Non Resident- Returning NRIs

Returning NRIs

Returning NRIs are assessed as Resident but Not Ordinarily Resident. A person is treated as Resident but Not Ordinary Resident if he satisfies one of the basic conditions (mentioned above) and either one or none of the additional conditions. The additional conditions are as follows:

1. Individual resident in India for at least 2 out 10 years immediately preceding the relevant previous year,

2. Individual is in India for 730 days or more during 7 years immediately preceding the relevant previous year.

Overseas Assets

In case any foreign currency, foreign security, or immoveable property is held by the non-resident while he was in abroad or has acquired the same from a non resident in India, then he can continue to hold such property even if he decides to settle in India permanently.

There is no specific provision regarding movable assets. Such assets can be held in the same form or disposed off when in India. RBI is not required to be informed. However, in order to avoid litigation it is advised to inform RBI.

Overseas assets can be repatriated to India and the sales proceeds of assets held outside India can be deposited in RFC account. Such accounts are free from all restrictions regarding utilization of foreign currency and investments made in any form outside India.

Reinvestment abroad is not permitted but the same can be done with the help of RFC accounts. Under FERA, RBI had granted general permission to returning Indians to maintain and operate foreign currency accounts abroad. However, in order to maintain a bank account abroad an approval from RBI is required.

Income from overseas assets needs to be repatriated to India. Such amount can be transferred to RFC accounts, which enables free utilization of foreign currency and investments made in any form outside India.

Indian Assets

A returning non-resident is required to designate all his banking transactions as resident account by informing the banker about the change in residential status. Fixed deposit accounts may be continued till maturity. Proceeds from such fixed deposits and interest thereon should be transferred to RFC accounts.

Similarly, change should be brought to the notice of companies in which shares, debentures or any such securities are held by returning non resident.

Resident Foreign Currency Account (RFC Account)

A returning non resident can open RFC Account. RFC Account is free from any restrictions regarding utilization of foreign currency and investments made in any form outside India. The following funds are to be transferred to RFC account:

· Transfer from NRE/ FCNR account.

· Funds realized on conversion of overseas assets.

· Income from overseas assets.

· Pension and other benefits from employer abroad.

· Foreign exchange brought in India at the time of return to India.

It should be noted that the balance in RFC account fetch a lower rate of return as compared to other investment avenues.

Comments

Popular posts from this blog

Proof of Leave Travel Allowance

Interest on borrowed fund for self-occupied property

DEDUCTION ON REPAYMENT OF HOUSE LOAN UNDER SECTION 80C