When Non-Resident Indians (NRIs) return to India, one of the key financial aspects they need to address is the status of their Non-Resident External (NRE) Fixed Deposits (FDs). These accounts, which offer tax-free interest income and full repatriability, are highly beneficial for NRIs while abroad. However, the rules and benefits change once you return to India.
This post explores what happens to your NRE FD after you become a resident, the options available to you, and how to make the most of your investments during this transition.
You can also get RNOR Guide from this post – important in the case of NRE fixed deposit.
Must Read – Why NRIs Returning to India?
One of the most common questions that I get from NRI is – what will happen to my NRE FD after return to India?
This question is on top of his mind because most NRIs locked their savings in long-term NRE fixed deposits & they are giving high interest which is tax-free in India.
NRE Fixed Deposit
As an NRI, you can invest your money in fixed deposits in NRO, Non-Resident External, and/or FCNR accounts. The interest rate on these accounts may be different from the interest rate on resident FDs. Here is a comparison of NRE FD Rates of some banks –
| Type of FD in Bank
(Sum less than Rs. 5 crores) |
NRE Fixed deposit Rate or NRO FDs | Interest Rate on FCNR FDs (US Dollars) |
| 1 year FD in ICICI Bank | 6.75% per annum | 5.15% per annum |
| 1 year FD in HDFC Bank | 6.65% per annum | 5% per annum |
| 1 year FD in SBI | 6.5% per annum | 4.70% per annum |
Check – NRE Vs NRO Accounts – Everything You Must Know
It is good to park money in FCNR fixed deposits & NRE fixed deposit accounts –
- Interest earned on NRE FD tax-free in India. (can be taxed in the country of residency)
- The movement of funds is easy.
- FCNR accounts are protected from exchange risk.
- Many banks provide loans against FCNR deposits.
- They can be continued in the same state till maturity whether you return to India or not during the FD tenure.
- An NRE fixed deposit can’t be open in joint name with an Indian resident, even if that person is a direct family member.
- There is a repatriation option on investment through Non-Resident External Account.
NRO FDs are not lucrative as –
- Interest is taxable.
- There is no repatriation option on the principal investment or it’s tough.
- Funds that have been originated in India or funds from an NRE account can only be used to open an NRO FD. NRE FD and FCNR FDs can be opened with funds received abroad as well.
As an NRI, you can make use of NRO FD for investing money that you have earned in India and/or if you want to open a joint account with an Indian citizen.
Go for an NRE fixed deposit account if you want to mainly park funds from foreign countries and want the money to be fully repatriable.
Read – Best Investment for NRI in India
NRE FD account after return to India
Let us look at the status of these NRE fixed deposit accounts and the taxation rules related to them when an NRI returns to home base i.e. India and becomes a resident of India –
- These deposits can remain as-is until maturity when an NRI returns to India and become a resident Indian. They need not be converted to resident accounts.
- Withdrawals from both these accounts can be done only in Indian Rupees.
- If we break NRE Fixed deposit before maturity then interest is calculated only for the duration deposit remained with the bank.
- Prematurely breaking of NRE FD attracts penalty which varies from bank to bank.
- Non-Resident External and FCNR fixed deposit accounts can be converted to Resident Foreign Currency (RFC) accounts after maturity. The currencies allowed for RFC accounts are freely convertible currencies such as the US dollar, Euro, British Pound, and Japanese Yen.
- NRO fixed deposit accounts have to be converted to resident accounts.
- The interest rate will be payable at the original rate if the deposit is held for the full term even after conversion into a resident foreign currency account.
- Interest income from NRE A/c or FD that have been converted to RFC accounts will be exempt from tax if the status of the returning NRI is ‘Resident but not ordinarily resident’ also known as RNOR. A person is considered as an RNOR if the following conditions are satisfied –
-
The person has stayed abroad for 9 years in the previous 10 years
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During the 7 financial years preceding the year the person returned to India, he/she has stayed in India for a period of 729 days or less.
-
- A person usually has the RNOR status for around 2-3 years. If the status is ‘Resident’, the interest is taxable. Interest income from an NRO account is taxable in India whatever the residency status be. If the interest is taxable, then it has to be considered in the income source – ‘Income from other sources’ while filing tax returns.
- After returning to India you become a resident Indian and your global income becomes taxable in India. Of course, Double Taxation Avoidance Agreement ( DTAA) may be availed if the oversees is also getting taxed locally, so to plan your stay in India try to maintain RNOR status for the maximum possible time.
- In such a scenario except for some income, the rest of your foreign income will remain exempt from tax.
- The NRI has the responsibility to inform the bank on a change of residency status so that the bank can take the necessary steps on the accounts held by the NRI. On becoming a resident the onus is on you to notify the bank of the change in the status.
- The amount in the RFC account can be used for remittances abroad and investments abroad.
- If you decided to go abroad again for the long term you can either remit the RFC balance abroad or transfer the fund from your RFC into a Non-Resident External or FCNR account.
Immediately on return to India, NRIs should inform their bank to designate their accounts as domestic Resident accounts or transfer the balance in their NRE/FCNR accounts to Resident Foreign Currency (RFC) accounts, if so desired; FCNR accounts can be continued till the date of maturity and upon maturity, can be converted to RFC accounts. wiseNRI
Few more points:
- NRI after becoming a resident in India can also create a separate tax profile like HUF and take a separate tax exemption limit to HUF.
- There is also NRO– Five years tax saver Fixed Deposit that will be eligible deduction under Section 80C of Income Tax Act, 1961. This also provides NRIs an opportunity to diversify their investments in addition to other investments permitted in Section 80C. The maximum amount to be invested in this should not be higher than INR 150000 in a financial year. No Overdraft or pledge allowed in the NRO – Five years tax saver Fixed Deposit.
- In Five years NRO Tax Saver Fixed Deposit there is monthly and quarterly payout option is available but there is no partial and premature withdrawal is allowed.
NRE FD FAQs
Here are 5 FAQs that can help you understand the status and management of your NRE FD post your return:
- Can I continue my NRE FD after returning to India?
Yes, you can continue to hold your existing NRE FD even after you become a resident of India. The NRE FD account will simply be re-designated as a resident FD account. - Will the interest rate on my NRE FD change?
The interest rate on your NRE FD will continue to be the same as before, even after it is re-designated as a resident FD. Banks do not change the interest rate simply because your residential status has changed. - Can I open a new NRE FD after returning to India?
No, you cannot open a new NRE FD account after returning to India and becoming a resident. You will have to open a regular resident FD account instead. - How do I manage my existing NRE FD?
You can continue to operate your existing NRE FD account just as before. You can make additions, withdrawals, and renewals as per your requirements. - Are there any tax implications on my NRE FD after return?
The interest earned on your NRE FD will be taxable in India as per your income tax slab. You will have to declare this interest income in your annual tax return.
As an NRI, let us know your experience if you ever asked your banker – NRE Fixed deposit account can continue after return to India? Please share their response in the comment section. If you have any additional or updated information – must share that will really help every NRI.
Tax implication on NRE FD’s after returning to india.
If you return to India and have Non-Resident External (NRE) Fixed Deposits (FDs), there are specific tax implications and procedures you need to consider
I am eligible for RNOR status. But I have NRE FD in Indian rupees. Can I continue these Fds in Indian rupees if I become RNOR?
You can continue holding NRE FDs while being RNOR, and the interest will remain tax-free during the RNOR period. Once your status changes to a Resident Indian, you’ll need to convert these FDs to Resident FDs and handle the tax implications accordingly.
How many days can I maintain my NRE accounts after returning back to India?
You can maintain your NRE accounts for up to six months after returning to India. During this period, you should arrange to convert the accounts to Resident accounts to comply with Indian regulations.
I want to speak to a tax advisor urgently.
How can I save tax of my NRE account FD’s after converting them to ordinary accounts?
Once you convert your NRE (Non-Resident External) Fixed Deposits (FDs) to ordinary (Resident) accounts, the interest earned becomes taxable under Indian tax laws.
If I have RNOR status, can i keep my NRE account and NRE FD till i have RNOR status
Yes, if you have RNOR (Resident but Not Ordinarily Resident) status, you can continue to maintain your NRE (Non-Resident External) accounts, including NRE Fixed Deposits (FDs), as long as you hold RNOR status.
How much tax I need to pay after I return to India
Hi Jacob, the tax you need to pay after returning to India depends on your total income, the sources of income, and your residential status.
What happens to my nre fixed deposits?
Hi Kulbhushan,
For this contact the professional.
can NRIs hold stocks gifted by whoc is an indian residentparent
Hi Kuldeeo,
Yes, NRIs can hold stocks that are gifted to them by Indian resident parents. The RBI allows NRIs to receive gifts in the form of shares and securities from Indian residents.
Do I need to pay tax on my NRO deposit ?
Hi Anil,
The interest earned on funds in your NRO account is considered income in India and is subject to income tax as per the applicable income tax slab rates. If you are eligible and choose to avail of the benefits of DTAA, the tax rate might be lower based on the terms of the agreement.
Good morning sir,I have been working in kuwait since 2001. During Mar 2019 I came to India for the treatment of aged parents. I returned to kuwait during feb 2020 to renew my residency. I returned to India after renewing my residency in the same month. Due to the pandemic (covid 19) I couldn’t return back to Kuwait. Meantime my residency expired. Kuwait govt stopped issuing of new visa. During September 2022 I received a new visa from my company and started working.Meantime my company couldn’t get any new projects, hence they requested me to stay in India till they get a new project. Now I keep traveling to Kuwait once in 6 months to keep my residency live. I have a valid residency till Sep 2025.I have kept my earnings in NRE fixed deposit and keep renewing the same till today. My question is… Should I file the income tax return for the interests earning through my NRE FDs.Please note that I don’t have any other income in India. Please clarify sir
Hi Natarajan,
You are not required to file an income tax return in India solely for the interest income earned through your NRE FDs. While the interest earned on NRE FDs is tax-free in India, you should also consider the tax laws in your country of residence.
Hi Natarajan,
Interest earned on NRE FDs is generally tax-free in India. Since you don’t have any other income in India, and the interest from NRE FDs is tax-exempt for NRIs, you might not have a tax liability in India.
Does nre fd get taxed on maturity for a returning Indian
Hey Saurabh,
You can continue to hold and maintain the NRE fixed deposits. NRE accounts are designed to provide tax-free interest income to NRIs, and this benefit is extended to returning Indians as well.
Hi Saurabh,
If you are a returning Indian and your NRI status changes to Resident Indian status, The interest earned on NRE FDs will be added to your total income and taxed at the applicable income tax slab rates for resident Indians. It will be treated as a part of your regular taxable income.
i lost the nre status but having fd in nre account
Hi Mannan,
As per my knowledge you need to convert the fd to resident FD account.
I just got an info from toni that there is TDS on NRO FD’s. Is there any way i can avoid thst TDS because interest earned wouldnt cross exemptions limit
Hi Anil,
It is recommended that you talk to a CA regarding the same.
I have a FD in bank of baroda and I want to break the FD and need the funds into my Indian account or the repatriation of funds by breaking the FD into my kuwait bank account.And I cannot travel to India at this moment and I need funds into Indian bank account or here in Kuwait bank account.please help me in the process to know
Hi Mohit,
As per my knowledge you should contact your bank to get a detailed knowledge of the process.
Do i need to pay tds on nre fd
Hi Anil,
Interest earned on NRE Fixed Deposit is exempt from tax in India but there is TDS applicable on interest earned on NRO Fixed deposit.
Hi I have an fcnr certificate here in uk in pound sterling but due date has expired 29.5.18. I want to repatriate all the fund to uk and close the account. It is with bank of Baroda in Gujarat. I contact the branch in Manchester uk but they said they cannot help with what forms I need to fill. Could you advice ?
Hello Ramesh,
To repatriate the funds from your FCNR (Foreign Currency Non-Resident) account to the UK and close the account, you will need to follow the process outlined by Bank of Baroda. Here are the steps you can take:
a) Contact Bank of Baroda’s FCNR department in India to initiate the repatriation process. They will guide you through the necessary steps and documentation required.
b) You will need to fill out the Form A2, which is used for remittances abroad. This form is available on the RBI website, and you can also obtain it from Bank of Baroda.
c) You will also need to provide a self-attested copy of your passport and FCNR certificate, along with a letter of authorization authorizing Bank of Baroda to remit the funds on your behalf.
d) Once the documentation is complete, you will need to submit it to Bank of Baroda’s FCNR department in India, along with the FCNR certificate.
e) Once Bank of Baroda receives the documentation and verifies the details, they will initiate the repatriation process and transfer the funds to your UK bank account. The time it takes for the funds to be credited to your account will depend on the processing times of the banks involved.
I am NRI and have returned to india April 22nd. Should I change all my existing NRE, NRO FD’s or can keep it for 3 years or till maturity
As an NRI who has returned to India, you have the option to continue holding your existing NRE, NRO and FDs until maturity or until the completion of their respective tenures.
However, as per RBI regulations, upon your return to India, your NRE account will be re-designated as a Resident Rupee account or a RFC (Resident Foreign Currency) account. The interest earned on your NRE FDs will be taxed in India and subject to TDS at the applicable rates. Similarly, the interest earned on your NRO FDs will also be taxable in India.
Alternatively, you may choose to prematurely withdraw your NRE and NRO FDs and reinvest them in Resident FDs or other investment options that offer better returns and tax benefits for Indian residents.
how can i use my pension amount abroad
Hi, Do we need to issue an Authority letter attested by the Indian Mission in Canada, authorizing my brother-in-law, to submit the death claim, a Fixed Deposit, for which my husband is the nominee, the same to be transferred from Canara Bank to HDFC.Can the documents be couriered to the Banks directly?Thanks and regards
Hello Matlida
Yes, if you want to authorize your brother-in-law to submit a death claim and transfer a fixed deposit from Canara Bank to HDFC on your behalf, you would need to issue an authority letter to that effect.
for sending the documents to the banks, it is generally acceptable to courier the documents directly to the banks.
Being nri for over 25 years, when returning back to India, if I get indemnity from my service abroad, should invest in resident or nri account as it’s income earned out of India
Hello Gopi Lata
any income earned outside India, including the indemnity from your service abroad, will be considered as income earned outside India and will be subject to taxation as per the relevant tax laws.
Regarding investment, you can choose to invest in either a Resident or NRI account, depending on your current residential status.
It is advisable to consult a tax expert or financial advisor to understand the tax implications and choose the investment option that best suits your financial goals and residency status.
To which account the fd which will be matured in future will be credited, after changing the NRE account to resident
Hello Uday
If you change your NRE account to a resident account, any future maturity proceeds of your fixed deposits (FD) will be credited to your resident account.
Once you become a resident of India, you are no longer eligible to hold an NRE account. Therefore, it is necessary to convert your NRE account to a resident account within a reasonable time after your return to India.
How to file tax by NRI
Hello Jagadeesh
As an NRI (Non-Resident Indian), you may be required to file your tax returns in India if you have any taxable income in India or if you have earned income outside India that is subject to Indian taxation.
It is advisable to consult a tax expert or a financial advisor for any specific queries or for a better understanding of the tax laws and procedures in India.
I want to close my NRE term deposit after maturity and convert to Domestic term deposit
Hello kamala
If you want to close your NRE (Non-Resident External) term deposit after maturity and convert it to a domestic term deposit, you can follow these steps:
1.Contact your bank
2.Provide necessary documents
3.Fill out the necessary forms
4.Complete the formalities
5.Recieve proceeds
It is advisable to consult your bank or a financial advisor for more information on the conversion process and any tax implications associated with the conversion.
What happen to NRE account once I decided to get another citizenship. that means losing Indian Citizetip.
Hi Evangelin,
You can continue with your NRE Account even after get the another citizenship.
Can RNOR apply for new FCNR after their NRE FD Matures till the time RNOR status is active ?
Hi Vijay,
Yes, an Resident but Not Ordinarily Resident (RNOR) individual can apply for a new Foreign Currency Non-Residential (FCNR) fixed deposit after their Non-Residential External (NRE) fixed deposit matures, as long as their RNOR status is still active.
how lonf NRE fd remains non taxableafter returning back to india
Hi Jay,
If you are returning back to India for employment or business or for good then it will be taxable immediately.
Keeping NRI money invested in foreign currency but in India to keep for higher studies.
Hi Jignesh,
An NRI (Non-Residential Indian) can keep their foreign currency in India for future use, such as for higher education. One option for doing this is to open an NRE (Non-Residential External) account, which allows NRIs to hold foreign currency in India and earn tax-free interest. Another option is to open a Foreign Currency Non-Residential (FCNR) account, which offers a fixed deposit in foreign currency and provides a guaranteed rate of return for a specified period of time. Both NRE and FCNR accounts have different features, so it is recommended to compare and consider these options before making a decision.
I am uae nri. Since my only income from india was aound 2.5 to 3 lakh interest on whi h bank was cutting tds, there was no more taxable income. .i didnot file it returns sins 2017_18.now i came to know that even nil return are needed to be filed. What can i do now
Hi Sangita,
It is advisable to consult a tax professional to ensure that your returns are filed timely & correctly and to avoid any errors or mistakes that could result in a penalty or interest.
Is TDS deducted in the hands of nominee while receiving the NRE FD account
what happens NRE FD , if the person return to india permanently
Hii
Mani
They can be continued in the same state till maturity whether you return to India or not during the FD tenure.
A tax free fixed deposit was created in INR in an NRE account(axis bank) by a person staying abroad. Then the person relocated back to India and updated the linked savings bank account to resident account, but bank said the FD can continue to be NRO and therefore no tax to be paid on the accrued FD interest. One of the CAs mentioned that this is fine under section 115F/H of income tax act, but another CA is saying tax needs to be paid.
Hi Pari,
It’s possible for different Chartered Accountants to have different opinions on tax laws and regulations. As per the Income Tax Act of India, Section 115F states that NRE (Non-Residential External) deposits are exempt from tax in India, while Section 115H provides for tax exemptions for non-residents on foreign income. However, the applicability of these sections depends on the individual’s tax residency status and other factors.
In this case, it’s recommended to consult with a tax expert to understand the specific tax implications of the situation and ensure compliance with applicable tax laws. The individual should also clarify the bank’s stance on the matter, as the bank may have its own interpretation of the tax laws and regulations that apply in this situation.
If I return back to India Say Jan 2, 2023, Do I have to become resident from the day 1 or I have the option to become resident within six months ( I can stay six months as a resident) or after 5 months, I can go out of India for a month and become resident after I am back ?
Hi Dev Fol
As per the Income Tax Act of India, an individual’s tax residency status is determined based on their physical presence in India during a financial year (April 1 to March 31). If an individual is present in India for more than 182 days in a financial year, they are considered a resident for that financial year.
In your case, if you returned to India on January 2, 2023, you would be considered a resident for the financial year 2022-2023 if you remain in India for more than 182 days between April 1, 2022 and March 31, 2023. Whether you can go out of India for a month and still be considered a resident would depend on the specific details of your stay, including the duration and purpose of your absence from India.
It is recommended to consult with a tax expert to understand the specific implications of your residency status for tax purposes and ensure compliance with applicable tax laws.
I want to understand how I can move oney from here to US
Hi Nikhil,
There are several ways to transfer money from India to the United States:
Bank wire transfer: You can initiate a bank wire transfer from your Indian bank account to a US bank account. This is typically a fast and secure way to transfer funds, but it may also be expensive due to fees charged by the banks.
Online money transfer services: Companies such as Xoom, TransferWise, and Remitly offer online money transfer services that allow you to transfer money from India to the US. These services may be more cost-effective compared to bank wire transfers.
Forex card: You can purchase a forex card in India, loaded with US dollars, and then use it to withdraw cash or make purchases in the US.
Checks or drafts: You can send a check or draft drawn on an Indian bank to a recipient in the US, who can then deposit it in their US bank account.
Before making a transfer, it’s important to compare the exchange rates, fees, and processing time of different options to determine which one is the most suitable for your needs. Additionally, it’s advisable to check if any government regulations or restrictions apply to your specific transfer.
My NRE FD account is closed with no interest payable why?
Hi Swati,
Please, contact your bank.
Hi Swati
Commercial banks should not pay interest on deposits of money accepted or renewed by them in Domestic, Ordinary Non-Resident (NRO).
is the interest from NRE fixed deposits taxable in the foreign country ?
Hi Sanjay,
Yes, it will be tax free in India but in your resident country it will be taxable.
I have returned from foreign back to india and have NRE FDs .After return and informing to bank they have closed my exisiting FDs
Hello Swati,
Please, Contact your personal banker for further information.
NRI account closure – Penalty & tax implications , if not converted post return to India
Hi Kavish,
As per my knowledge, there is no such penalty but According to FEMA, it is illegal to have NRI Accounts When you became Resident.
On return to India will that NRE FDs run for the full term and is the interest taxable?
NRE and FCNR fixed deposit accounts can be converted to Resident Foreign Currency (RFC) accounts after maturity.
Since the status will be RNOR interest will be tax free.
I am planning to return to India for good in April 2023. my NRE FD will mature only in Oct 2023. when I become RNOR can I renew my NRE FD into RNOR FD? so that I can have the tax benefits of the interest paid for the FD?
NRE and FCNR fixed deposit accounts can be converted to Resident Foreign Currency (RFC) accounts after maturity.
Since the status will be RNOR interest will be tax free.
whats RNOR status?How long I can be in RNOR after returning to INDIA?
For RNORs returning to India they can keep their RNOR status for up to 3 years after their return.
I have been working at Indonesia since 2010. I returned to india in April,2021 for field break and could not return to Indonesia due to carona. Mean time i turned 60 years and decided to stay in India. But my work permit is valid upto March-2022. My company send exit permit from Indonesia dated 22nd April.My question is:When i have to close my NRE a/c here.Bank manager told me that i lose full interest if FRD’s closed in middle.Whats the time frame before which i have to close my FDR and convert or cancell my NRE a/c
NRE and FCNR fixed deposit accounts can be converted to Resident Foreign Currency (RFC) accounts after maturity.
Since the status will be RNOR interest will be tax free.
Returning nri is holding resident savings account (converted upon coming to India ) He has Nre Fd continued upon coming back to India. Interest for which is credited to resident bank savings account. Is this interest on nre fd taxable as it is received in resident savings account.
Taxable
I returned to India in June…my NRE FDs are maturing in october 2022 and may 2023….i have been NRI for the last 10 FY….is interest earned on NRE FDs taxable…when should i inform bank(S) of change in resident status….should it be RNOR or resident
Since status is RNOR interest will be taxfree.
Is NRE FD interest taxable for RNOR status?
Since the status will be RNOR. Interest will be taxfree.
Can I have informative sheet on RNOR status which spells out about interest exemption on NRE term deposits, please advise, I am RNOR from this year
we came back to India 6 month backbut our Fd matures in 2023We have not yet informed bank about our return..whether tax is deductable
Since the status will be RNOR. Interest will be taxfree.
I am a non resident and is planning to return to India. I will be a RNOR in FY 2023-24. I have a NRE fixed deposit I made for 50Lacs in De 2018 maturing in December 2023 and maturity value will be 73lacs. Assuming I will be RNOR, what will be my tax liability if there is any? Will I be taxed on the full 23 Lacs interest or only proportion of interest from April 23 to December 23, or there wont be any tax liability at all?
Hii Varghese
The interest income will be taxfree.
is tds applicable on fds converted from nri to resident account in january 2022 before 3 monarths end of financial ye
No tax is applicable on conversion of NRI FD to resident
i have become resident three weeks back my status will be RNOR.
Hi Sangameswar,
Yes.
Once NRI returns to India the NRE FD interest becomes taxable. Is it taxable for the whole previous year during RNOR status or the taxability starts from the 182nd day when you lose NRI status?
Hi Sridhar,
You cannot maintain your NRE account and NRE FDs when you are an RNOR. You need to convert your NRE account to a resident account immediately upon returning to India. The interest earned from NRE FD is not taxable, however after it is converted to a Resident FD the earned interest is taxed as per your income tax slab. TDS will be deducted if applicable.
How is NRO FD taxed?
Hi Sreenath
Tax applicable on NRO FD is quite high at 30% along with applicable surcharge and cess. In case the interest earned is over Rs. 10 lakhs, then an additional surcharge of 10% will be added.
I have Nre account in India.now I plan to go to India on maternity leave. I plan to take 1.5 years maternity leave. What will happen to my Nre account. Can I repatriate amount from same Nre account in future
Hi Seen,
If you reside in India for more than 182 days in India then you will be considered as Resident Indian. Then you have to convert your nre account into a resident account.
Can I hold my NRE deposits till maturity after I become resident?
Hi Ronald,
You can hold the account till maturity.
what happens to my NRE deposit after I return to India, will be be taxed or can I continue till maturity?
Hi Ayrito,
It will not attract tax. You can hold account till maturity.
Can I transfer NRE FD of wife to my
Rnor status, can I open savings/Demat account?
Hi SK,
Yes you can open savings/Demat account with RNOR status.
If one is employed in USA and has lived in india during employment for more than 200 days then does he need to pay tax india for salary earned during this period
Hi Ajay,
If you live in India for more than 200 days then your global income becomes taxable in India.
Upto what period can i maintain NRE FD A/C after becoming Resident
hi Shyam,
you need to convert your NRE FD A/C to resident account within 3 months.
NRE FD status after returning back to India
NRE FD can remain as-is until maturity when an NRI returns to India and become a resident Indian. They need not be converted to resident accounts. Non-Resident External and FCNR fixed deposit accounts can be converted to Resident Foreign Currency (RFC) accounts after maturity.
Will there be any deduction in my nre fd, when i change the nre status to normal account?
Hi Vikash
The bank will charge TDS (If applicable) on the interest earned post converting to the normal account.
How much interest rate for NRI account holder if deposit 8800000
Hi Gurdeep,
It vary from bank to bank. Please, approach your bank.
Thank you for the informative articles for NRI’s. I wonder if you could post similar articles for OCI’s as well.
Hi,
I hold NRE savings and FD accounts with HDFC bank, tenure of FD is 4years, at present 2 and half is completed.I want to know once my stauts is changed to Resident, whatever interest I earned on FD on maturity is taxable/only proportionate interest earned since my stauts chaged to till maturity period is taxable.
Thank you.
Hi Aneel,
Your FD will be taxable on a proportionate basis.
I have returned home 3 years ago. I have fds. They r maturing in 3years . Is the maturity amount taxable
Hi,
The interest amount will be taxable.
I am UK citizen. I have Mutual Funds Investments in India.They have my PAN card number, but I am getting message that PAN has be linked to Aadhar card.What should be my response.
Hi Tapan
You should contact your MF Company and get it attached once again to avoid any issues.
How much tax i have to pay when i sell my flat in Delhi, which i inherited from my parents? Thanks.
Hii Swarn
It is suitable to take advice from a tax consultant
I am NRE holder for the past 7 years from July 2012 to Nov 2019. I returned India End of Nov 2019. I coudnt go back to Overseas Countries because of Covid. Iam staying in India still now. I have some NRE FD. my Interset income on term deposit is 215000 Rs Annum. Do I need to File Tax return.
Hii Rajesh
The interest income earned on NRE FD is taxfree
will my bank account number change if I convert my NRE to a Resident savings account?
Hii Mr.Rajesh
As far as I know you need to close your NRE account and transfer your funds to resident saving account
Hi,
I hold NRE savings and FD accounts with HDFC bank. After returning to India I visited the bank to change my NRE account to domestic.
Bank told me that FD account also has to be closed prematurely with NRE account and no interest will be paid on FD.
Could you advice if there any clause to defend bank to keep FD account open till maturity?
Thank you.
Hii Sujit Ji
As per my knowledge Non-Resident External and FCNR fixed deposit accounts can be converted to Resident Foreign Currency (RFC) accounts after maturity.
Is TDS deductible for tax free FCNR deposit of RNOR?
Hii Mr. Vinod
As per my knowledge, interest income earned from your FCNR deposits shall be exempt from tax till you hold Non-resident Indian status or Resident and Not Ordinarily Resident (RNOR) status as per the provisions of Income Tax Act, 1961.
It is suitable to take advice from a tax consultant.
After cancelled my visa can i continue my nri account
Hi Mahesh
No, you can not.
Can a NRE Fd br convered to resudent Indian FD
Hi Vanaja
Yes it can.
What are the tax implications for NRE FD once I returned to India
Hi Selvi
The interest will be added to income as other sources and will be taxed as per slabs.
Thanks for the reply
Will the principal amount taxed after maturity, and in which account the principal amount will be transferred?
Hi Selvi
No, only the Interest earned will be taxable. during the time of maturity, you can give your savings account details to them and they will transfer the money.
Thank you ?
Further to your reply, after status change from NRI to Resident, interest on the NRE FD for the whole FY will be taxable or only the interest from the date of return to India will be taxed..?
I have NRE FD in federal bank and sbi and it was for eight to ten years with 7 to 7.5% interest and if I return to India next will I need to break the fd and convert to residents fd or it can be continued at the same interest rate till maturity
Hi Dilip
It can be continued till maturity.
What happens to NRE immatured FD after loosing NRI status ?
Hi Shyam
You can continue to hold them till maturity but interest will be taxable.
I have NRE FD deposits. Once I’m back to India & closing the NRE account, what happens to FD deposits. Still will it continue? if so, on maturity where the amount will be transferred? Do I have to give Indian Saving account details?
Hi Dinesh,
You can continue your NRE FD till maturity and once you come back to India, you should inform your bank regarding residency status.
I am RNOR, do I have to pay tax on my NRE FD Interest?
Hi Rajan
Yes, You have to pay tax on NRE FD Interest.
how can see my High value tractions before filing the ITR return ?
Hi Manoj
You can check the transaction from the respective statements of your assets.
I need to know something I have been in an overseas job and was having an NRE account. Now, my job is over and I am back to India. My question is, for how long can I keep my NRE account as it is?
Hi Srikant
As per law, you need to change it as soon as possible and there is no prescribed timeline attached with that.
I am returning to India after 30 years of service outside. How long I can keep NRE FD with out tax deduction.
Hi Srikumar
You can hold the NRE FDs till maturity but the interest would be taxable for Indians.
I hold senior citizen saving deposits in post office and banks.when I generated the deposit I was a resident of India. But now I had to declare myself as NRI as I am stuck in Australia because of movie for the past 15 months. Now my question is will the interest I am getting will remain the same till deposit reaches maturity date?
Hi Venkata
As per my knowledge, the interest will remain the same and will continue till maturity but you can’t extend the same.
what are the implications if gulf returnee does not inform bank and countinues with NRE account
Hi Prakash,
You will need to pay some penalty as it is not under the law to continue the NRE account.
Once a person returns back to india then can we maintain nre acc ?
Hi Naresh,
No.
i have some equity share holding, which i purchased long before become nri, but after that no transaction on that demat. some small dividend comes from that. please let me know if it is required to declare in ITR?
Hi Subrata,
Yes.
is my income taxable if returning back to India in June
Hi Rajeev,
If you have paid the tax on the same income abroad no need to pay tax in India.
Is there any tax applicable for NRE FDs after returning to India after 30 years?
Hi Sunny,
Interest earned on them will be taxable.
When i return permanently to India what happens to my FCNR account?
Hi Anuj,
You can convert it to RFC account.
I have worked in GCC for 10 years..so if i move and work in india for 2 or 3 years do my Fixed deposits in NRE ACCOUNT will be taxable? if yes then again if i move back whther the same fixed deposit can be converted back to NRE Fixed deposit eithout much cost implications?
Hi Jiji,
Yes, it will be taxable.
Cost implications vary from bank to bank.
i was outside India for 3 years and returned 1 month back. i have FDs in INR in NRE account. How to go about it ?
Hi Manoj,
You can continue it till maturity.
How to you manage the taxes to be paid on NRE FD once you return to India if you hold them till maturity?
Do you ask bank for interest certificate and include that in your taxable income?
I am an OCI having NRE FDs in India. If I return to India, how long can I retain the FDs in NRE status? or do I have to convert to a Resident account? I am a foreign national having OCI status.
Hi Anil,
You can continue them till maturity. After that convert them into resident.
What will happen to my existing FD if I change my status to a normal from NRI
Hi Bhuwan,
You can continue it till the maturity.
will the interest earned be taxable. ??
What will happen to my existing FD if I change my status to a normal from NRIWhat will happen to my existing FD if I change my status to a normal from NRI
What will happen to my existing FD if I change my status to a normal from NRI
Hi Saumendra,
As per my knowledge income earned from the FD will be taxable.
If after returning to India, he has not informed immediately, but after two years he is telling, he is in India for two years,then what Bank generally do?
Hi Saumendra,
I think they will change your status.
I have 5-acre agricultural land and want to buy a path for that land at present I am an Australian citizen what I have to do.
Hi Ali,
It depends on the location where you want to buy land.
Can a person invest his NRE funds in his hometown for purchasing properties when holding the RNOR status?
Hi Yelamanchili,
As per my knowledge yes you can.
Nre returns to India for good. His FCNR can be retained as FCNR for how long. is it compulsory for it to be converted to resident account on maturity.
Hi Sanjay,
No it is not compulsory to convert it.
I used to live in India and left India in the year 2009. I forgot to change my bank account from a resident account to a non-resident account.
Hi Prasad,
You should close the resident account as soon as possible.
Is there a penalty for holding on to this account for so long? And, I would like to convert the funds into US dollars. What account will help in facilitating this? Appreciate your help!
Is interest earned for NRE FD taxable, if I stay in India for 2 years.
Hi Kathu,
As when the status changes NRI to RI your income earned from NRI FD will be taxable.
Do we have to show our NRE Fd amount while filing Returns?
Hi Vishal,
Yes.
I was abroad from Jan 2009 to Aug 2019. Three times came to India for around 1-month duration each during this period. Recently came to India 31st Aug 2019 evening. All my income from abroad was kept in NRE A/c and NRE FD ( in INR). Kindly advise taxation on interests for NRE Ac. From which date income tax will be paid as resident Indian?
I was abroad from Jan 2009 to Aug 2019. Three times came to India for around 1-month duration each during this period. Recently came to India on 31st Aug, 2019 evening. All my income from abroad kept in NRE A/c and NRE FD ( in INR). Kindly advise on taxation on interests for NRE Ac. From which date income tax will be paid as resident Indian? Regards
Hi Debasis Das,
As when the status changes from NRI to Resident. Income earned from the NRE Ac will be taxable.
Thanks a lot for your article. It is an area of great confusion with banks. I wanted to confirm if I understood it correctly – I had opened long term NRE FD’s when I was overseas. If I understood correctly all these FD’s remain tax-free till the maturity date of 5yrs/10yrs even if I have returned to India after 4yrs and am employed in India?
Dear NA,
As per my knowledge,
After the status changes NRI to RI, the FD will be taxable for the maturity value.
FD will be taxable for the maturity amount means ?
That if it was 5years FD and I was overseas for 4years- they will still charge taxes on entire interest at time of maturity after 5years?
Or only for the 5th year when I was resident Indian?
I returned to India last July 20 end after 5 yrs work outside. NRE FD interest will be taxable from the date of the return or for the whole FY 20-21.
Hi Ramachandra,
It will be taxable for the maturity value.
After near 5 year job abroad, i returned to India by end July 20, for the FY 20-21(AY 21-22), my status ROR. Bank informed that my NRE FDs can continue as such till maturity, they have no such provision to designate as Resident FDs. They can close NRE FDs and rebook as resident FDs , which will cause loss of interest etc. the only option therefore is to just continue NRE FDs and pay tax on interest earned.
1. Kindly advice whether this is permissible or not..?
2. Please also clarify whether interest on NRE FDs for the whole FY 20-21 would be taxable or
I need to pay tax only on interest earned from the date of return to India ie ( July end),
Appreciate your advice
Hi Ramachandra,
As per my knowledge,
1- You can continue your FDs till maturity.
2- Interest earned on the FDs will be taxable.
Hi Shreya,
Thank you so much for the reply, truly appreciate.
kindly also advise whether the NRE FD interest from the date of return to India or for the whole FY will be taxable.
Best Regards
So it means you can hold your NRE FD till it’s maturity to get old interest rates, however the interest will be taxable from date of return to India ?
Or will the interest be non-taxable till the FD maturity?
Please confirm
Status of nre fd after returning back to India permanently?
Hi Deepak,
You can hold it till maturity.
I’m having NRE FD, once I return back to India ( lost NRI status). Will the FD amount ( principal amount ) taxable?
Hi Selvi,
Interest earned on it will be taxable.
What happens to FDs under the NRE account after returning back to India having stayed abroad for 12 years?
Hi Prabir,
You can continue your FDs till maturity.
Hi Shreya
After maturity of NRI FD , what is the tax procedure of principal amount
I am currently an NRI, holding FD. Soon will move back to India (FD will not be matured then). Will interest earned be taxable?
Hi Jawwad,
Yes, it will be taxable.
I had nre account and had returned for good what will happen to my account?
Hi Anuj,
You have to inform your bank about your status.
Will I get any interest before one year of NRI FD maturity?
Hi Maria,
No.
If somebody acquires RNOR status his NRE .will be converted to domestic but whether NRE FDs will continue as NRE FDs till maturity?
Hi Amit
Yes you can hold NRE FD till maturity.
I become RNOR from 1 st April 2020 till 31 st march 2022
When my NRE deposit mature within RNOR period , can i renew it as NRE deposit , becuase i still have tax benefit until 31 st march 2022
Hi Sathya
As per my knowledge you can not renew it.
Hello,
I need some guidance.
I returned to India in December 2017. I have and NRE account with NRE FD valid till 2024. I receive interest on a monthly basis. Till now my income was much below the tax limit so I did not pay much attention however this FY 2020-2021 I made a lot of profit in stocks and crypto and I will be paying tax. Now I am wondering if I have to pay any tax on my NRE FD interest or I can let it continue till 2024. Kindly help me out with this please. Thank you.
Abhinav.
Hi Abhinav
If you are holding RNOR status you can hold it till maturity. Also you have to convert your account to RFC account then your NRE FD will be tax free.
I and my wife are Canadian citizens with OCI cards. At present we are stuck in India due to Covid 19. We will go back to Canada after the Covid situation is stabilized. After some time we are planning to return to India and spend only a few months in Canada each year. As we may stay over 180 days in India we have to pay tax here and we will pay as per Indian Tax rules for the interest earned on our NRE FDs. Please advise , What will be the status of our NRE deposits/Accounts after our return as a foreign Citizen with OCI card holder and staying over 180 days in India?
Hi Venkatraman,
As long you hold RNOR status you can hold your FDs till maturity.
In your NRE FD article it was stated that “The interest rate will be payable at the original rate if the deposit is held for the full term even after conversion into a resident foreign currency account “As the Rupees interest rate on FD is usually more than RFC FD rates, does it mean that even after conversion to RFC one will get NRE rupees FD rate?
Hi Murali,
Yes He will get NRE rupees FD rate
After NRI Returns and becomes RNOR whether interest on NRE deposits is exempt or not? as per SBI format, only FCNR and RFC are mentioned.
Hi Hareram,
for Tax exemption you have to convert your account to RFC account.
I have US Dollar deposits which I deposited in SBI when I was working in the Gulf. Now that I have returned to India about 6 years ago and retired and If I want to continue the hold the deposits in US Dollars – is it allowed?
Hi Sudhir,
As per my knowledge you can hold it.
I am an NRI staying UAE for more than 20 years. am I eligible for RNOR status?
Hi Girish,
It depends on the number of days you travel in India.
Hemant
Thanks for the very informative article.
I propose to return to India, either in 2021 or 22; we are still evaluating.
I have been asking my RM from different banks & while they say that the NRE deposits can continue till matui=rity, they have not been able to convincingly clarify whether it will be taxable or not while I am RNOR. I gather from your article that NRE & FCNR deposits will be non taxable. Which is the section(s) that cover this?
Thanks
Raphael
PS: Ranandeb Sarkar’s reply below seems to contradict your article (if i have not mis-understood) Could you clarify?
Hi Raphael,
I think you should consult your CA for a better understanding.
Please tell me If I Have an Account in Union bank and make some FD for one year but unfortunately I need that money before one year. Can I break the FD or not?
Hi Rajneesh,
Yes, you can but for premature FD’s you have to pay a penalty.
Can an existing MF folio be used for investment, if the residency status of the investor changes to a non-resident?
Hi, Karthik,
Yes, you can.
We returned from Dubai after working 37 years now can we keep our gratuity money in the new account.
Hi Rita,
Yes.
Hello, would like to check if one of the friends after retirement has to return to India, they have sent their gratuity funds to NRE account, can they do fix deposits for what time period, kindly advise.
What happens to existing fixed deposit when my status changes to NRI?
Hi Shyam,
It will continue the same till maturity.
Interest from NRE FD Account for RNOR is taxable?
Hi Kamlesh,
It is exempt for RNOR
What is the time limit to convert the NRE account to the resident after your return to India?
Hi Sanjay,
There is 3 Months time period to convert NRE account into resident.
Sir, I have returned to India after 20years work in Gulf. I understand I am considered as RNOR for 3 years. How to proceed to RNOR category sir?
Hi Srinivas,
You should consult with your bank regarding this.
My and wife are NRIs from the UK. We are UK citizens with OCI Status. Spend 6 months each year in Bangalore. Have NRI accounts but no income in India. Should we have to file ITR?
Hi Tiruchengodu,
You don’t need to file ITR.
I am on family visa and have a savings account in India. Do I need to change to NRO account?
Hi Emmanuel,
as per my knowledge it is illegal for NRIs to hold savings account so it would be better to convert it
Can i invest in equity funds using funds from NRE account & are they fully repatriable after completion of tenure?
Hi suri,
yes you can invets in equity funds using NRE account and the money would be repatriable.
who is a remitter and a remittee if I am transferring funds from my NRO account to an NRE account in the same bank
Hi Meena,
Remitter is a person who send the money and receiver will be called remitter.
I have nre fd with bank. Now i am resident indian. Bank says your nre fd will be converted to resident fd and tds will be deducted. Is it correct ?
Hi Meena,
As per my Knowledge, you need not to convert your FD to resident FD, you can continue it till it’s maturity however the interest earned on it would be taxable.
I have an NRE joint account with my daughter. If I return to India, and my daughter continues to be NRI, will the account still be NRE?
Hi Ancy,
If you are the first holder of account and you return to india then you have to convert this NRE account to Resident.
Is there any change in RBI rules regarding the continuity of NRE FDs after becoming a resident till the deposits gets matured? Because, today my bank (City Union Bank) said that the deposits can not continue after 15th November 2020. Please clarify.
Hi Ramakrishna,
As per my Knowledge, there have no changes as such, a person can continue the FD till it’s maturity however when the person becomes resident the interest is taxable on that FD.
how long can i keep my nre account after i return to india?
Hi oniell,
You have to inform the bank about the change in your residency status as soon as you return back to India.
I stayed in US from April 2017 and returned to India only this year in Feb 18 2020, my questions are :1. What is my residential status for AY 2020-2021(FY 2019-2020) 2. What part of the interest from my NRE fixed deposit is taxable? I.e., do I need to pay tax for the interest earned between 1-apr-2019 to 31-mar-2020 or only the part of the interest earned after my return?
Hi Lalith,
for the FY 2019-2020 you will be considered NRI. And you can hold your NRE FD till maturity.you don’t need to pay tax on this.
Hai sir
Can u please clarify the below query?
A) From Jan 2009 to 2019 April 9th I was abroad in a No Tax country.
B) Last 07 years (2011-2019) I was approx 300 days in India on holidays in total.
C) I came back to India for a short assignment on April 9, 2019, to join a job in the Indian company and worked till Nov 2019. ( IT was deducted on salary paid to me)
D) I returned back abroad on Jan 1st, 2020 in the same financial year. (267 days stay in India in 2019)
I have some NRE FD in Banks with Monthly Interest payout option,( interest was credited into NRE account only)
Some FD have matured during the stay in India and the amount was credited into the NRE account
1) Will I have to pay tax on interest earned on FD which matured during my stay in India.
2) What about the tax to be paid for the same period of 267 days for FD which are not matured and still continuing with monthly interest payout.
3) Will the 07 years (point B) give me tax exemption for all the interest earned on FD?
4) All my NRE accounts are not converted as Banks advised not to if I am returning abroad in the same Financial year.(point D)
Thanks in advance and appreciate the support
Does an nre account get automatically cancelled due to non transactions in the account for 9 months?
Hi Shyam,
NRE account will be dormant if there is no transaction for 12 months.
What is required to change an NRO Fixed deposit to NRE fixed deposit?
Hi Priya,
as per my knowledge, it cannot be done, you will have to close the NRO FD and start a new NRE FD from an NRE account.
What will be the status of NRE FD if one loses a job and gets back to India and what will be the tax-free amount. Also, I m NRI for the last 22years.
Hi Rao,
NRE FD can be hold till maturity & there is no tax on it.
what contradictory advices you are giving……..
If I make a nre FD, and funds come out from my nre ac, after maturity which ac is the funds and interest transferred
Hi amit,
As per my knowledge the funds are transferred to the respective NRE account only.
can I withdraw my fixed deposit from a foreign country?
Hi Noorsha,
Yes you can.
My daughter returned to India and just now joined the yoga program for seven months.Is it necessary to redesignate her NRE account immediately or can we do it after seven months
Hi Shyam,
As per my knowledge you are supposed to inform the bank about the change of residency status as soon as you return back to India.
After returning home country, will NRI FD tenure will continue till maturity?
Hi Shambhu,
Asper my Knowledge you can continue your FD till it’s maturity
I am an NRE currently…if I make an FD NRE today for 10 years on return to India permanently say after 5 years. What will be the staus of the NRE FD?
Hi Elvis,
As per my knowledge, you can hold NRE FD till its maturity but the interest will be taxed.
The NRE FD interest earned by an RNOR is exempt under income tax under what section?
Hi Bhavuk,
As per my knowledge, It is under section 10(15)(iv)(fa) of the FEMA Act.
Can i claim exchange rate loss on NRE deposit? i have reported the interest in US tax returns
Hi Chaula,
In my opinion, you can’t claim exchange loss on NRE FD However it is advisable to consult a CA.
I am NRI since past 18 years working in the Middle East. Due to the Pandemic my company have given me a 5-6 months break to return to India and join back when situation improves. I have NRE fixed deposits with SBI. My overseas visa is valid until 2022. Do I need to change my NRI status for these 6 months and transfer NRE fds to ordinary taxable fds?
Hi Samir,
As per my knowledge, there is no need to convert NRE Fds into residential Fds in your case.
Was an NRI till 2018-19. Resident from 2019-20. Can continue NRE Deposits with out paying tax till maturity?
Hi Mohanan,
As per my knowledge, After return to India NRE FD interest is not taxable till you are holding RNOR status. If you are having RNOR status then interest is not taxable till the time you can hold this status.
I am a RNOR, (Australian citizen), I have an NRE account jointly with my daughter living in London,hers is the first name with me and wife as joint account holder, is she liable to pay tax on interest earned?
Hi Seshu,
No she is not liable to pay tax.
Last year i cam to india Sep’2019 but due to covid i unable to return, I am searching jobs now in ME. How my investment here will be treated.
how do I go about changing my NRI status to normal residence account?
Hi Akashay,
In my opinion, you need to inform the respective bank regarding your change of residential status after returning to India.
Will someone’s income transferred to NRE A/C will taxable after returning to India?
Hi Jasmine,
As per my knowledge, if income is earned outside India it won’t be taxable till you hold RNOR status.
Can I continue my NRE A/c after return to India?
Hi Jasmine,
You need to change your NRE a/c into a residential account.
Hi,
I am NRI living in Sweden since July 2015. My question is:
In case I return back to India (permanently) anytime between April 2021 to Sept 2021, then my stay in India will be more than 182days for FY 21-22. In this case, should I be paying taxes in India for the earnings I made in Sweden between 1st April 2021 to the date I landed in India?
Hi Abdul,
No you dont need to pay tax.
Hi,
Is there a difference in taxation if i create 5 year NRI FD with quarterly payout or cumulative payout on maturity? Specially let’s say if I come back to India after 3 years. In case of quarterly the interest paid to me will be in past financial years but for cumulative I’ll be paid total amount at the end. So do i have to pay tax on whole 5 years interest in case of cumulative FD if my status is resident at that time?
HI Amit,
You can hold it till maturity. there will be no tax.
I an an indian citizen returned back from uae 1 year ago. I have deposits in US dollars. Upon maturity how can i bring the money into India?
Hi Salvador,
You should consult with a CA for this.
I am in UAE. I am planning to return to India next year October. I will be returning in October 2021 so that I will be less than 182 days in FY2021-22. I have NRE RD which will mature in 2024 September. When will I become resident? Is it required to premature break my NRE FD when I become resident?
Hi Hareesh,
I Think from FY 23-24 You will become Resident, you can hold your NRE Deposits till its maturity.
Require Clarifications:
After working abroad have retired and have no other plans to work further. But I have US B1 visa and plans to tour different parts of the world. My questions,
1. Can I continue to maintain NRI status based on the prevailing definition of staying away for more than 182 days.
2. Based on above my existing NRI bank accounts can be continued as NRI. If so, how can I submit my KYC documentation
Dear Hareesh,
NRI definition of FEMA is different from Income Tax. We are not CA but my understanding is for your bank account & investment you will be NRI – for the tax you have to check your taxable income in India & 120 days may also apply.
My suggestion is you should have a word with CA.
Hello Mr. Beniwal, I have recently asked my bank to change my status from NRI to Resident up on my return to India. I have few NRE FD’s in the bank which were opened @9.25%. I was promised by the bank employees that all the FD’s will remain as it is including the rate of interest. Most of the FD’s have been converted to same rate however, four of my FD’s with original rate of interest of 9.25 have been converted to 8.5%. Please let me know how can I get it sorted out?
Dear Mahesh,
I will suggest you raise this with bank’s NRI cell or Regional Head.
Hi, Please let me know upon which Act/RBI/FEMA guideline you had come a conclusion that a NRE FD can continue till its maturity ? As per my understanding an NRI has to intimate his residential change to the banker, and the banker has to convert his NRE FDs to normal FDs. Please clarify with supporting regulation.
One person has been outside india for 15 years.for how many years his account will remain nre after he returns?
Hi Anish,
As far as I know, After returning to India a person can hold RNOR status for max 2-3 years.
For RNOR status NRE FD interest are taxable?
Hi Sunil,
As per my knowledge, It is not taxable.
I am NRI and have fd of 3 years in my nri account. Should i create fd which pay quarterly interest in my savings account or cumulative? I want to know tax implications if i become resident indian before fd matuarity in both cases?
i have NRI deposit for 10 years and getting maturity by 2 years. But I am moving to india from GCC in September. Can I continue as NRE deposits?
Hi Guru,
Yes you can continue fd til its maturity.
Thanks. But the question is
1. Will the FD continue as NRI deposit till the maturity even though I am not NRI
2. Do I have to pay tax on Interest income earned for remaining per period.
Thanks
i am planning to resign and come back to india by december. my leave salary and retirement money may credit to my indian account by february only. is that amount is taxable?
Hi Varghese,
As per my knowledge, It won’t be taxable in India.
I want to know if i invest in FCNR account as fixed deposit for three years period with Indusind Bank will it be safe?
Nre fd can continue after return to india?
Hi Raghuvaran,
You can continue NRE FD till its maturity.
My aunty wants to transfer her shares in my Nro demat account, Is it possible?
Hi Anil,
As per my knowledge, It is possible only after taking the approval from RBI.
Suppose a NRI goes back to India and he has some fixed deposits which are going to be matured after 10 years. If the total interest earned from those deposits are subject to tax ? If yes then from which year onwards the income becomes taxable ?
Hi Sandeep,
As per my knowledge, interest income will be exempt until the time you will be RNOR after that it will be taxed. RNOR status can be hold for 2-3 years.
I am in oman i can able to do deposit fixed deposit in post office?
Hi Lijo,
As per my knowledge, NRI cannot invest in Post office Deposits.
Once i return to india, after how long do i have to start paying tax?
Hi Sally,
As per my knowledge, If you have any Indian income then you need to pay tax immediately after returning to India but for some foreign income, you may get relaxation till the time you hold RNOR status.
Is there a repatriation option on investment through nre account?
Hi Prasanna,
As far as I know, the NRE account is a repatriable account.
I have shifted from gulf country & have fixed deposits.
Hi Ratna,
As per my knowledge, you can continue your Nre/Nro FDs till maturity.
What is the duration I can keep RFC fixed deposit account in India?
Hi Anthony,
As per my knowledge, you can keep it till its maturity.
Hi Saeed here staying in Saudi Arabia I have opened account in HDFC NRE/NRO both with out Adhaar & PAN card now I am getting mails to provide it.., need your valued advice can I will be able to withdraw my money with out this both cards.. Regards
Hi Saeed,
It’s better to consult with the bank.
My Bank manager says” NRE FCNR FD will continue, but NRE Rupee FD will get converted as resident FD when you convert your NR account to resident account”
Hi Shekar,
As per my knowledge, you can hold your nro fd till its maturity.
If a nri who has stayed abroad for 25+ years, returns to india but has FCNR deposit maturing 2 years hence. Then is the interest on FCNR deposit taxable ?
Hey Deepak,
I would suggest you continue till maturity and interest will be exempt.
Dear Mr Deepak,
He file as RNOR & can continue to enjoy tax free status of his FCNR for 3 financial year or maturity, whichever is earlier.
Hope this clarifies.
Thanks..!!
Ranadeb
sir,
i want to know one lady age 70 had dual citizen india & USA now last two or two&half years she is in india she can do NRE tax free fix deposit in india .
Hi Mehul Shah,
As per my knowledge, only an NRI can Open an NRE taxfree deposit in India.
If she holds US passport & OCI card then yes….
if nri having saving & fixed deposit a/c in the capacity of resident, only interest income is only below Rs.50,000/- filling ITR regularly as resident status. what to do in future filling for the A.Y.2020-21,Please reply.
I returned in India from UAE last year in June and still havent converted NRE FD into either RFC a/c or normal resident FD, as per the thought process i feel its better to withdraw NRE FD and invest in safe options and then notify the Bank to convert NRE savings a/c to a normal resident a/c…what do you suggest
Hi,
Ideally, You are supposed to Inform your bank about your change of status immediately. I would suggest you do the same to avoid any penalties.
Have NRE FD Deposit. Now am resident, how to process?
Hi, just Inform your Bank about it, Nothing will happen to the FD it will Remain as it is.
Hii I want to ask that if Indian person working in Dubai for the last 8 years and have nri account .. and that money he wants to do as a fixed deposit what will be the terms and conditions. That fd amount and interest earned is taxable? After maturity? If a person returns back to India.
Hey Dipika,
Interest income will be tax-exempt in India if you qualify as a person resident outside India. You can continue them as it until maturity when you return in India.
I have US Dollars FD and I have returned to India 4 years ago. I want to maintain the FD in US Dollars. How can I do it? Please advice.
Hey Sudhir,
You can hold your existing FD till maturity.
I have an NRE SB account and can I open an NRO TDR?
Hi Atul
Yes you can.
After returning back finally in home town. shall we maintain the NRE account live for how many years?
Hey Rajendra,
You are legally not allowed to maintain NRE accounts under FEMA after return to India.
I have been an NRI for the past 20 years. I came back last March, ie March 2020. I have various NRE FDs and FCNR deposits. Do I have to convert the status of these FDs to RFC accounts? Will I be exempt from tax on the interest earned in these accounts during the next 2 years?
Hey Suresh,
Continue them till maturity.
The Interest rates mentioned for FCNR USD accounts are that accurate? it is mentioned ICIC pays 3.66/annum on FCNR USD accounts
Hi Aruna,
The interest rates vary as per the economic factors. The rates are down as of now due to corona.
Rules on NRI accounts for US Citizens living in India temporarily from 1-3 years.
Hi Bala,
I think you will get relevant information from the bank regarding this. As per my knowledge, a person who lives more than 180 days in India is not considered as an NRI.
Hello Hemant,
I will return back to India after 15 years working in the gulf. Due to Covid I might return in October. As a NRI status I’ve fixed deposits in NRE account bank which gets matured next year or in 2022. Do i need to inform the bank immediately to change the status. Will my NRE account continue till 2022. Will I get Interest free on the deposits. Do i have to file for Income Tax next year. Or Do I have to change to any other status to save the taxes. Thanks in advance!
Hey Mel Pic,
As per my knowledge, you can continue your NRE FD.
I am kumar .nre.singapore. i have sbi nre account. Nextmonth cancel my nre after i get some amount. Ex..500k.just transfer to account. After in india can i change to nre fd ? If cannot .any tax for 500k amount?
Hi Ramkumar,
As per my knowledge, if you change that amount into NRE FD, interest earn on it will be taxable.
If the NRI returns permanently to India, is nre FD amount taxable or not?
Hey Samuthiram,
As you returned in India you are required to designate the NRE account as resident and the interest income earned on the same will be taxable in India.
If my visa cancelled after staying in a foreign country for 14 years, what should I do my NRE account in India. How to convert as RNOR account and avail tax exempt of interest earned from NRE account?
Hi Farook,
As soon as you back to India, you must intimate the bank where you opened the account to redesignate.
How long can we wait to inform the bank of your NRI status as it could be I might go back to a foreign country?
Hey Michael
As soon as you can.
If the deposit is for 10 years but returned within 3 years. What to do the deposits?
Hey Mahendran,
Hold it tii maturity.
Dear Mr. Hemant
I am nri with more than 25 years, now planning to come and settle in mumbai for good. Please advise if I should contact financial adviser or CA for my future planning on tax savings. If you could also give me their charges
Hi Michael,
It depends on your requirement if taxation is the only issue CA is the right person. If you are looking for complete financial solution – you can consult a financial planner.
What will be the status of the long-term NRE fixed deposit upon return to India?
You can continue your deposit and there is no need for premature closure.
To understand how the interest will be taxed scroll up to my previous commentary
When I come to India what happens to my NRI account. The amount in that account will be taxable?
Please read my comments on NRE and FCNR interest by scrolling above
I become an Australian citizen 5 years ago, moved to India with OCI permanently, what will be my status, nre or nro What happened to my new FD?
Please do not confuse citizenship status with tax residene status.
Every tax resident in India, regardless of citizenship, is taxable on their global income as well as Indian income.
As a resident OCI your Indian income will be taxed like any other resident.
I am an NRI and have few NRI fixed deposits in India. Now I am planning to resign and settle in India permanently. For how many months these deposits will continue NRI status so that I do not need to pay any income tax on their interest.
Hey,
It will continue till the maturity
what happens to my NRE FD once I return to India? is this automatically converted to a resident account?
Hey Basil,
No, it will not automatically converted you will have to inform your bank about your resident status once the FD Mature.
If I put some cash for FD in my NRE account, then after the maturity period that interest and cash will come to my same NRE account or to the NRO account on the same bank.
Hey Nithin,
Yes, interest will come to respective account.
I returned to India in Apr 2019 will my NRE FD continue and I do not want in foreign FD.
Hey Manish,
Continue it till Maturity.
Both me and my son (adult) are NRIs and we have separate NRE accounts in Nationalised Banks in India. I want to transfer money from my account to my son’s account. Is there an upper limit for such transaction? Whether any taxes are involved in such transaction?
Hi Mani,
There is no limit on the amount you transfer. But the interest earned from that will be taxable outside the India.
I intend to transfer money from my NRE account to my son’s account who also holds an NRE account in Nationalised Bank. Are there any restrictions on maximum amount. Are there any tax involved
Hey Mani,
As per my knowledge no restrictions on the limit.
Interest will be taxable outside the India.
After returning back to India whatever maturity of NRE deposits is there..will be still tax-free?
Hey Sudha,
Yes this will be taxfree.
What is the interest rate of savings NRI a/c?
Hi Sathyanandan,
As per my knowledge the minimum interest rate on NRE account is 3.50%.And it differs from bank to bank.
If an NRI returns back to India, he will become RNOR initially if the criteria of 7 PY is applied. However, after one year, he will not qualify for RNOR status. Is that correct?
Assuming for an NRI returning back to India, If the NRE deposit matures in less than a year from arrival in India, will the interest be taxable for a person who returns back in say June 2020? Let’s assume that the NRE deposits are maturing during October 2020 till March 2021. So for AY 2020-2021, will the assessee be liable to pay tax on the interest accrued on deposits maturing after June 2020?
Hey Usha,
As per my knowledge you will not be liable to pay tax on interest.
when I back to India NRE account FD amount what can I do?
Hey Dhivakar,
Continue it till maturity.
I had NRE FD in a bank and changed my status from NRE to a resident in July 2019. Am I required to tax on the interest earned from NRE fd for 2019 – 20?
Hey Arvind,
No you are not liable to pay tax.
Is it? i think it is wrong
I am NRI and I have FD what will happen if I come back for permanent.
Hey Yaspal,
Continue it till maturity.
I am a Canadian citizen and trying to settle back in India. I landed on March 10, 2020, and don’t intend to return unless required. I want to understand the process of navigating the NRI status and it’s redesignation which may not be beneficial at this point. All I have is nre account savings and no fd yet.
i returned back to india on 20 feb.2020 for good. I have money in the bank maturing in september 2023. upon maturity how can I transefer this money into my indian account.
Hey Salvador,
FD gets liquidated and the bank transfers proceeds to saving account.
Do I need to submit yearly my KYC documents for the renewal of NRI?
Hey Nibin,
It is not mandatory to submit this on yearly basis.
What happens to NRE FD (TDS) after the person returns to India?
Hey Dhirendra,
You can continue it till maturity.
Till what time period can I maintain nre deposit after I become a resident.
Hi Nikhil,
As per my knowledge you can maintain it till maturity.
Can I use my NRE account in India?
Hey Kartik,
Yes but its good if you re-designated your account after returning in India.
I want to transfer my foreign earning to India.
Hey Nitin,
Yes you can.
Sir, your posts are very much useful. Thank you!
if I have no intention to go back to abroad and no other foreign income is there, will it be helpful to convert NRE FD’s to RFC account?
RNOR qualification: will it counted the days visited to india as vacation in between in calculations.
Note: 30days before I came to India
Hey Ganesan,
As per my knowledge its good if you continue your NRE FD’s till maturity.
No it will not countable in calculation.
I am a gulf returnee, Senior Citizen. What will happen to my NRE account and FD?
Hey Abdul,
You can continue your FD till maturity and your NRE saving account will be re-designated as a resident rupee account.
After I lose my NRI status, what should I do with my NRE INR account balance? Is the balance eligible for interest exemption under RNOR status even after redesign action as a resident account?
Hey Kamal,
As per my knowledge your interest earn thereon becomes taxable.
Can an NRE FD started in “x” bank be transferred as an NRE FD in another “y” bank. Just to diversify the asset as don’t want to park all asset in one bank and the bank suddenly goes kaput like the PNB / YES bank
Hi Vikram,
I can understand your concern but FDs can’t be transferred.
NRE FD is not taxable till maturity even after the person returns back to India?
Hi Bhupesh,
Even on returning to India, if his/her residential status is NRI for a particular financial year, the interest income on NRI-FD is taxfree.
My NRI account is blocked for KYC.
Hey Amarnath,
In this regard, you are required to undergo for the re-KYC and submit relevant documents for the same.
If an NRI is deceased, what does happen to his NRI Fd? And nre accounts in India?
Hey Rohit
Bank will transfer the same to the nominee as per its policy and regulation.
I am staying in Dubai for the last 30 years, I have NRI FD and SB account, If I return back, I have to pay tax?
Hello
I plan to return India now in May 2020 and worked abroad for about 28 years. Now can i keep NRE FD now for 3 years and get the tax free interests? I will be retiring so do not plan to take up any employment again. (Bank was pushing that put the NRE FD before coming here so you get the tax free interest till its maturity !! so is this correct?
Hey Bhupesh Mehta,
Yes it is correct you will get tax free interest till its maturity
These FD are not in FC they are Indian Rs FD so pls confirm still it is not taxable till maturity
What is the best investment scheme in India for NRI?
Hey Ujjal,
You will get the knowledge of best investment from the below link.
https://www.wisenri.com/nri-investment-options-in-india/
Upon return to India permanently how will my NRI FD which were invested when I was NRI be treated.
Do I have to pay income tax on my NRE fixed deposit till the time I am RNOR?
Hey Deb,
No, you don’t have to pay tax on interest till the maturity of your NRE fd.
Hi . I have NRI account and FD’s on same account and interests earned on Those Fds are More than 2.5 Lakhs , do I need to File IT return.
Hello Experts
I am NRI stayed for about 30 years outside (in UAE mainly) and will be retiring in April-May 2020 sometime forever to India.
What i studied is for retiring we need monthly fixed income and for that following options are better or NRE FD keeping for 5 years is better ?
1. SCSS – upto 15 lacs (senior citizen saving scheme)
2. POMIS upto 9.5 Lacs (with spouse)
3. Government Bond Saving – 10 years Interest is 7.75
above all are taxable incomes.
With FDs rates going down is it worth keeping NRE FD more or the above options ?
Once i return my NRE FD which gives quarterly interest so this tax will be taxable ? if yes then why is it called NRE FD ? if not then if i keep money just before entering india for 10 years will these interests will be tax free ?
I came back to India from abroad permanently. I made some NRE deposits for 5 years. Since I back do I have to break my fds or I can continue it till maturity. What will be tax implications?
Hey Manmeet,
You should continue it till maturity as the interest from the fd would be taxfree.
What will happen to my NRE account after returning to India?
Hey shrey,
You must re-designate your NRE bank account to an RFC account. Interest on NRE and FCNR accounts is Exempt in the hands of NRI. However once the individual becomes a ROR, interest on the RFC accounts taxable.
Was an NRI till 25th Jan….now retired and have returned to India…have FDs that mature early 2021….can I open a savings account or should I break all the FDs prematurely and then open a savings account.
you can break your FD but then you might have to pay penalty for it the interest will also go down by some percent.
You can also open a savings account as well, you have both the options.
I was NRI till 31st March 2019 since Aug 2016 and from this year as on 31st March 2020, I will be Resident Indian but still working for an overseas company and getting earnings from there. I have NRE and NRO both accounts. How to proceed further now from this financial year.
Hey Anil
You must inform your bank about the changes in your residential status. Whatever account you have that must be re-designated as a resident rupee account.
Hello,
One of my friend is planning to go back to India. He is planning to go for long term NRE FDs while he is an existing NRI. Let’s say, he is planning to go back to India in 2021, and thus he is planning to invest funds as NRE FDs for 10 years (Longest Possible Tenure) in 2020. In this way, the interest earned from 2021 until 2030 will be tax free for him, even if he is staying in India from 2021. Logic he has that he will create these FDs while he is a NRI.
Can I know if his plan is correct? When he is an Indian Resident (from 2021 onwards), the interests earned from the FDs (10 years) he created in 2020 will still be non taxable?
Kindly looking forward towards your feedback. Thanks!
– Abhishek.
what is the taxability of NRE deposit both principle and interest NRE FD NRE RD NRE Saving? is there any exemption period or will it be immediately taxed.
hi mr. paul
There is no tax in nre fd
My wife was also working in foreign and we had one bank account in foreign as joint account with my name being first one. Both her income and mine were deposited here into this one account.
In the same periods we had NRE account in Indian banks also as a joint account. We made FDR also as a joint names.
Now the FDR made in India is from income of both of us earned in foreign. When we eventually return back to India, how will interest income be treated.
1. will be treated fully as my income, even though it has contribution from my wife also?
2. can I convert few FDR into wife name after we return to India – will it be allowed and not viewed as gift or clubbing
3. ideally I would like to be viewed me and my wife as separate entity and want to file 2 returns with few income from interest shared between us – is it possible
Hi Ganesh,
It will be treated as a separate income. You should make sure that you keep information handy related to foreign income or bank transactions – if required by IT department in the future.
Coming to your specific questions:
1. No – it’s your wife’s income.
2. Yes, you can convert few FDR into your wife’s name.
3. Yes – you should file 2 separate ITRs.
I am an Irish citizen of Indian origin holding an OCI but have been resident in India for the last 3 years I opened an NRE and NRO accounts what happens to my FDs opened in my NRE account 3years ago
You can break them by giving Penalty Or continue them till the maturity.
I am returning NRI and want to intimate my bank about my change of status. I have FCNR maturing end Jan and Feb.Will these are converted to INR on maturity and liable for tax?
No, they won’t be liable for tax on maturity. Your FCNR can be converted into an RFC account as well.
Hi Hemant,
I am returning to India in March 2020,after a long stay of 27 years abroad. I have read a lot about RNOR in your articles & some other articles also. I am still not clear about INR NRE FDRs, can I keep my FDRs as it is & avail tax exemption like NRI or I have to break these & convert them to USD or Pound Sterling to put them in RFC to avail tax exemption under RNOR. Please clarify.
you can keep your FD as it is but the interest won’t be tax-free, to avail tax exemption you will have to convert them to RFC FD and you can keep them till your status remains as RNOR.
Whether NRE FD interest is taxable after becoming RNOR
No, the FD won’t be taxable after becoming RNOR FD
If I held my foreign investments in FCNR for 2 years. What are my options at maturity?
After maturity, you can invest your money as per your choice.
I was staying out of India from 02/2008 to 06/2018. Would I be an RNOR?
yes you would be an RNOR and you can hold it till 2021as per my knowledge
I was staying out of india since 02/2008 to 06/2018. Would i be a RNOR?
I have replied to your query in the previous comment
I WAS NRI, MORE THAN 12 YEARS. TILL WHEN CAN MAKE NRI STATUS IN INDIA
when you come back your status will be considered as an RNOR and since you have stayed abroad for 12 years you can continue your RNOR status for 2-3 years.
I am posted in the Democratic Republic of Congo for a year on United Nations Mission, I have an NRE account in India, I will complete my tenure in September 2020…what happens to my FD after that…will it remain tax-free
No, it will not remain tax-free after returning to India, you will have to pay tax on interest
If in Resident foreign currency account, a NRE FD matures then can it be reinvested as NRE FD till the RNOR status is maintained?
I have an nre account and am using fed mobile for my transaction. My question is, there is an option to deposit my money as FD. So if I select the category option for nre- cash certificate -compound interest. What does it mean?
I m having NRE fixed deposit in dollar & pound and returned to India 10yrs back what would impact on FCNR FD.
I want to know about what does it mean for NRE cash certificate -compound interest.
since you will receive interest on the cash certificates Compound interest will help in increasing the amount of the deposit by the power of compounding
i came to india mid 2016 and opened an nre account to which i repatriated some money. I have since been mainly resident in india but am still an irish citizen and hold an oci card when do i have to start paying tax on my nre fds
How long i can maintain my NRE account status after i return to india.I have NRE accts in SBI?
after coming back to India as per FEMA you will have to inform your bank about your residency status and your nre FD will be redesignated as resident account
I am working in UAE for the last 23 years and had been to india for short vacations wanted to know when i return back for good how long can i keep my NRI status and enjoy the tax free benefits
after coming back to India you cannot continue your NRI status however you will be considered as an RNOR which also has some tax benefits
Just lost my job abroad and back to india. Until when I can keep the NRI account status.
It depends on the days you stayed in India in the financial year, and as per my knowledge, you might be considered as RNOR.
If an NRI invested in a 10 year NRE FD with an Indian Bank in 2015 and expected to mature in 2025, and has permanently returned to India in 2018, can he legal. hold his NRI Saving Bank account till 2025 so that the maturity amount could be transferred into that account
Hi Conrad
Yes, it can be held until it’s maturity.
after returning india is my account balance in nre account taxable
Hello Sunil, the amount in your nre account won’t be taxable if you hold an RNOR status and if you do not hold an RNOR status then the amount would be taxable.
I was NRI for 10 out of 10 previous years and did not more than 729 days in the previous 7 years. But from last year 2018-19 I am RNOR status for 3 years. I am still keeping my savings abroad. I like to keep it there. How long can I keep there and do repatriation to india?I was NRI for 10 out of 10 previous years and did not more than 729 days in the previous 7 years. But from last year 2018-19 I am RNOR status for 3 years. I am still keeping my savings abroad. I like to keep it there. How long can I keep there and do repatriation to india?
Stayed outside India for years & Income earned outside India was brought & invested in MF & FD in HDFC Bank in India & status was NRI so No taxable. Now next year stay in India is > 180 days so residential status is Resident, so whether old invested amount of MF & FD interest will be taxable in next year
I just returned to a India after spending more then 10 yrs as a nri. I am going to change my residency status to bank and what will happen to my NRE fd which is less then 1 yr old
If i retire outside india, will my interest on FD’s be taxable
It depends on whether you have an NRO FD or NRE FD.
The interest on NRE FD is taxfree.
I moved to India an year back from US. Now I want to transfer my funds to Indian bank in INR. I don’t have NRE account. In this case, can I just transfer it to my savings account in India
when nre account redesignated to the resident account the total balance held will be taxed?
Hi Deeba,
Once the NRE account is converted to Resident Savings account, interest earned thereon becomes taxable.
how long i can keep nre fd in same nre satus after becoming resident
Hi Suresh,
It can be continued till maturity but it will be taxable as if considered to be resident fd.
I am Prabhakar, still, I doubt on the nre fd, can those be in the same status, until maturity even after SB nre is concerted into ordinarily account, some fds are for 10 years. I am a senior citizen now
Once I return back and become RNOR (2 0 3years), will interest earned on NRE FD IN INDIAN RS. is taxable If yes, then only I can convert to RFC account
Hi Sandesh,
Yes, Once you attain RNOR status, interest earned on NRE fd is taxable.
I have about 10 nre FD accounts in India and in case I return back to India from abroad( i was in UAE for 10 years), can I still enjoy tax-free status on these
Hi Santhosh,
You can earn tax-free interest until you attain RNOR status.
Can you answer in simple terms. If one bcomes RNOR (2-3 years), will interest on NRE FD in Indian Rs. is taxable and if so, then only he has to convert to RFC?
Hi. Sandy,
You can earn taxfree interest until you attain RNOR status.
Once you attain RNOR status then you have to convert the NRE deposit in RFC and you can continue till its maturity with taxable returns.
Can an NRI after becoming resident gift to NRI relatives by depositing in their NRE account in India? . How about Fixed Deposits of NRI which opened before becoming resident ,is it still trated as non taxable and be given to NRI relatives by remitting to their NRE account maintained in India?
I have operated a resident savings bank account as NRI. Now I realise it was a mistake. What’s way forward? Do I inform the RBI or IT about it and how do I transfer money from the account to NRO account? Is this fema violation and do I have to go to RBI for compounding of contravention.
What happens to NRE FD when a bank fail like PMC
NRIs returning India after RNOR status of 2 to 3 years, what will be the status of the principal amount in RFC accounts or FDs? Is the principal FD amount is taxable?
Hi. Royce,
Only the interest part will be taxable.
I am NRI since last 25 Years and now i m coming back to India where my status will be resident.What will be the status of interest earned on my FCNR account and NRE FD which i already have with me
Hi. Raju,
FCNR and NRE deposits need to be converted into RFC deposits and you can earn interest on them until maturity but that interest would be taxable.
I have a query regarding RNOR, I am an NRI for more thanpast 10 years and have been in India for about 100 days in past 7 years, If I return back to India on 30 Nov 2019, I will be an NRI for AY 2020-21. I will be in India for 365 days in FY 2020-21 and also FY 2021- 22. How is my Status be for these 2 AY years – RNOR or no. Please give reasons
Hi. Sunil,
You can check https://www.wisenri.com/rnor-status/
Hi sir… My query is that I had opened an nri account wit 3 people in it as either or anyone of the survivor mode of operation
The first holder being my dad(he has expired), second my mom n thirdly myself
The bank people are saying tat since am already in India for more than 182 days in this financial year I have to transfer that nri AC to residential savings account…so tat my fds need not be withdrew prematurely… But the issue is tat since the primarily holder was my dad…they are telling tat I will have to close the account n fds also n transfer to our residents savings account
Doing so I will have to go through lots of losses due to premature closures(2017-2021 are the due dates of all fds)
Pls advice
Hi Abhishek
You need to close it down if you planned to stay in India for good
What should be done to NRI account once after return to India after 9 years in UAE.
Hi. Abhishek,
You have to close that account and all your NRE deposits will convert into RFC deposits.
An NRI for 25 years returning to India having USD FCNrs/NRE Rs Deposits and NRE bank account.1 What should be done with NRE InRs FD’s? Can they be retained til maturity? Is interest taxable of tax-free for 2-3 years?
Hi Niraj,
Yes, it can be continued till maturity, but it will be taxable as if considered to be residental Fds.
After living 8 years and six month in abroad I just came back to India. Please guide me how I will approach to bank for my nre account and nre fixed deposit account
Hi, Anarendra
You must contact senior management of a particular bank, give details of yours fds you want to continue as NRE Fds till maturity
What will happen to NRE and NRO FD if return to India.Can I continue to the Fd till maturity?
Dear Avirush
Yes, you can.
I am NRI for last 14 years and planing to back home then what will be status of my NRE fds
Hi,Chandrakant
If your intentions to stay in India for good, then the status of NRE fds will be converted into residential fds, and continued till maturity.
i am nre holder have deposits it will get matured in 2023 now i am retired in this my deposits status will remain nre till maturity
Dear Guilbert,
Status will be converted in general fds, but you can hold it till maturity
I am working in foreign ship. For last 15 years I have been maintaining my NRI status by working abroad for 185 days in each year. Is there any benefit if I not maintain my NRI status particularly this financial year 2019-2020 due to some domestic requirements.
can I keep my FCNR account after my return to India
Dear Rohit,
Yes, you can.
Hi Hemant,
I had a doubt, as an example if I have several NRE FDs, prior to returning to India, if I break all of them and convert them to a single 10 year NRE FD and then return to India, I would be a RNOR for 2 – 3 years and after that a Resident. What will be the tax status of interest earned on these NRE FDs?
If I understand right, existing NRE FD need not be broken/withdrawn/converted until maturity, so this could be a solution for retiring NRIs to save tax for atleast 10 years?
Regards,
Prashant
NRE FD, on return to India : The advice given to me by several accountants / auditors is:
1. The NRE account should be converted to Resident account within a “reasonable time” (no body is able to clarify how much is “reasonable” 1 month?, 2 months? 3 months?…)
2. The NRE FD should be converted to “Resident” FD and can be done at the at the contracted interest rate and the maturity date.
3. The interest on the said FD will be taxable when the tax status of the individual for the financial year in question changes from NRI to RNOR / Resident.
This aspect of income tax on interests from NRE FD’s on individual’s return to India:
1. Banks are not aware / you don’t get a clear response / it is not their look out.
2. They let you continue the NRE FD as NRE FD till maturity, after which they expect you to notify them of your change in Tax Status.
3. Several accountants / auditors are of the view that the said interest on the FD’s continues to be free of income tax (like for FCNR’s) till the maturity of the (NRE)FD.
Hi Rajan,
Thanks for sharing your views.. Yes, most bankers & even CA don’t have any idea about NRI issues.
what is the best way to transfer fixed deposit from india to NRE account. am yet to open nre account
Hello Hemant.
Thanks for the information you shared here.
I am an OCI card holder and citizen of Australia.
If I wish to come to India say for 5 years when do I become a Indian resident for tax purpose ?
Hi Digvijay,
You will be a resident for tax purpose when you will stay in India for 182 days in any financial year.
I want to know: Is gift from a NRI to his brother’s HUF taxable?
Hi Vikas,
In India, there will be no tax upto 50000 (above that HUF may have to pay tax) – not sure how it will be treated outside India where your brother is staying.
i have an nre account in which i have been remitting money while i was employed in the foreign country. but now I am not employed and now I am in my husbands visa but with residential status. so what has to be done to my nre account and fds
Hi Anitha,
Sorry but not very clear about your question. If your status is still NRI (weather you are working or not) you can continue NRE account.
How much amount can we put in saving account Tax-free
Hi Wasiq
Interest earned on NRE account is tax-free.
i am opening an NRO/ NRE account but the Fixed deposit doesnt mature until 2022
HI Shyam
Your resident FD will be converted into NRO FD and the tax implications would be same as resident FD.
An nri returning to India after 20 years, is his nre fd interest taxable as long as he is an rnor?
Hi Mohan,
Yes, the interest will be taxed from the day you arrived in India.
I have my NRI account and I came in india permanently I want to know that till how many years my NRI account is active
Hi Ajay,
In my viewpoint, NRI account is active till you have RNOR status.
after being an NRI for 14 years, I returned back to India 2 months ago. I am now signing up for a new financial service and I would like to know what should I declare as my resident status since I have only been in India for 90 days. Also, Do I need to update mu KYC status?
Hi Animesh,
According to FEMA if you don’t have any plans to go back – you are resident Indian.
I was an nri for 37 years and i have some FD which will nature in 2023. Also what will happen the money remaining in my nre account
Hi Purushu,
Its depend on your residential status, if you returning in India, the interest will be taxed from day one otherwise it is exempt.
After return to India, are NRE FDs taxed after the two year period
Hi Regina,
Yes, the interest will be taxed from the day you arrived in India.
I have some FD’s in my NRE account and i dont have any income in India. They deduct approx 31% tax from the interest earned. Can i get a refund if i file ITR at the year end. I am Canadian.
Hi Gurvin,
Consult with your CA.
NRE FD Interest are tax exempted after having RNOR Status?
Hi Mathew,
As per FEMA, RNOR will also be a resident. Therefore interest will be taxable.
I have some NRE FDs which are tax exempted. Now returned to India…can I continue availing tax exemption till the maturity of FDs?
Hi Ramesh,
Interest will be taxed from the day you arrived in India.
how will i be taxed if i renew my fd along with my principal amount + compound interest?
I have nre fds and FCNR fds what happens if I return to India for good
Hi Naresh,
Your NRE FD will be taxable from the day you arrived in India.
And interest income earned from deposits maintained in an FCNR account is exempt from tax up to such period you are a non-resident or RNOR in India
The SBI interest certificate provides me interest paid and accrued both.my ca say as I in between my status changed my nrefds should be converted to normal fd. As I know I can continue till maturity. And ca say my interest income is taxable including both paid and accrued . But as they are nre fds y interest certificate shown paid includes accrued also .please clarify me
Dear Mr. Hemant,
I have stayed in India continuously one year as of Sept 2019 after more than twenty years worked abroad. Now I have decided to continue to stay in India in future. I have NRE SB account in union bank of india, which has my life time entire saving. Kindly please advise me the necessary steps , so that I can protect my money in NRE SB account.
Is there any chances of loosing any money.
Kind regards,
Sanil
Hi Sanil,
You are not allowed to continue your NRE account after returning to India for good.
It is not clear, one side you are saying Nri can keep NRE fds till matuarity in Nre account even if return to India and later you are saying NRI upon return must convert Nre fd to Resident fds….?
Also pls advise my Nre fds will be taxable if I return to India and do not earn RNOR STATUS.
Hi Amit,
Sorry if I confused you.. You can continue NRE FDs (so assuming you locked higher interest rates a few years back – you can get that till maturity) but their status should be converted to Resident. Hope this clarify your first question.
Even if your status is RNOR interest will be taxed from the day you arrived in India.
Hemant sir… Can u pls clarify one more thing along with this…. My income will b taxable from day i arrived in India OR after completing 182 days in a financial year…. Pls clarify this … Thanks n regards
I will be returning to India in Oct 2019. I have few FDs (tax free) which have different maturity periods. If I convert them into Resident FDs i have to pay 30% tax on them, right ? In this scenario, please let me know which is the best option to save maximum tax on interests earned ? Any other stable investment ideas which can compensate the tax loss ??? Thanks in advance for your kind advice.
i am relocating to india and i have NRE deposits.. do i have to pay tax for the interest earned for the NRE deposits
Hi Manohar,
Interest will be taxed from the day you arrived in India.
As I am NRI and after some time i will return to INDIA, then what will be with my NRE FD
Hi Raman,
Interest will be taxed from the day you arrived in India.
What happens to NRE FDs that are maturing few years after planned return back permanently
Hi Rajnish
The same would be converted into Resident Fds and you need to pay tax on them.
I am going to settle in India. My some of nre fixed deposits are going to mature n 2022 and some of.in 2027. Is interest receive from such FDRs are taxable?
Hi. Deelip
Yes, Tax would be implied on the same.
I have left gulf country i have nre account so pls guide how will i continue that account
Hi Jayesh
You need to convert them into resident account by the time you decide to reside in India permanently
I have an NRE account now i am a resident of india i wanted to know whether interest from such FD is taxable?
Hi Kamal,
Yes, the interest will be taxable.
What if I stayed in USA for 8 months and going back to India? I need to open NRE/NRO account?
Hi Vijay
I believe temporary stays are not required to open these accounts.
Hi,
My question is how the taxable interest will be calculated. Because if It is FD then i will receive all Interest at the end of the tenure. Let say, at the time of Resident Status my FD gets matured after 10 years. Do I need to pay tax on whole 10 years interest or only interest accrued in that year?
Thank you.
Hi Raj,
while filing IT return, you can consider 1 year accrued return & pay tax on that.
Will I need to pay tax on NRE FD interest when I return to lndia
Hi Kulkarni Ji,
Yes, you have to pay tax.
i returned to india in april 2018 and keeping my account in nre account, interest from these accounts are taxable in f y 18-19
Hi Bobby,
Yes, it will be taxable in FY 18-19
I returned from abroad as NRI, for good on Jan 15, 2017. Now, up to which date, my NRE FD interests can be considered as non-taxable? Thanks
Hi Nathan
I believe , by the time you declare that you are planning to reside in India for good.
I was NRI since jan1989. Return to India in ur 2013/14 then NRI sept2015till may 2016 again I HV assignment in sept2019. Should I report my bank asset in foreign ac
Hi Pushp,
Not very clear about your issue.. please talk to a CA.
Asked our bank if our NRE and NRO fd s can continue without breaking till maturiry if we become residents? We already pay taxes on NRO fd s. And we are ready to start paying taxes on NRE fd s when we return to India. We just do not want to break our FD s for conversion. But bank said we have to break them, pay penalty for premature breaking and make fresh FDs at lower interest rate. Can you help?
Dear Ratna,
Ask your banker to give this in writing.
Regarding my fixed depoist in nre account.. after returning from abroad this fixed deposit interest is taxable,?
Hi Arun,
If you have RNOR status than your NRE FD interest is taxable.
Do I have to pay income tax on interest earned on NRI deposits after returning to India?
Hi Baptist,
Interest income is tax-free until your residential status is NRI.On becoming a resident , interest is taxable.
Kindly let me know income tax implication on a 5 year NRE FD, if Residential status of the depositor changes from NRE to Resident Indian even before maturity of the FD
Hi Kumar,
On becoming a resident , interest is taxable.
I am an nri for 15 years, but now living in india since from 15 dec 18. Not sure what is my nri status now. I am planning to go back abroad again this year or next year. Till then how wll be my nri fds in the bank will be treated?
Hi Sanjeeb,
Recently you have NRI status. So interest income is tax-free till your residential status is NRI.
I have done FD in union bank in NRE account .Is that amount is taxable after maturity
Hi Anup,
Interest income is tax-free until your residential status is NRI.On becoming a resident , interest is taxable.
want to know more about NRE account
Hi Ravi
The article covered almost all the points related to NRE FD, if you still have any specific one, you are free to ask here.
I understand that an NRE is a person who has gone out of India (a) for or taking up employment outside India or (b)for a business or vocation outside India or (c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period.
My background is:-
1. I have been living in the Gulf region for more than 15 years and visited India less than 50 days on annual leave every year, in the past.
2. I am retiring and going back to India on 25.07.2019. ( Thus, in FY 2019-20, I will be an NRE for 115 days and RNOR for 250 days). I will be RNOR in FY2020-21 also but not thereafter. All my NRE deposits will be taxable from FY2021-22 onwards
These are my questions:- (1) Can I extend my NRE status in 2019-20 by visiting a nearby country for 250 days by taking advantage of the NRE status provision “for any other purpose with an uncertain period of stay”
2. Also, Can I take advantage of the same provision and retain my NRE status in the subsequent years by visiting Canada for 183 days, every year.( I have a visit visa for Canada valid for 5 years. 6 month’s duration for each entry)
Consult with a financial planner.
All you need to maintain NRI status is to be OUTSIDE INDIA for more than 183 days. You could be ANYWHERE.
Only issue will be your Bank asking for Residence address. So give your relative or friend address in Canada since you won’t be having valid Residence Visa stamped on your passport while exiting your Gulf Country.
can i add name of NRI son in nre fds
Hi Sheetal,
Yes, you can.
I have stayed in India for more than 180 days in FY 18-19 and have income from nre deposits .I was an nri since 1992 till I returned in 2018.Do I have to pay tax on the interest on nre Fds If yes can I pay on annual accrual basis on deposits that mature after 5 or 10 years.Thanks Shiva Prasad.
Hi Shiva,
Interest income is tax-free until your residential status is NRI – On becoming a resident , interest is taxable.
Currently aI Iam in UK m going back to my home country permanently next month can I open fcnr now
Hi Yug,
Yes, you can.
I am a NRI but on 27th of April, I returned to India on my retirement after 35 years of service abroad. I have NRE saving accounts. When I have to inform to the banks and how and when the Tax will commence on my earnings as interest on the NRE FDs?
Hi Raj,
You have to inform bank within a reasonable period of time ( the time is not defined but we assume up to 3 months)
Dear Raj,
I am also in same situation , i returned 8 months ago after nearly 20 years and i have my money in NRE SB accounts. If you got the procedures can you please let me know also.
I recently returned to India after living abroad for 15 years. I have a NRE account with NRE FDs (in INR). When I approached the bank about status change, they said that they will close the NRE account and open a new resident saving account.
Since some of my NRE FDs are less than 1 year old, bank said that they will break the FDs without giving any interest and start new FDs with the same principal amount for the remaining duration in the new savings account.
Can I continue my NRE account as I will be in RNOR status for 3 years? Is the bank correct on not giving interest on FDs. Looks like I am getting penalized for moving back to India.
Hi Manoj,
No interest payable if deposit prematurely closed within 1 year.
Yes, you can continue the FD till maturity but as a regular resident FD, not NRE FD.
Hi Armaan…can u also pls specify since Manoj will fall under RNOR STATUS so will the interest income be taxable
Interest is taxable ONLY as a Resident Indian status. During NRI & RNOR status the interest on NRE FDs is NOT taxable.
Dear Dr Santosh,
Thanks for helping other readers with your detailed replies.
Can you share any source on this “During NRI & RNOR status the interest on NRE FDs is NOT taxable.” our understanding is it will be taxable even in the case or RNOR.
Dear Dr Santosh,
Could you please provide a backup for your statement that interest on NRE FDs are non-taxable during RNOR status.
Please scroll up and refer to my earlier comment where I have explained that NRE is exempt only for the 1 previous year after ones FEMA status has from NR to R.
FCNR is exempt for 2 preceding NOR years before the year when ones IT status has changed from NOR to R
Sir I heard only FCNR deposit will not be taxable with RNOR but NRE FD with RNOR status is taxable. CAN YOU RECONFIRM PLS.
Hi I was an NRI. Now we are in India for 1&12years.We had an NRE Fd. It got matured. My question is is the interest taxable.
Hi Sindhu,
Interest income is tax-free until your residential status is NRI.
Am still an NRI, I have a NRE FD, which will mature in July. My question, the full amount upon maturity along with the interest earned will be transferred to the NRE account?
Hi Victor,
Yes, the full amount upon maturity with interest will be transferred to the NRE account.
what happens to a NRE FD when an NRI returns to India.
Hi Simon,
Interest income is tax-free until your residential status is NRI or RNOR.On becoming a resident , interest is taxable.
Hi palak….in one of the above comments in reply to one of the queries an tax epert by name TANYA replied that RNOR status holders have to pay tax…but u r not mentioning that it’s not taxable
Thanks…pls reply
I stayed 8yrs in abroad and soon I will return to India can I be a RNOR
You will be considered Resident but Not Ordinarily Resident in a year – if you satisfy one of the two conditions for a Resident –
1. If you have been an NRI in 9 out of 10 financial years preceding the year.
OR
2. You have during the 7 financial years preceding the year been in India for a period of 729 days or less.
In one part of this article you say the onus is on the NRI to inform the bank to convert his account to resident account upon his return to india.
Elsewhere it is written that an NRI can retain NRE accounts till maturity (does that mean beyond the period he is RNRO?)
Hi Surya,
You are allowed to keep these Fds till maturity but it would be treated as Resident FDs by the time you decide to reside in India, hence tax implication would be the same as resident Fds
what happens to NRE deposits after the status is changed to resident deposit?
Hi Kedar,
After the status is changed to resident deposit than the Interest income is taxable.
After NRI returns to India and has RNOR status is the interest earned on NRI Rupee deposit taxable?
Hi Niraj,
Interest earned on NRE deposit is taxable if you have RNOR status.
Within what time frame should a returning NRI intimate his bank about his changed status from NRI to Resident?
Hi Pradeep,
You have to inform bank with a reasonable time period. (exact time limit is not defined).
Hi Hemant,
Could you pls clarify on one doubt as I am not sure.
I have a NRE FD which i just made a few months back. As per the bank, no interest is paid if NRE FD is broken before a year (there’s no pro-ration based on the actual duration the FD is held).
Now I will be returning to India in a few months. My NRE FD will not complete the tenure of 1 year. As per your article and my research, I cannot hold a NRE FD the moment i return to India permanently
1.) After my return to India, Can I still hold the NRE FD till maturity but pay tax on the earned interest. I think I will be in RNOR status for a year. But even if I am in ROR or Resident status, I dont mind and will file taxes. But is this legal (i.e. holding NRE FD but paying taxes as per the tax filing status
2.) OR do I need to immediately convert my NRE FD to resident FD on return. If this is the case, I would immediately convert break my NRE FD and lose a few months of interest instead of breaking it after I go to India and losing an entire year of interest
Pls advice
Hi Rohan,
Yes, No interest payable if deposit prematurely closed within 1 year
It is your responsibility to inform the bank of your change in residential status. It is possible that some bank may inform you that you can continue NRE FD until maturity whereas others may require to close the NRE FDs.
If you continue the NRE FD, the interest on NRE FD would become taxable from the day of your return as you are legally not allowed to maintain NRE accounts under FEMA after return to India.
Hello Hemant,
I would like to know whether the rules are similar for OCI card holder and NRI
does my nri Fd remain non taxable after I return to India after 12yesrs
Hi Shri,
Interest income is tax-free until your residential status is NRI.
In matters of tax one must ask a tax adviser to quote the relevant official publication. Indian IT Act Sec 10(15)(iv)(fa) is quoted below:
It states that exemption for NR person or NOR person is allowed (of interest paid) on foreign currency deposits. If this is the same section under which a bank exempts NRE interest while the account holder enjoys NR status then it is reasonable to assume the phrase “foreign currency” deposits also includes “foreign exchange” deposits. Under FEMA, NRE deposits are referred to as “convertible foreign exchange”.
(fa) by a scheduled bank to a Non-Resident or to a person who is Not Ordinarily Resident within the meaning of sub-section (6) of section 6 on deposits in foreign currency where the acceptance of such deposits by the bank is approved by the Reserve Bank of India.
Explanation.—For the purposes of this item, the expression “scheduled bank” means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but does not include a co-operative bank;
Hi Rau,
Thanks for sharing.
Hi Hemant,
Sec 10(15)(iv)(fa) seems to deal only with foreign currency deposits of NR and NOR individuals. A strict interpretation of this would be FCNR deposits which are denominated in foreign currency.
It is Sec 10(4)(ii) that deals with exemption of NRE interest of persons resident outside India
Sec 10 (4) (ii) in the case of an individual, any income by way of interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India in accordance with the Foreign Exchange Management Act, 1999 (42 of 1999), and the rules made thereunder :
Provided that such individual is a person resident outside India (i.e. a Non-Resident under IT Act)
The FEMA definition of a person resident in India generally covers a person residing in India for more than 182 days during the preceding Financial Year. (understand that reference is made to the preceding FY which is the year preceding the “Previous Year” (Sec. 3) i.e. the year in which income is earned.).
Under FEMA the definition of resident excludes a person coming to or returning to India otherwise than
– for employment or business or profession
OR
– for other purpose in circumstances that suggest he intends to stay for an uncertain period (indefinite period ?)
The above double negative implies a person coming for employment,business,profession is a resident from the very day they arrive.
Similarly a person coming for any other purpose (e.g non OCI tourist or retired Indian) in circumstances that suggest an intent to stay in India for an uncertain (indefinite) period would also be FEMA resident assuming they have crossed the 182 day threshold.
Conclusion:
An IT NOR individual may not claim exemption of NRE interest under Sec 10(4)(ii) beyond one Financial year following the preceding Financial Year in which he was a FEMA NR.
An IT NOR individual may claim exemption of FCNR interest under Sec. 10(15)(iv)(fa) for the years in which he enjoys IT NOR status
Hi Rau,
Thanks for sharing.
I am an Indian citizen. I was working outside India for 27 years and after retirement, returned to India in Jan 2018. For FY 2018-19, I filed my returns as NRI, having stayed in India for less than 182 days.
From 01 Apr 2019, my status is RNOR. A few of my NRE FD’s are still continuing. Based on item 1 as stated under conclusion, can I (as RNOR) get exemption from income tax for the NRE A/C and NRE FDs for FY 2019-20 (one more year)? Thank you.
Hi Sundar,
This is based on an arguable interpretation but you have to pay tax from 1st April 2019 on these FDs.
I was NRI for past 30 years. I returned to India on 25 Dec, 2019. For A/Y 2018/19, I stayed outside India for more than 180 days. I got my dues from my foreign employer in Nov/Dec 2018 which I have invested in NRE FDs & FCNR which mature in Oct/Nov, 2019. I have small balance in NRE account. I wish to inform my Bank about my change of status. Please guide me.
Hi Ramesh,
You have to inform the bank about your changing status with a reasonable time period. (exact time period is not defined)
real question is; can my NRE (INR) FDs accounts be 1. redesignated as RFC accounts (am still RNOR) so these funda are avilable for convertion later if need be for overseas use; 2. & or can the NRE a/c INR be exchanged to FCNR (say $) and or 3. continue as FD but redeposited as RFC (INR) as is, so as to enable me to utilize, if need be later, for overseas use??
RFC is Resident Foreign Curreny.
So answers to your questions are as follows –
NRE FDs which are in INR will stay as NRE FD till maturity. You will have to convert INR amount at maturity into say US$ (at prevailing Bank rate) IF you wish to keep the funds as RFC FD (same interest rates as FCNRs) or RFC Savings account (almost negligible interest rate).
FCNR & RFC are ONLY IN FOREIGN CURRENCY AND FULLY REPARTRIABLE.
Dear Sir,
I have seen the following comment:”Will the FD in NRE be considered as domestic FD in a bank if I relinquish my NRI status?”
Is it that the each bank will have its own rule or is there any guidelines or circular by RBI regarding NRE FD of returned NRI?
Hi Subramanian
Once you become resident you have to inform the banks in India and they will change the status of the account as domestic.
Is nri time deposit is taxable in India
Hi Rem,
It depends in which type of account you are holding time deposit
Like in NRE , NRO etc.
After long 27 years working abroad I have returned back to India on 9 Feb, 2019. I have saving in NRE a d FCNR deposits. Being NRI the interest was tax free in India. I want to maintain the FCNR as it is for my children higher edication at USA. What is the most efficient way to restucture my investments.
Hi Bija,
Consult with your financial planner.
If your status is now Resident Indian, then I suggest you convert your FCNR FDs AT MATURITY into RFC FDs. You will get same interest rate as for FCNR and all the funds remain Tax free AND repatriable for your kids’ education abroad. You can also keep some amount out of the FCNR Maturity as RFC savings account just in case you need to convert some funds into INR for expenses in India. But such RFC Savings account interest is almost nothing & tax free too.
I also suggest you invest some amount from NRE FD into Mutual Funds. Now after the Indian Govt has implemented DDT (Dividend Distribution Tax) on MFs, the dividend amount you get credited into your Resident Savings account is Tax Free which you can use for your monthly expenses. You will surely get minimum 8% p.a. amount as dividends. Longer you keep the MFs the higher dividends you will get. Discuss with your Financial Advisor for advice on current best Mutual Funds.
Went to ICICI today. Had 3 NRE FDs with them all opened in the last 6 months. They said I have to close them and open new FD. Since none of them completed 1 year, lost all the interest till today. 🙁
Dear Manoj,
Sorry to hear that but you should talk to higher authorities in the bank.
I have done FD in my NRE account. What will happen if I return to India. till when I can continue NRE FD? Is interest on NRE FD will be tax free after return
Hi PS,
After returning to india you can hold NRE FD till maturity but that means it’s status will be same, it will be considered NRE FD.
Taxability depends upon your residential status.If you become resident then interest would be taxable
Looking at current scenario is it better to keep money in fcnr or nre fd as rupee might slight further
Dear Niket,
You said “rupee might slight further” – it’s similar to timing the equity market… I will suggest you read this
https://www.wisenri.com/best-time-to-send-money-to-india/
Still confused about the future of nre fd held by an nri returnee with local banks
Need a straight answer by someone whether the interest earned is taxable if the holder have rnor status
Why rfc or fcnr account is different from nre fd
? Fcnr foreign currency denominated and nre fd although it is in rupees it is repatriable means it’s backed by a foreign currency
Banks in india deduct tax once you inform them that you are back for the nre fds.
Therefore if anybody in this forum knows about the sections in tax law supporting the the argument
Not to pay tax for nre fds till
The expiry of rnor status please share it.it will be of good use to many of the returned indians.
Thank you
Hi Abraham,
Interest earned in FCNR is exempt if the holder has RNOR status. (NRE FD it’s taxable.)
The basic difference in FCNR & NRE FD –
1. You can open NRE account as Saving account or Fixed deposit, but FCNR is always a fixed deposit account.
2. Your money remains in Indian currency in NRE account but it remains as foreign currency in FCNR account.
3.NRE account is always in INR but FCNR account can be in JPY, USD, CAD, AUD, SGD, JPY or CHF.
4. The interest rate on FCNR account is lower than NRE account generally, depending upon which foreign currency you open the account.
5. You can withdraw money from NRE account anytime, but you cannot break FCNR fixed deposit before completion or maturity.
Agreed mr.abraham same query but no proper reply from anyone
Agree, I am also struggling to get a response from many expert on this and the double taxation. Bank also making it very difficult for returning NRI and mostly suggest to break the FD.
NRI return to India FD account status how
Dear John,
Can you clarify your question
After matured the NRE FD, and become a resident, need to pay tax for the interest from the deposit.
Hi Benoy,
Interest Income is tax free till your residential status is NRI or in RNOR convert that to RFC.On becoming resident, interest is taxable
i want to know after becoming resident indian from NRI status, do I need to break FDs of NRE account?
Hi Ravindra,
You don’t have to break – you can continue.
How is that possible i.e. to continue with NRE FD ? You had said before that NRE accounts are to be converted into Resident Accounts. Bank will have to close NRE FDs in such cases in their System (GL) and open new Resident FDs with same interest rate and maturity ?
Hi Shekhar,
Yes, you can hold NRE FD till maturity.
After that, you have the option to convert in a resident account.
So If the maturity of NRE FD is say – 3 years – from the day I become resident Indian. Then the NRE FD will continue for another 3 years. What about the tax on interest for this 3 years- would we it be taxable?
Dear Hemant,
This article is one of the great resource of information on NRI topic!
In such case for example an NRE FD was booked for 5 years tenure. Person was NRI 1st year (staying overseas), RNOR for next 3 years (after his permanent return). He didn’t break the FD and this continued till its maturity.
So the interest earned on these FDs for first 4 years not taxed and then from the 5th year (since when he converted his account to Resident) the interest will taxed as per the slab.
Is this correct understanding and do banks take care of this? Or they will deduct tax on interest for whole 5 years as Resident?
Another question : NRI returned India and became resident while continued to hold a Savings account overseas keeping fund on which tax was already paid overseas (this is not an income overseas after he became resident). In future when he remit these funds to India will that be considered taxable?
Thanks,
Deep
Best bank for nri’s with good customer service and fd rates
Hi Pramod,
You can check ICICI OR SBI bank
Bank of Baroda
I got this message from my Bank:
Taxability in India is dependent on whether an individual qualifies as an Ordinary Indian Resident (ROR), Not Ordinarily Resident (NOR) or Non-Resident (NRI). An ROR is liable to tax on his global income, while a NOR and NRI is liable to tax on the income ‘earned’ in India. NRI benefits are available to a person till the time he holds the NRI status in India; a person loses his NRI status in the same year when he returns to India or within 2-3 years from the date of arrival to India, depending on the number of days of stay in India (explained below).
Foreign exchange and overseas assets (such as bank accounts, stocks/securities, life insurance policies, loans, company deposits, debentures, bonds etc.) acquired/held/owned by NRI while he was abroad can be continued to be so held and owned even after the NRI returns to India for permanent settlement. Such foreign exchange and overseas assets can accumulate or accrue income outside India and the balances can be utilized for reinvestment or repatriated to India at any time (without attracting Wealth tax in India) within 1 year immediately preceding the date of his return or later.
This exemption period is limited to 7 successive years which immediately follow the year in which the NRI permanently returns to India.
Immovable property
NRIs can continue to hold immovable properties outside India. Such properties can be rented out and rentals can be credited to overseas bank accounts. The properties can be sold and the sale proceeds credited to overseas bank accounts. Expenses relating to such properties, such as maintenance, insurance premium etc. can be paid out of the overseas balances.
Thanks for sharing..
Much useful info, one comment on tax bit:
Instead of 5-year Tax saving deposit, one may choose ELSS (tax-saving mutual fund) which is locked up for only 3 years, and offers greater chances of appreciation, and increased tax efficiency. With ELSS only 10% long-term capital gain tax is to be paid; in case of bank FDs, the interest is to be shown every year in your tax papers, and tax is to be paid according to your slab. With NRO account, bank will deduct higher TDS. Even if you owe no tax, to recover your money (interest amount) more paper work (15H, or filing tax forms to get refund) needs to carried out, which is an avoidable head-ache.
Thanks Seetharama Ji – your inputs are always valuable 🙂
Really very useful tips. I had these queries as I am planning to return to India and even our RM from banks could not provide satisfactory replies to my queries and all my queries infact answered in above post.
Especially RFC account and RNOR status are first time information to me.
So, I can continue to avail tax free income even after returning to India by converting NRE FD to RFC account after maturity!
Suppose if my NRE FD matures after 3 years of my return, can I still transfer that money to RFC and avail the benefit!
Dear Yogesh,
Thanks for appreciating 🙂
Regarding your query – interest income on NRE FD will be taxfree in India till the date your status is NRI or in RNOR you can convert that to RFC.
Hi Hemant,
thanks for addressing this important topic.Is NRE FD even possible once someone becomes RNOR? Or one has to convert it into RFC?
Hi Ashutosh,
RNOR is a tax residency status.
You can have a NRE FD or FCNR FD only if you are a person resident outside India under FEMA.
A person who has returned to India for employent becomes a person resident in India under FEMA immediately on return.
After that he can only open a RFC account that is designated in foreign currency.
Interest on RFC is tax free..
My bank has said NRE FD account can continue till its maturity after that will become an normal resident deposit.
Hi Venkitaraman,
Thanks for sharing. Few banks tell their customers to take a premature withdrawal they have some technical issues..
I have come back to India after 9 years and this year I qualify for a resident but not ordinarily resident. Next year, I’ll again go abroad and be a NRI. Do I need to convert my NRE fds (which are maturing this year)into resident foreign currency accounts or should I reinvest as NRE FD?
Dear Mr Riaz,
As RNOR, you can continue to enjoy tax free status of your existing deposit held in foreign currency ( like in FCNR).
In case you are holding the funds in INR ( like in NRE FD), your interest earning will become taxable as per individual slabs, in-spite of you being RNOR.
Hope this clarifies.
Thanks…