I got here again to India for good final week after staying in US for round 5 years. I’ve NRE rupee accounts and FCNR accounts in India. Could you let me know if I would like to vary these accounts to another accounts? How lengthy I can hold these accounts?
An individual can have an NRE account so long as one is a non-resident beneath the provisions of Foreign Exchange Management Act (FEMA). A non-resident turns into a resident beneath FEMA as quickly as he comes again to India for good or for an indefinite interval. So you’ve already change into a resident beneath FEMA the day you landed in India. So your NRE accounts need to be redesignated as resident accounts instantly on coming again to India. Alternatively, you’ll be able to switch the cash mendacity in your NRE account to a Resident Foreign Currency (RFC) Account in foreign money of your alternative from permitted currencies. Once the account is redesignated as resident account, curiosity obtained on it turns into totally taxable in India.
As far as deposits in FCNR account are involved, you might be allowed to proceed to carry your FCNR deposits until its maturity. However, curiosity obtained on an FCNR account is tax free solely so long as you’re a non-resident or not strange resident beneath the earnings tax legal guidelines. Since you don’t fulfill the situations for being handled as not strange resident even for a single 12 months and you may be a resident straightway on satisfying the fundamental situations for the present 12 months. The curiosity for the entire 12 months in your FCNR deposits will change into totally taxable in India from present monetary 12 months. Here once more you’ll be able to both get the FCNR deposits transformed into rupee account on maturity or switch the proceeds to an RFC account if you don’t want to take the danger of volatility of change price otherwise you want to return someday in future once more.
Balwant Jain is a tax and funding skilled and might be reached on [email protected] and @jainbalwant on Twitter.
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