NRI Helpdesk: What happens to NRE FD after returning to India?ET Dec 5 ,2022 Used here for Educational purposes only.

 

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For our NRI readers, we have started an immigration helpdesk. Write to us at nri.economictimes@gmail.com and our team of experts will address the most pressing issues.

Please note that questions have been edited and/or clubbed so that we can address similar queries at once and that the answers are clear and relevant to our audience. All questions are nswered by Archit Gupta, Founder and CEO, ClearTax.

I am no more NRI now, and want to know;

• Where I can deposit the fund which is in NRE account, since I need to close this account as per rules? -
• Will there be any tax on this fund, after transfer?
• And Can I withdraw this fund for property investment or personal use?
• The amount can be deposited in a regular savings bank account or a resident foreign currency account if there is a need for foreign currency in future. Once you are no longer an NRI, you are required to intimate your bank and convert your NR accounts to resident accounts.Since the amount is earned outside India while being a non resident, there should not be any tax implication. However, it is advised that you keep a record of all your tax filings done towards earning this amount.
• The amount can be used to purchase property or personal use as you have now become a resident.


I am presently an NRI in UAE and have NRE bank account , I am planning to retire in 6 months and will have to convert my NRE Bank account to Resident account, I have invested in US stocks through a US Stock broker and plan to sell the stocks only after 2 years , please inform Tax/TDS when those sale proceeds are transferred to my resident account from US.
Once you become a tax resident in India there is another criteria which needs to be checked to determine whether your US income is taxable in India or not, that is the determination of whether you are a resident but not ordinary resident. After becoming a tax resident in India if you fulfill either of the following two you become a ordinary tax resident
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• You were a tax resident in India in 2 of the previous 10 years
• You have stayed in India a cumulative period of 730 days or more in 7 previous years
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• If you become an ordinary tax resident then your global Income shall be taxable in India otherwise if you are a resident but not ordinary resident such gains may not be taxable in India. However, if the sum is received directly in a regular resident bank account, such capital gains may be taxable in India regardless of residential status.
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• I’m an NRI for last 26 years. I’m planning to return in FY 2022-23 after completing 184 days of stay outside India. My Indian income for 2022-23 will be less than 15 lacs. So by definition I’m supposed to be NRI for the financial year 2022-23. My question: Will my income from NRE FD from return date until March 31 be taxable for that year?
  Once you come back to India permanently, you are a resident as per FEMA. And residents are not permitted to keep a NRE account. Interest on NRE FD is tax exempted only for Non-Residents. Therefore from the day you come back to India any interest earned in NRE FD becomes taxable in your hand.
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• I have a few queries regarding tax for NRE. I invested only in mutual funds and stocks. The total gain from my investment is less than 2.5 lac. It includes bank interest, STCG, and LTCG. Do I need to pay any tax? If I don't have to pay tax then do I have to bother to file a tax? I have existing savings accounts. Do I need to convert all accounts to NRO? If I will do so then I think Tax will be deducted at source from any gain. Do I have to file ITR every year or is there any way to declare so that there will be no tax deduction at source?
  Deduction in respect of unexhausted basic exemption limit is extended to only Indian tax residents. So, if you are a non tax resident you may have to pay taxes on LTCG and STCG at special rate according to section 112A and 111A respectively. If you are a non resident then you are required to convert your regular savings bank account to NRO accounts. If your Interest income is less than 2.5 Lacs then you may file an application your AO u/s 197 requesting for a lower/ nil TDS deduction certificate, which would result in lower tax deduction/ nil tax deduction.
  
  
  The author's views do not necessarily represent the views of ET Online nor do they constitute legal advice or representation. Practice tips provided in the written materials are based on the author's experiences and the current state of the law and regulations. Please be sure to conduct legal research and analysis, or engage independent counsel for your unique situation as the law and requirements change quickly and the author's experiences may differ from your own.
  
  
  
  Read more at:
  https://economictimes.indiatimes.com/nri/invest/nri-helpdesk-what-happens-to-nre-fd-after-returning-to-india/articleshow/95995124.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
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