భారత్ కు శాశ్వతంగా తిరిగొస్తే ఎన్నారైలకు విదేశాల్లో ఉన్న బ్యాంక్ అకౌంట్లే గతి

భారత్ కు శాశ్వతంగా తిరిగొస్తే ఎన్నారైలకు విదేశాల్లో ఉన్న బ్యాంక్ అకౌంట్లే గతి

what happens to foreign accounts when an NRI comes back to India? Can one continue with their NRE, NRO and FCNR accounts or they need to be aligned with the change in residential status? This is because the residential status is an important criterion when determining a person’s tax liability in India, as it decides whether the person shall be taxable as a resident or non-resident of India (NRI).

“If you are an NRI, when you return to India, your residential status immediately changes to resident individual and you need to change your status by informing the bank. NRO NRE and FCNR accounts is decided as per FEMA (Foreign Exchange Management Act) provisions,” said Dilshad Billimoria, Board Member, Association of Registered Investment Advisors (ARIA).

***NRO, NRE and FCNR accounts
Tarun Kumar, Direct Tax Leader at Coherent Advisors explains a Non-resident Indian or Person of Indian Origin (PIO) can open three types of accounts with an authorised dealer in India: Non-Resident (Ordinary) Rupee Account – NRO Account, Non-Resident (External) Rupee Account – NRE Account and Foreign Currency Non-Resident (Bank) Account – FCNR (B) Account

An NRE account is opened in India in the name of an NRI to park his foreign earnings, whereas an NRO account is opened to manage his income in India. NRE and NRO accounts are opened in Indian currency, and the account type can be Savings, Current, Recurring or Fixed Deposit. FCNR (B) Account is opened in any permitted currency, and the account type is Term Deposit only.

Income earned in the NRE and FCNR (B) accounts is tax-free, whereas the income earned on the NRO account is taxable. The change in residential status from Non-resident to resident shall impact these accounts in the following manner:

*****NRO Account
“The NRO account shall be designated as a resident account on the return of the account holder to India for any purpose indicating his intention to stay in India for an uncertain period. If a resident Indian becomes an NRI, his existing resident account should be designated as an NRO account,” explained Kumar.

*NRE Account
If NRI returns to India to take up employment or changes the residential status from non-resident to the resident, he has two options:
One option is that his NRE account should be designated as a resident account. The other option is that the funds in the NRE account may be transferred to RFC (Resident Foreign Currency) Savings Account. RFC account is for NRIs who have returned to India and hold funds in foreign currency, and one can transfer the funds back to NRE account on re-gaining NRI status. An account holder shall do this immediately upon his return to India to take up employment or on change in the residential status.

“NRE account has to be re-designated to a Resident FD account and all NRE FDs must be closed. Some banks allow you to hold the same to Maturity, however, the interest will be fully taxable because as per FEMA regulation you become a Resident individual the day you return to India,” pointed out Billimoria.

**FCNR Account
If the residential status of the account holder changes, he may continue his deposits till maturity.“On the maturity of the FCNR (B) deposit, the account holder can convert it into a resident rupee deposit account or RFC (Resident Foreign Currency) Savings Account,” said Kumar.
“For NRE deposits and FCNR deposits, one has the option to change to a Resident Foreign Currency account and retain foreign currency in the same for some time or for travel purposes. One can hold a FCR or Foreign Currency account if one enjoys an NRI status for more than 1 year. RFC accounts are freely transferable and fully repatriable, hence there is no exchange rate risk,” explained Billimoria.