NRI Returning to India Consultancy

A person who is not a resident of India is considered a Non-Resident of India (NRI). You are a resident if your stay in India for a given financial year is: 182 days or more 60 days or more and 365 days or more in the 4 immediately preceding previous years. In case one does not satisfy either of the above conditions, one will be considered an NRI.

An NRI, like any other individual taxpayer, must file return of income in India if gross total income received in India exceeds Rs 2.5 lakh for any given financial year. Further, the due date for filing a return for an NRI is also 31 July of the assessment year or extended by the Government.

If there is a rental income in India, then Income tax return needs to be filed in India mentioning the PAN and tax to be paid. Also to note, that though holding one property in India is considered as ‘self-owned’, a second property, even if it is not on rent, is considered ‘deemed rented’ and tax needs to be paid for that. One can, however, show 30% of the deemed rental as ‘maintenance cost’. There is no tax to be paid abroad (say, USA) on ‘deemed’ income, but declaring it is important as during repatriation of funds from India, it should not cause any issue.

If an NRI receives income in India, such income is taxable in India, i.e. India as a source state has the right to tax such income. However, the country where such NRI is a resident will also have a right to tax such income as it is the residence state. This way, the NRI will end up getting taxed twice on the same income. To overcome this, India has entered into DTAAs with various countries. It will help eliminate double taxation by allowing the taxpayer to claim credit for foreign taxes paid while filing their return of income in the home country.

No, The Income tax Act applies to all persons who earn income in India. Whether they are resident or non-resident.

In case of resident individuals and companies, their global income is taxable in India. However non-residents have to pay tax only on the income earned in India or from a source/activity in India.

Yes, The dividend declared by Indian companies is taxable in the hands of the shareholders at the rate of 20.00% without providing for deduction under any provision of Income Tax Act.

You can authorize any person by way of a Power of Attorney to file your return. A copy of the Power of Attorney should be enclosed with the return.

Yes, if an NRI’s tax liability is expected to exceed Rs. 10,000 in a financial year, he must pay advance tax. Interest under Section 234B and Section 234C will be levied if advance tax is not paid.

You cannot maintain your NRE account and NRE FDs when you are an RNOR. You need to convert your NRE account to resident account immediately upon returning to India.

Open an RFC account. Resident Foreign Currency (RFC) is a Scheme approved by Reserve Bank of India permitting persons of Indian nationality or origin, who have returned to India on or after 18th April 1992 for permanent settlement (Returning Indians), after being resident outside India for a continuous period of not less than 1 year, to open foreign currency accounts with banks in India for holding funds brought by them to India.

Yes, of course, NRIs can buy life Insurance and health insurance in India and our term life rates in the country are among the best in the world. Therefore, there are a lot of NRIs who come and take a term plan here because the rates are attractive and we have the ability to give large value term life covers India has that ability to do that.

Yes, NRIs must close or re-designate their NRE accounts after moving back to India. According to the Foreign Exchange Management Act (FEMA), once you return to India with the intention of staying, you are considered a resident from that day forward. Therefore, your NRE account must be converted into a normal resident account, or closed, to comply with Indian regulations. Failing to do so within three months of your return can lead to penalties under FEMA.

If you are uncertain about your long-term plans and still hold a valid overseas visa, you are allowed to maintain your NRE and NRO accounts for a limited period. You can keep the accounts until you surpass the eligibility criteria of 120 to 183 days, depending on your situation. However, if you decide to stay in India, you must inform your bank and re-designate your accounts accordingly.

Interest earned on NRE accounts is tax-free only while you are a non-resident. Once you return to India, the interest on these accounts becomes taxable. To manage this, you can transfer your funds from the NRE account to a Resident Foreign Currency (RFC) account, which allows you to maintain your funds in foreign currency and enjoy repatriation benefits.

Upon returning to India, it is crucial to inform your bank, fund house, and insurance company about your change in residential status. As a resident Indian, your investments will now be subject to regular tax laws. Although there won’t be changes in tax laws for previous years, it’s important to update your status to avoid complications.

NRI-specific tax exemptions are no longer valid once you become a resident Indian. If you’ve made investments with tax benefits exclusive to NRIs, you will lose those benefits after becoming a resident. It’s essential to inform your investment house about your new status and consult with them regarding any potential tax implications.

The first step is to inform your bank about your change in residency status. The bank will guide you through the process, which may involve filling out a form or providing a written declaration. Your NRE account can be either re-designated as a resident savings account or converted to a Resident Foreign Currency (RFC) account. Each bank may have different procedures, so it’s advisable to consult with your bank directly for specific instructions.