NRI Tax – Follow this Financial Checklist If You are Returning to India!

thumbnail
Reading Time: 2 minutes

Source Link | Twitter Profile | Quora Profile

Planning to Return to India for good? We’ve made a checklist with NRI Tax implications for you.

We’ve had tons of clients ask us about the implications of Returning to India, how does NRI Tax apply, and how to streamline their compliance.

A detailed list of FAQs is available here.

We’ve created a checklist of items for Returning Indians to make life easier:

Assets outside India

Continue to hold. You can hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such assets were acquired, held or owned by you when you were a non-resident or was inherited from a non-resident person.

Pro-tip: Be mindful of income tax regulations that determine scope of total income. You want to minimize tax paid in India on overseas assets and avoid double taxation. Plan your investments and date of return in the most tax efficient manner.

Indian Assets

  • Non-Resident Ordinary (NRO) a/c: To be re-designated to Resident a/c
  • Foreign Currency Non-Resident (FCNR) a/c: Permissible to hold up to maturity and then to be converted into Rupee Account or Resident Foreign Currency (RFC) a/c
  • Non-Resident External (NRE) a/c: To be re-designated to Resident a/c or balance can be transferred to RFC a/c*
  • Shares & Securities: Returning India is required to inform the Depository about change of his/her residential status from non-resident to resident
Also Read on FinMedium:  What Does Cricket Teach Us About Investing?

Pro-tip: Note that while NRE account and FCNR account here tax exempt while you were NRIs, they become taxable when you become Resident in India (even if you forget to re-designate them for whatever reason).

Authorities/ Services to inform about return to India? No requirement to inform Government or RBI.

Returning Indian must inform the following:

  • All bankers with whom they hold banking accounts and get it redesignated,
  • Depository participant with whom they hold DEMAT accounts,
  • Companies where NRIs are Shareholders / Debenture holders and firms where they are partners.

Tax Implications

The tax liability of a person returning to India would depend on the Residential Status of a person as per the Act.

  • Under the Act, income earned outside India is liable to tax in India only if the person is ROR.
  • A returning Indian who has been a NR as per the Act for 9 years or more or whose stay in India was less than 729 days in preceding 7 years, then generally for 2 successive years he may be considered as a RNOR.

To maximize your NRI status, what date should you return to India?

It may not always be possible to plan your return to India. But for those with such flexibility, try to come back on or after February 1 (or February 2 in case of a leap year) of a FY in order to ensure NR status in the year of return.

Also Read on FinMedium:  Mindspace REIT opens on July 27 - Everything you need to know!

Hope this checklist is useful for all NRIs!

Source Link | Twitter Profile | Quora Profile

Contact Email: support@thegalacticadvisors.com

Contact Number: +91 7738525546

Cover Image: Quotacy

Every Wednesday and Saturday, we send Info-Graphic and FinMedium Weekly Digest newsletters to our 25000+ Subscribers.

Join Them Now!

Please Share :)
Galactic Advisors
Galactic Advisors is a team of Chartered Accountants providing services related to tax and FEMA compliance, planning and advisory with specialization in cross-border and international taxation.  Contact Email: support@thegalacticadvisors.com | Contact Number: +91 7738525546
Back To Top