Provisions & Formalities for returning NRI

NRE & NRO Savings Bank Account

Returning NRI have the following two options from the day the person becomes a resident under FEMA:

• Convert their NRE & NRO savings bank account into resident Indian savings bank account.
• Convert NRE savings bank accounts can be converted into RFC savings bank account/RFC term deposit held in foreign currency.

Taxation

• The interest on converted NRO/NRE savings bank account into resident Indian savings bank account becomes taxable from the day the person becomes a resident under FEMA.
• Interest on RFC savings bank account and term deposits are exempt from Income Tax for Non-residents (NR) and Resident but not Ordinarily Resident Individuals (RBNOR).
• The interest incomes on RFC savings bank accounts & term deposits after attaining Resident & Ordinarily Resident residential status (R & OR) can be taxed at a  flat rate of 20% u/s 115H.

NRE & NRO Term Deposits

Returning NRI have the following two options from the day the person becomes a resident under FEMA:

• Continue the NRE & NRO term deposits at the same terms.
• Convert NRE term deposits into RFC savings bank account/ RFC term deposits held in foreign currency.

Taxation:

• The interest on NRE term deposits continued till maturity become taxable from the date of return to India, irrespective of the residential status under Income Tax.
• The returning NRI has an option to be taxed on the interest incomes on NRE or NRO term deposits (invested from convertible foreign exchange) continued or converted (not redeemed and reinvested) into resident term deposits till maturity at a concessional flat rate of 20% u/s 115H.
• Interest on RFC savings bank account/ RFC term deposits are exempt from Income Tax for Non-residents (NR) and Resident but not Ordinarily Resident Individuals (RBNOR).
• Interest incomes on RFC savings bank account/ RFC term deposits after attaining Resident & Ordinarily Resident (R & OR) residential status can be taxed at a flat rate of 20% u/s 115H.

FCNR term deposits

Returning NRI have the following two options from the day the person becomes a resident under FEMA:

• Continue the FCNR term deposits at the same terms.
• Convert FCNR term deposits into RFC savings bank account/RFC term deposits held in foreign currency.

Taxation

• Interest on FCNR term deposits continued are exempt from Income Tax for Non-residents (NR) and Resident but not Ordinarily Resident Individuals (RBNOR).
• The returning NRI has an option to be taxed on the interest incomes on FCNR term deposits after attaining Resident & Ordinarily Resident (R & OR) residential status at a flat rate of 20% u/s 115H.
• Interest on RFC savings bank account /RFC term deposits are exempt from Income Tax for Non-residents (NR) and Resident but not Ordinarily Resident Individuals (RBNOR).
• The interest incomes on RFC savings bank accounts/RFC term deposits after attaining Resident & Ordinarily Resident residential status (R & OR) can be taxed at a  flat rate of 20% u/s 115H.