I am a non-resident Indian working abroad. I plan to return to India and live and work here for at least a few years. Can I keep my local bank accounts in India? Do I need to open Non-Resident External Accounts (NRE) or Non-Resident Ordinary Accounts (NRO)? Should the income I earn from India be deposited in an NRO or NRE account only? How will my income be taxed in India if I am a Canadian citizen?
Since you are a non-resident working abroad, you must have converted all your local bank accounts into Non-Resident Ordinary (NRO) accounts immediately after leaving India to take up employment outside India.
Important Update for Non-Residents Returning to India
A person immediately becomes a resident of India when he comes to take up employment or carry on any profession or business here in India or returns to India with the intention of staying for an indefinite period.
Since you are returning to India to work here and stay here indefinitely, you will become a resident of India as per the FEMA Provisionsthat govern a person’s banking and investments within and outside India. Please note that resident status under FEMA differs from income tax laws and is relevant for different purposes. Since you will become a resident for FEMA purposes immediately after your arrival here in India, you are not allowed to have an NRO account, NRE account or FCNR account.
Income taxation It depends on your residency status, which changes annually under the income tax laws based on your physical stay in previous years and the total sum of your physical stay in the past. Your Indian income will be taxable irrespective of your residency status under the tax laws.
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Balwant Jain is a tax and investment expert and can be contacted at [email protected] and @jainbalwant, his username X.
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