NRI Moving Back To India

Are you an NRI who is planning to return back to India for good? Are you a professional who has been working abroad and now is being sent on a long-term assignment to India? If yes, I am sure you have many things to do.

You might be busy winding up your work, winding up your household, arranging the logistics of travel for you and your family, and transport of personal belongings. An important aspect that needs some well-thought plan of action is your financial plan.

This post is aimed at enhancing the knowledge base of NRI’s for ensuring their happy NRI returning to India.

Read – Myths and Facts about Residential Status

Here are five key points to remember and take action on when you, an NRI are going to be a Resident Indian –

Manage Bank Accounts –

As an NRI, you might have NRE, NRO, and FCNR accounts. The NRO savings accounts have to be converted to resident savings accounts. Fixed deposits in FCNR and NRE accounts can remain the same until maturity. They can be changed to Resident Foreign Currency (RFC) accounts after maturity. Savings accounts can also be converted to RFC accounts when you have the RNOR (Resident but not Ordinarily Resident) status. Interest received in these accounts is exempt from tax. They have better conversion rates and can be used for transacting within India and abroad.

Demat Accounts –

You cannot operate the NRI Demat account that you opened when you were an NRI. You will have to open a resident Demat account and transfer all your current investments to it.

Tax Implications –

You need to have a look at taxation rules in India before moving back to India. When you are an NRI and relocating to India, you first become an RNOR (Resident but not Ordinarily Resident). You can be an RNOR for a maximum of three years based on certain conditions of your stay abroad. As an RNOR, you are exempt from tax for the following incomes –

Interest on FCNR accounts
Interest and dividends received on investments abroad
Capital gains on the sale of assets abroad
Rental income

Once you become a resident Indian, the income that you earn abroad will also become taxable in India. Of course, the DTAA protects you from getting doubly taxed.

Overseas Assets –

You might have acquired assets such as property, stock, or bonds overseas when you stayed there. If you sell these assets and receive the sale proceeds outside India when you are an NRI or RNOR, you do not have to pay any taxes in India. The amount can be received in an account abroad and remitted to India. You will not be liable to pay tax.

Check – NRE FD after return to India

As an NRI returning to India, you can also continue to hold your foreign earnings, foreign securities, and immovable property outside India if it was acquired when you were a resident outside India. The income from such investments can also be retained outside India.

Financial Planning –

It is important to tweak your financial plan based on your residential status. The financial plan must cater to your short-term goals, long-term goals, and current financial status.