NRE Fixed Deposit upon returning to India

Now as per income tax act as soon as one NRI return to India permanently they need to convert their NRE account RFC account.

Now the interest on both these accounts is exempt till the time you are resident but not ordinary resident.

So who is a resident and who is a ordinary resident:

Resident is the one:

1 who has been in India for more than 182 in India in the previous year. Or

2 who has been in India for more than 60 days in the previous year and 365 days in the previous 4 years

To become an ordinary resident you need to fulfill both the condition i.e.

1 he has been a resident in India for atleast 2 years out of past 10 years. And

2 in previous 7 years he has been in India for 730 days and more.

Now if you come in India by december 2018 you will become a resident by 2019-2020 financial year and ordinary resident by 2021-2022 and by then I guess all your deposit will get mature so I guess there is no harm in returning to India by december 2018 as you will be a ordinary resident only by 2021-2022 and then only such amount can be tax however by then all your deposit will mature and no tax on interest then.

Hope you find it helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Now as per income tax act as soon as one NRI return to India permanently they need to convert their NRE account RFC account.

Now the interest on both these accounts is exempt till the time you are resident but not ordinary resident.

So who is a resident and who is a ordinary resident:

Resident is the one:

1 who has been in India for more than 182 in India in the previous year. Or

2 who has been in India for more than 60 days in the previous year and 365 days in the previous 4 years

To become an ordinary resident you need to fulfill both the condition i.e.

1 he has been a resident in India for atleast 2 years out of past 10 years. And

2 in previous 7 years he has been in India for 730 days and more.

Now if you come in India by december 2018 you will become a resident by 2019-2020 financial year and ordinary resident by 2021-2022 and by then I guess all your deposit will get mature so I guess there is no harm in returning to India by december 2018 as you will be a ordinary resident only by 2021-2022 and then only such amount can be tax however by then all your deposit will mature and no tax on interest then.

Hope you find it helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Dear Sir,

Hope you are doing well !

You will not be liable for any tax on your FDs if you come in India by December, 2018. You will be treated as RNOR for up to 3 financial years post your return back to India i.e.up to 2020-2021. Therefore income that you earn outside of India in any form will continue to be not taxed in India. Therefore like an NRI –

Any income that is ‘earned’ in India is taxable for you in India

Your income outside of India is not taxable in India

And you can continue this status for a period of 3 years. However, once you have attained the status of a Resident, all of your income within and outside India will be taxable in India, barring any concessions that may be available under the Double Taxation Avoidance Agreement between India and the country from where your overseas income has arisen.

It is advisable that you must convert your NRE account into RFC account.

***An RFC (Resident Foreign Currency) Account is a account maintained in foreign currencies for NRIs who have returned to India and hold funds in foreign currency.

Please find below the relevant provision for determine residential status in India for your referance:

According to the tax laws, an individual is considered to be a tax resident if he or she is present in India for:

182 days or more in a fiscal year, or

60 days or more in a fiscal year and 365 days or more during the preceding 4 fiscal years; the 60 days may be extended to 182 days in certain cases.

Taking the classification further, there are two kinds of tax residents:

Resident and not ordinarily resident (RNOR)-You are "not taxed" on any income earned outside India

Resident and ordinarily resident (ROR)-You are liable to pay tax on all types of incomes i.e. what you earn in India

And on all other incomes earned outside India

A resident individual who satisfies either of the following additional conditions will be classified as an RNOR:

The individual has been an NR in India for at least 9 out of the preceding 10 fiscal years.

The individual has been in India for 729 days or less during the preceding 7 fiscal years.

If an individual does not satisfy both of these additional conditions, he/she is classified as an ROR.

Thanks & Regards,

Payal Chhajed

Hi,

- Are you moving back to India permanently or temporarily basis on which reply depends?

Thanks

Hi,

Assuming you are coming India permanently before 31st December. 2018, you will not be required to pay any taxes as you will be treated as RNOR up to FY 2020-21.

Hi,

Assuming you are coming back to India permanently before 31st December 2018, you will not be required to pay any taxes as you will be treated as RNOR up to FY 2020-21.

Regards,

Nikhil

Hi Vrajavasi,

The interest received on NRE FD will be exempt. Assuming you come back to India by December 2018, you will be RNOR till FY 2020-21. For RNOR, interest on NRE and RFC account are exempt.

However, you need to convert NRE account to RFC account. Just inform your bank, they will do it.