The evolving global development has seen many Indians returning to the country. This amounts to the change of their status from a Non-Resident Indian to an Indian Resident as far as money matters are concerned. One must inform their banks about changes in their residential status. The necessary paperwork is required to be followed to give effect to this change of status.
Here are few types of bank accounts that may in such cases. They are as follows:-
• NRE / NRO account- The first step to be taken when an NRI returns back home, is to
inform the bank about the change of status. The NRO and NRE account that he holds will have to be re-designated to resident savings account. NRO account or deposit must be then re-designated into a resident rupee account. FCNR and NRE account can be closed immediately or can be allowed to run up to maturity. And if anyone continues till maturity, he/she will be credited with extra interests. Pre-withdrawal will attract penalties.
• RFC account- An NRI also has the option to convert the existing NRE account to a Resident Foreign Currency (RFC) Account. In this account, you can maintain funds in foreign currency with the funds being fully reportable. This account can be held in the form of savings, current or even in term deposits accounts. This account allows funds from abroad to be deposited in this account. The funds can include foreign currency from sale of assets outside India or income that is received outside India such as income from employment, assets, investments. You can also transfer the balance to the RFC account. You should be aware that no penalty is payable for premature withdrawal of FCNR/NRE accounts in such cases. Funds in this RFC account can be freely remitted abroad or credited to fresh FCNR/NRE account if you regain non-resident status.
• Form for re-designation of account- A declaration for re-designation of NRO or NRE account to Resident or the RFC account will be required to be filled up by the returning NRI. You would be required to provide details such as account number, joint holder details (if any), and customer identity proof which need to be filled up and signed by all account holders. This form must also be submitted at the local branch of the bank. The Process involves re-designation to Resident Rupee Savings account or to Resident Foreign Currency account once the bank receives the declaration. Once the given NRE account is converted to Resident Savings account, interest earned thereon becomes taxable.
One is advised to consult a tax advisor before making any decisions regarding such matters. These are the things one can do for managing their bank accounts when they return to India.
Here are few types of bank accounts that may in such cases. They are as follows:-
• NRE / NRO account- The first step to be taken when an NRI returns back home, is to
inform the bank about the change of status. The NRO and NRE account that he holds will have to be re-designated to resident savings account. NRO account or deposit must be then re-designated into a resident rupee account. FCNR and NRE account can be closed immediately or can be allowed to run up to maturity. And if anyone continues till maturity, he/she will be credited with extra interests. Pre-withdrawal will attract penalties.
• RFC account- An NRI also has the option to convert the existing NRE account to a Resident Foreign Currency (RFC) Account. In this account, you can maintain funds in foreign currency with the funds being fully reportable. This account can be held in the form of savings, current or even in term deposits accounts. This account allows funds from abroad to be deposited in this account. The funds can include foreign currency from sale of assets outside India or income that is received outside India such as income from employment, assets, investments. You can also transfer the balance to the RFC account. You should be aware that no penalty is payable for premature withdrawal of FCNR/NRE accounts in such cases. Funds in this RFC account can be freely remitted abroad or credited to fresh FCNR/NRE account if you regain non-resident status.
• Form for re-designation of account- A declaration for re-designation of NRO or NRE account to Resident or the RFC account will be required to be filled up by the returning NRI. You would be required to provide details such as account number, joint holder details (if any), and customer identity proof which need to be filled up and signed by all account holders. This form must also be submitted at the local branch of the bank. The Process involves re-designation to Resident Rupee Savings account or to Resident Foreign Currency account once the bank receives the declaration. Once the given NRE account is converted to Resident Savings account, interest earned thereon becomes taxable.
One is advised to consult a tax advisor before making any decisions regarding such matters. These are the things one can do for managing their bank accounts when they return to India.
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