Someone rightly said “Change is the only constant in life” but few changes are really tough like the change in residential status for NRIs.
Are you an NRI who is planning to return to India? Or are you a resident Indian who will become an NRI?
Either way, there are certain steps to be taken regarding financial matters. You need to take care of your demat account, Bank account, MFs etc. to ensure that the type of account that you operate matches your residency status.
Must Read – Investment Options for NRI in India
Read – NRI new Tax Rules
Change in Residential Status
Let us look at different accounts and the action to be taken when residency status changes –
Bank Accounts
Resident Indian to NRI
NRIs cannot hold normal savings accounts in India. NRIs can open an NRE or NRO account to deposit his earnings.
An NRE account can be opened as a savings account or a term deposit account. A resident Indian can be made a joint account holder. Funds from NRE account can be transferred to NRO account. Only foreign income can be deposited in NRE accounts. Interest earned in this account is tax-free.
An NRO account can be opened as a savings account or a term deposit account. A resident Indian can be a joint account holder. Only income from India can be deposited in this account. Interest earned in this account is taxable.
NRIs have to convert their resident fixed deposits to NRO deposits.
NRIs can open FCNR accounts to have term deposits. Deposits can be made only in foreign currency. Interest and principal amounts are tax-free. Resident Indians cannot be joint holders to this account.
Process – Visit the bank branch and fill the relevant forms and submit along with identity proof related documentation, passport and visa.
NRI to Resident Indian
NRIs have to convert the NRE and NRO savings accounts to resident savings accounts. NRIs have the option to convert savings accounts to RFC accounts till the time the residency status is RNOR (Resident but not Ordinarily Resident) status.
Fixed deposits in FCNR and NRE accounts can be as-is until maturity date. They can be changed to Resident Foreign Currency (RFC) accounts after maturity.
Process – The NRI has to give a declaration to redesignate NRE/NRO account to Resident Savings account or RFC account Details like customer id, account number etc. should be filled up, signed and submitted at the local branch of the bank.
NRIs can operate resident bank a/c on ‘either or survivor’ basis. wiseNRI
Must Check this List – NRI Checklist
Demat Account
Resident Indian to NRI
NRIs have to close the demat account that they held when they were resident Indians. They have to open a new demat account or Portfolio Investment Scheme (PINS) account with a bank. They can buy and sell shares using this account. Sales proceeds can be repatriated to the NRE savings account.
An NRI can have only one PINS account.
Process – The authorised dealer and the depository participants must be informed of the status change.
Read – Myths and Facts about NRI Status
NRI to Resident Indian
NRIs cannot continue with NRI demat account when they become resident Indians. They have to open a resident demat account and transfer all existing investments to it.
While you were a resident Indian, will have to be closed and you would need to transfer the shares to an NRO demat account. You can continue to hold these shares in the NRO demat account or sell them. If you sell them, the proceeds are credited to the NRO savings account.
If you want to buy shares from the secondary market as an NRI, you would need to open a Portfolio Investment Scheme (PINS) Account with a bank. In this scheme, you can buy shares with funds in your NRE account and sale proceeds can be credited to NRE account for repatriation.
Process – The authorised dealer and the depository participants must be informed of the status change.
Mutual Funds
Resident Indian to NRI
The mutual funds can be held when resident status changes.
Process – The NRI should write a letter to individual AMCs along with proof of NRI bank accounts, KYC documents, passport, overseas address proof.
NRI to Resident Indian
The mutual fund units can be held when resident status changes.
Process – Write a letter to individual AMCs with folio no stating your change of Status from NRI to Resident individual and attach the cancelled cheques of your old NRE/NRO accounts and the new resident account.
Read – NRI Capital Gains Tax On Mutual Funds
PPF Account
Resident Indian to NRI
An NRI cannot open a PPF account. But if he had opened a PPF account when he was a resident Indian, he can hold that account till its maturity.
Process – He can invest amount in it as an NRI using funds in NRE or NRO account.
If he wants to close it, he can use the withdrawal form to do so along with attestation from the bank where the NRE/NRO account is present.
NRI to Resident Indian
Process – The NRI will have to invest money from a Resident savings account.
If he wants to close the account, he will have to fill the withdrawal form along with relevant forms.
NPS Account
Note: NPS detail is purely based on information received from an NRI – if you have some different views please share in the comment section.
Resident Indian to NRI
A Resident Indian will have to close the NPS account when his residency status changes. As an NRI, he can open another NPS account. He can have only one NPS account.
Process – There are two ways –
He can open the account through eNPS if he as an Aadhaar or PAN card. It can be done from the eNPS website.
He can download the NRI NPS form, complete it and submit it to the bank branch.
The amount will have to be remitted through the NRE/NRO account.
Check – NRI Aadhar Card
NRI to Resident Indian
NRIs have to close the NPS account that they opened as NRIs. They can open a new NPS account when they become resident Indians. The NPS account cannot be transferred when citizenship changes.
Process – There are two ways –
He can open the account through eNPS if he as an Aadhaar or PAN card. It can be done from the eNPS website.
He can download the NRI NPS form, complete it and submit it to the bank branch.
The amount will have to be remitted through the resident savings bank account.
Read – NRI Moving Back to India
Insurance
Resident Indian to NRI
A policy taken as a Resident Indian will be valid when you become an NRI. You will have to understand the claim rules and procedure for the status change. You have to inform the company about the change in residency status.
NRI to Resident Indian
NRIs can continue with their life insurance policies that have been purchased abroad. They can also continue with the policies they purchased in India as NRIs. They have to inform the company about the change in residency status.
Hope this gives you some idea about the actions that you have to take when your residential status change. If you find any discrepancy or change happened after we published – please add a comment.
If you have any question related to residential status feel free to ask.
Is interest/accrued interest on FCNR/NRE deposits taxable when one becomes Resident.
Hi Surya,
Yes, it will be taxable but if you can maintain RNOR Status – you can avoid tax. I will soon write a post on this.
Surprisingly few banks even don’t allow you to continue NRE FDs after the status change – a technical issue on their side.
One is allowed to repatriet the income earned from a NRO account. What about the initial amount at the time of conversion that was in the resident account? Can that also be repatriated? Thanks
Yes Soli – that can be done after paying taxes in India.
What if I have more than 1 savings account in India and I have opened a separate NRE/NRO account also then I have to convert my existing savings account into NRE/NRO?
Yes Priyank.. you can’t have savings account.
when can I open NRE account?
Hi Tarun,
An Indian Citizen who have gone abroad for gainful employment or for carrying on a business or vocation or for any other purpose in circumstances indicating an intention to stay outside india for uncertain duration, can open a NRE account
I moved to NRI status and I have rental income in Kerala. Can I deposit it to my joint account with my mother or to my NRO account only?
Hi Shilpi,
In my opinion, you should go with the NRO account.
If want to change status from NRI to resident status what steps to take?
Hi Surinder,
You have to inform your bank regarding changing status.
I am currently an nri since 3 years but till now using normal saving account. I have recently invested in MF (75000 INR) and Stock (150000 INR) back from 2 months. What should I do now Can I carry on with normal saving account?
Hi Santosh,
As the residential status changed, either you close your existing savings account or convert it to an NRO account.
NRIs are not permitted to invest in PPF ? and all other small savings scheme.
Hi Nagesh,
If you had opened ppf before being an NRI you can hold it till maturity. and for other small saving schemes NRI’s are not allowed to invest.
Hi Nagesh,
An NRI cannot invest in PPF, however, if one’s residential status subsequently changed to NRI, the account was allowed to be run till maturity
Hi Zoya,
Yes he or she can hold till maturity.
Can I hold India Salary account and NRE account both if I have a double tax certificate from my employer?
Hi Syed,
You can have only one type of accounts – either resident saving account or NRE & NRO accounts depending on your status.
Hello!
I have started investing in mutual fund through SIP from Resident Saving Account about few months ago. I am NRI from last 6 years. I have not open NRE or NRO Account because of I haven’t got legal status yet. What should I do? Should keep doing my investment now once I gor legal status Can I change my Account to NRE/NRO and also able to change my KYC through PAYTM Money as NRI. Please let me know I have to find information but i haven’t got anything yet.
Thanks.
Hi Hardik,
You are NRI from the last 6 years – what kind of legal status you are waiting for?
I will suggest you convert your savings account to NRO & then change Mutual Fund KYC.
What about Indian pension account maintain nro a/ c for green card holder
I have changed my residence status from resident to NRI. I have mutual fund investments in India. Can I hold them?
Hi Kiran,
Yes, you can hold those MFs but change the status with Mutual Fund Companies.
My parents made joint savings bank accounts with me while i was a resident and a minor. Now am an NRI. Does this account have to be closed ? I heard an NRI can continue to have a resident bank accont with close relatives, on “either or survivor” basis, but would like some confirmation, thank you.
HI Martes,
You can continue with this account but your mother or father should be the first holder of this account.
Hi Martes,
Firstly, you have to inform the bank about your NRI status, and as per my opinion, you can continue the account on “either or survivor” basis. For better confirmation, consult with your bank.
I have f d’s in NRE account. And got interest too. How can I repitrate It in USA?
Hi Sonal,
You can transfer through Net Banking.
How long can I delay the process of intimating the NRI status?
Hi Prabhakar,
As per FEMA, you have to inform the bank on an immediate basis.
I have opened trading and Demat account with upstox and buy some shares and once I received the statement it is showing wrong status resident instead non-resident I want to know how I can request to correct my status?
your KYC might be as Resident Indian that is why it might be showing so, you can still contact their customer service regarding it.
I want to know how long I can hold RNOR status after I return to India after 38yrs as NRI.
hi, You Can hold it for a maximum period of 3 years.
Thanks Rohit. Is there any official document ( from RBI) to support this so that I can produce the same to my local bank. Thanks once again. Sorry for the late reply🌹🌺🙏🏻
I’m already an investor in mutual funds. I want to change my resident account to NRE / NRO account. What will happen to my existing investments and SIPs?
hi, Your savings account will get changed to the NRO account. You will have to inform your mutual fund company regarding your change of status, and then you will have to update your KYC as NRI, It won’t affect the funds.
I hold funds in an offshore account as NRI. After I become resident can I continue to hold them?
I am staying in Israel for work for the last 3 yrs. If I fill the documents, what should I write in my country of residence?
Hi Anu,
The country of Residence would be Israel only.
I was staying 10-Sept-2012 to 12-June-2019 at out of India. Should I get the RNOR status?
Hi NM
To be eligible for RNOR status you need to complete at least 7 years abroad.
Sir the lack of proper guidance in even simple issues is mind numbing. I was unaware I needed to inform of change of status to bank (NRI to RESIDENT) it has been 3 years since I returned to India, can I inform now after 3 years to change my NRE account to normal resident account..I hope there will be no imprisionment or huge penalty. I want to fix this issue as a law abiding citizens.
Hi Varun,
There is can be some penalty it can be in some sort of monetary terms or they might cease the account, but you won’t have to face imprisonment.
I was an NRI. Came to India in Dec 2020 expecting to go back on another job opportunity. Now I am not planning to go back. How can I change the status from NRI?
You just need to inform your bank about it, and also update your KYC as per resident Indian.
Mr. Hemant Beniwal
Thanks for writing the articles to increase the knowledgeable of NRI’s. Your articles are very informative.
Thanks Harmeet 🙂
I am currently an NRI and would be returning to India in couple of years time. I plan to invest in ETFs here. My question is, once I return to India, can I continue to own these ETFs or I should sell them? Are there restrictions on holding foriegn assets (in this I am referring to only financial assets like ETFs or Bonds) when I return? Do i have to pay tax two times (once in the foriegn country and again in India), when I redeem the investments?
Hi Sunil,
As per my knowledge, you can hold foreign assets while you return to India. However, it is preferable to open an RFC account for the same while you return to India. For taxation purpose, you have to check DTAA Between the countries.
Dear Anand, thanks for your reply and the hint of RFC account! Really appreciate your promt response.
What happens to my savings account in india after I become an nri ?
Hi Priyanka,
You need to inform the bank about the residential status change and can convert it to the NRO account.
I registered few companies in India and my residency status has changed from Indian Resident to NRI what do I need to do and how will it effect me?
I inherited a property in India . I am in US. How do I transfer sale proceed to US ? Any limit on amount ?
After working 23 years in the Gulf, i have returned. If I change my NRE account to resident, my NRE FD is taxable even though i am not coming under taxable limit?
Hi Sankar,
As per my Knowledge Yes it is taxable after returning to India, Deduction under Section 80TTB up to ₹50,000 may be claimed on the interest income from FDs only if an individual qualifies as a resident senior citizen (60 years or more) in India.
I was NRI in UAE for past 7 yrs and returned to India on 1 Aug 2020. Thus only 4 months out of India. If I can go to UK for 2 months on visit visa, can I retain NRI status for this F/Y?
As per my knowledge, Your status will be considered as NRI for this year considering if your total Indian taxable income is less than 15 Lakhs.
I am already a NRI for several years now and planning to invest in MF and equity shares from my NRE account. But my KYC status is Resident Kindly guide me on how I can change my KYC status from Resident to NRI status?
Also my NRE account in India is not PIS activated Please guide me on how to get my PIS activated for my NRE account.
Thanking you in anticipation…
Dear Dr VS,
You again have to fill KYC form for modification – you will require passport & foreign address proof.
For PIS Check this
https://wisenri.com/pis-portfolio-investment-scheme-for-nri/
I came across your this wiseNRI first time I found so much of information so simply explained for the NRI Thank you so much for all the information provided here I found it very helpful indeed. Looking forward to more useful interesting information for the NRI. Thanks again!
Thanks for appreciating Dr VS – must share wiseNRI with your friends:)
When converting resident to nro, what to do with balance in resident account?
Hi Manisha,
I think, When we convert resident account to NRO accounts the balance becomes the balance of NRO account.
I was nri and have NRI deposits I have cancelled visa and not returned to India during March 2020. What to do with my nri fd accounts?
Hi Sasikumar,
You can hold it till the maturity.
Hi Hemant,
I am Ram, Staying UK For 3 Years, Last Year I opened Trading Account In India and started trading. Now I will Come to Know that I can’t do that as I am NRI. I Didn’t earn any money, went to loss only. Please Let me know what can I do, is there any penalty ?
Ram
Hi Ramesh,
There will be no penalty.
I have to convert my account to NRE/NRO and wanted to understand how it will affect my current investments?
Hi Ankit,
There will be no big impact on your investments. Now your all investment will be made through NRO or NRE account.
Can I convert my resident Demat account to an NRO non-pis account?
Hi Ramakrishna,
As per my knowledge you can’t.
I was an NRI. I have returned to India for good in September-2020. I am confused as to whether to inform the Banks to convert my NRE/NRO Accounts to Resident Saving Accounts or Resident Foreign Currency Account. I have some NRE FDs as well as maturing later.
Hi Nitin,
Yes, you have to inform your bank about the status. Continue your FD’s till maturity.
I have recently become an NRI and have a savings account in India. I have no intention to transfer money to India or vice-versa. But I use my Indian saving account to pay bills generated in India for my parents. Do I still need to open an NRE or NRO account?
Hi Rathi,
Yes you need to open an NRE or NRO account
Will there be Bank a/c numbers change with resident status?
Hi Ramesh,
No, it will remain the same.
Hi, I have investments in india and I am visiting India in March 2021 and planning to intimate all AMC’s about my status changing to NRI. My questions if I want to continue investing in india through NRE/NRO account can I still do that? Also, funds will transferred from Canada to India after I have paid taxes here, do I have to pay taxes on the capital gains that I will be making in India or Canada?
Does India have dual taxation treaty with Canada?
I also have invested in ELSS schemes in mutual funds, what options do I have? Do I have to withdraw my investment or can I hols it? I have certain units which are locked in for 3 years as I am still investing via SIP from resident savings account.
I am currently investing in mutual fund and I am planning to go to Canada for my higher studies and how will it affect my current mutual fund investment?
Hi Vishnu,
The mutual funds can be held when the resident status changes.
What to do to become a resident from NRI status.
Hi Pradeep,
According to Income Tax Act, there are certain conditions for that.
Hi,
I am planning to move out of India for a few months to a year.
My questions are
1) Can I change my accounts to NRE/NRO immediately after receiving my Residency Visa abroad or do I need to wait until I have actually lived abroad for say at least six months?
2) Also, if I change my status immediately, is any future income earned by me abroad, from that point on, not taxable in India?
3) On the other hand, if I change my status after 6 months of living abroad, will the income I’ve received before that in that particular financial year, be taxable in India?
For ease of understanding, let’s assume I’m moving out of the country on 1st of April, 2021.
Thank you.
Hi Wian,
1.) Yes, you should convert your resident saving account as soon as you become an NRI.
2.)Yes, it won’t be taxable in India.
3.) No, it won’t be taxable in India
Being an NRI income accrued or received outside India will not be taxable in India.
Hi, I am a temporary worker in Canada, I came before 1 year and my work visa will come to an end this year in August. My question is, do I need to open NRI or NRO account for investing? because I will be going back to India within 6 months from now on.
Hi Manimaran,
As per my knowledge, you need to open the NRE account for investing.
When NRI returned to India for good, how many days the NRI status remains.
Hi Royce,
Your NRI status after returning to India will be deemed as RNOR status for 2 years.
I am planning to visit my children in Canada on a visit visa for a longer period & will apply for a super visa my children are PR holder and I am dependent on them What will be my status NRE OR Resident Indian.
Hi Ravi,
It depends on the number of days you live there.
Being an NRI, when I fill-up the form for a new NPS account, how does the repatriation status of the account change the way I can move funds to and from my account?
what happens in a mutual fund account when changing resident status?
Hi Susheel,
You need to update your status in the AMC’s.
hi, I have recently become NRI. Do I need to update the same for mutual funds?
Hi Vikrant,
Yes, you need to update your status in MF too.
When I was an Indian resident I have invested in some mutual funds now I Became an NRI how to change my status
Hi Kamalakannan,
You should update your status to your registered broker or distributor.
I have an Icici super pension plan since 2008, now I am RI should I change status from NRI to RI. What are the tax implications?
Hi Beulah,
As per my knowledge, yes, you should change the status. Income will be taxable as per the slab.