answer to your question will depend on for what purpose your son has gone outside India. In case he left India for an indefinite purpose, he became a non-resident immediately on leaving India. Even if he has gone abroad for taking up higher studies abroad, he is treated as a non-resident as the intention is to stay outside India for an indefinite time.

It seems your son has gone abroad for higher studies and therefore has become a non-resident for FEMA purposes. There is no NRI account. I presume you are talking about NRO or NRE account.