NRI - things to do after returning back the india #NRI #NRE #NRO #RNOR
For returning Indians, NRI status is explained
If new tax laws are not followed, there will be consequences.
Many non-resident Indians who have lived in the UAE for a long time but want to keep their NRI status after returning to India, either in retirement or due to the loss of their job, are facing a problem.
Tax exemptions, incentives, and preferential treatment for property and capital market investment quotas, as well as admission of children to professional courses, are all available to NRIs.
Changes in residence from the host country affect NRI status, and returning to India for permanent settlement will have serious consequences if the recently amended tax laws regarding income declaration and tax obligations are not followed.
The new amendments to NRI taxation were discussed at a recent special seminar on NRI status and tax obligations.
Many NRIs return to India after 20-25 years abroad, but they are unaware of the new taxation rules, and it is critical that they understand the implications before returning to India.
Changes in status
In light of the amendments to the taxation regulations, this is an update.
The seminar covered topics such as residential status upon return to India, taxability of interest on non-resident external (NRE) and foreign currency non-repatriation (FCNR) accounts, banking and investment outside India after returning to India, and procedural compliance and return filing.
“If you have been a non-resident Indian for ten years and have returned to India for permanent settlement, you can keep your non-resident status for two years after your arrival. If you stay in India after that, you will be considered a resident,”
Notifying the financial institution
When it comes to returning to India, the taxability of interest on NRE accounts is a major issue.
NRIs can open NRE accounts with Indian banks, and the interest they earn is not taxable.
However, the account holder must report to the bank for permanent settlement within 30 days of returning to India.
The bank will then reclassify the account from NRE to NRO (non-resident ordinary), and the bank will begin deducting tax at source from that day forward, as interest income on that account will be taxed.
NRIs can also keep an FCNR (foreign currency non-repatriable) account after returning to India for two years.
So long as he is a non-resident or not ordinarily resident, the interest on his FCNR account is tax-free.
Before they come back,
Before returning to India, NRIs can convert their NRE account to an NRO or FCNR account, which means they won't have to pay tax on their interest income for at least two years.
The interest rate on an NRO account is usually higher than that on an FCNR account.
Imam recommends calculating the differential interest over a two-year period and factoring in the tax implications.
“If your tax liability is higher, put it in an FCNR account, which is protected against foreign currency exchange rate fluctuations.”
Even after returning home, NRIs can keep their bank accounts and investments outside of India.
People take LIC (life insurance) policies while travelling abroad, but they are unable to close the policies because they mature after they return to India.
The only stipulation is that they must disclose this in subsequent years' income tax returns, making it easier for them to explain to the tax authorities when they receive money from abroad.
In some cases, companies send termination benefits to employees after they return to India.
They can keep their accounts in the host country and ask their employers to credit the money to their foreign accounts if they have kept them up to date.
They can then take it to India.
If they receive it directly in India, it is possible that the income received in India will be taxed.
Liability for taxes
The minimum period of stay in India for qualifying to be a resident has been reduced from 182 to 120 days if the aggregate stay in the preceding four years exceeds 365 days and the aggregate taxable income exceeds INR1.5 million ($19,959, £16,148, €18,380) excluding income from foreign sources.
The 120-day limit was imposed because many residents used their NRI status to avoid paying taxes in India.
NRIs are taxed on income earned or received in India, as well as interest earned on fixed deposits and savings accounts, as well as capital gains.
The income tax liability of an NRI in India is determined by their residency status for the year. If they have the status of "resident," their worldwide earnings are taxable in India.
NRIs are widely believed to be exempt from paying income tax or filing tax returns in India.
Whether they are NRIs or not, any Indian citizen whose annual income in India exceeds INR250,000 is required to file an income tax return and pay taxes in India.
When the government imposed a country-wide lockdown on March 24, which is still in effect, and suspended international flights, a large number of NRIs became trapped in India.
Many have stayed longer than the 120-day limit, which means they have lost their NRI status, which entitles them to tax breaks and other benefits.
NRIs will technically become residents under income tax rules if they stay in India for more than 120 days, requiring them to pay tax on their worldwide income.
They'll have to file tax returns as Indian residents after that.
Imam also reminded those in attendance that the deadline for filing tax returns for the year ended March 31, 2021 has been extended to December 31, 2021.
If new tax laws are not followed, there will be consequences.
Many non-resident Indians who have lived in the UAE for a long time but want to keep their NRI status after returning to India, either in retirement or due to the loss of their job, are facing a problem.
Tax exemptions, incentives, and preferential treatment for property and capital market investment quotas, as well as admission of children to professional courses, are all available to NRIs.
Changes in residence from the host country affect NRI status, and returning to India for permanent settlement will have serious consequences if the recently amended tax laws regarding income declaration and tax obligations are not followed.
The new amendments to NRI taxation were discussed at a recent special seminar on NRI status and tax obligations.
Many NRIs return to India after 20-25 years abroad, but they are unaware of the new taxation rules, and it is critical that they understand the implications before returning to India.
Changes in status
In light of the amendments to the taxation regulations, this is an update.
The seminar covered topics such as residential status upon return to India, taxability of interest on non-resident external (NRE) and foreign currency non-repatriation (FCNR) accounts, banking and investment outside India after returning to India, and procedural compliance and return filing.
“If you have been a non-resident Indian for ten years and have returned to India for permanent settlement, you can keep your non-resident status for two years after your arrival. If you stay in India after that, you will be considered a resident,”
Notifying the financial institution
When it comes to returning to India, the taxability of interest on NRE accounts is a major issue.
NRIs can open NRE accounts with Indian banks, and the interest they earn is not taxable.
However, the account holder must report to the bank for permanent settlement within 30 days of returning to India.
The bank will then reclassify the account from NRE to NRO (non-resident ordinary), and the bank will begin deducting tax at source from that day forward, as interest income on that account will be taxed.
NRIs can also keep an FCNR (foreign currency non-repatriable) account after returning to India for two years.
So long as he is a non-resident or not ordinarily resident, the interest on his FCNR account is tax-free.
Before they come back,
Before returning to India, NRIs can convert their NRE account to an NRO or FCNR account, which means they won't have to pay tax on their interest income for at least two years.
The interest rate on an NRO account is usually higher than that on an FCNR account.
Imam recommends calculating the differential interest over a two-year period and factoring in the tax implications.
“If your tax liability is higher, put it in an FCNR account, which is protected against foreign currency exchange rate fluctuations.”
Even after returning home, NRIs can keep their bank accounts and investments outside of India.
People take LIC (life insurance) policies while travelling abroad, but they are unable to close the policies because they mature after they return to India.
The only stipulation is that they must disclose this in subsequent years' income tax returns, making it easier for them to explain to the tax authorities when they receive money from abroad.
In some cases, companies send termination benefits to employees after they return to India.
They can keep their accounts in the host country and ask their employers to credit the money to their foreign accounts if they have kept them up to date.
They can then take it to India.
If they receive it directly in India, it is possible that the income received in India will be taxed.
Liability for taxes
The minimum period of stay in India for qualifying to be a resident has been reduced from 182 to 120 days if the aggregate stay in the preceding four years exceeds 365 days and the aggregate taxable income exceeds INR1.5 million ($19,959, £16,148, €18,380) excluding income from foreign sources.
The 120-day limit was imposed because many residents used their NRI status to avoid paying taxes in India.
NRIs are taxed on income earned or received in India, as well as interest earned on fixed deposits and savings accounts, as well as capital gains.
The income tax liability of an NRI in India is determined by their residency status for the year. If they have the status of "resident," their worldwide earnings are taxable in India.
NRIs are widely believed to be exempt from paying income tax or filing tax returns in India.
Whether they are NRIs or not, any Indian citizen whose annual income in India exceeds INR250,000 is required to file an income tax return and pay taxes in India.
When the government imposed a country-wide lockdown on March 24, which is still in effect, and suspended international flights, a large number of NRIs became trapped in India.
Many have stayed longer than the 120-day limit, which means they have lost their NRI status, which entitles them to tax breaks and other benefits.
NRIs will technically become residents under income tax rules if they stay in India for more than 120 days, requiring them to pay tax on their worldwide income.
They'll have to file tax returns as Indian residents after that.
Imam also reminded those in attendance that the deadline for filing tax returns for the year ended March 31, 2021 has been extended to December 31, 2021.
