A Returning Indian may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such assets were acquired, held or owned by him when he was a non-resident or were inherited from a non-resident person.

• Non-Resident Ordinary (NRO) a/c : To be re-designated to Resident a/c

• Foreign Currency Non-Resident (FCNR) a/c : Permissible to hold up to maturity and then to be converted into Rupee Account or Resident Foreign Currency (RFC) a/c*

• Non-Resident External (NRE) a/c : To be re-designated to Resident a/c or balance can be transferred to RFC a/c*

• Shares & Securities: Returning India is required to inform the Depository about change of his/her residential status from non-resident to resident

*RFC a/c - Returning Indians, on becoming residents are free to open and maintain such accounts with Indian banks. The funds held in RFC a/c can be fully repatriated and also denominated in forex. Funds in RFC a/cs can be withdrawn freely for local payments in rupees.

Once they return to India for good they ought to inform the following persons about the change in their residential status:

• All bankers with whom they hold banking accounts and get it redesignated,

• Depository participant with whom they hold DEMAT accounts,

• Companies where NRIs are Shareholders / Debenture holders and firms where they are partners.

A Returning Indian is not required to report about his change in residential status to RBI. However, he is required to mention his revised status while filling his return of income.

Further, a person who is Resident as per Act is required to report his Overseas Assets in his return of income to be filed in India annually. However, he is not required to report about his overseas assets to RBI.

• The tax liability of a person returning to India would depend on the Residential Status of a person as per the Act.

• Under the Act, income earned outside India is liable to tax in India only if the person is ROR.

• A returning Indian who has been a NR as per the Act for 9 years or more or whose stay in India was less than 729 days in preceding 7 years, then generally for 2 successive years he may be considered as a RNOR.

• Interest paid by schedule banks to NRI or to a RNOR on RFC deposits is exempt from tax under the Act. The exemption, in respect of RFC account, continues till such time as the account holder continues to be a RNOR.

• Pension from NRI’s former employer after return to India may be liable to tax in India subject to provisions of the Double Taxation Avoidance Agreement between India and the country from which the NRI is receiving such amount (and was resident in).

A Returning Indian should try to come back on or after February 1 (or February 2 in case of a leap year) of a FY in order to ensure NR status in the year of return.

Returning Indians, i.e. those Indians, who were non-residents earlier, and are returning now for permanent stay, are permitted to open, hold and maintain with an Authorized Dealer in India a RFC a/c to keep their foreign currency assets. Assets held outside India at the time of return can be credited to such accounts. The funds in RFC a/c are free from all restrictions regarding utilization of foreign currency balances including any restriction on investment outside India. The facility is also available to residents provided foreign exchange to be credited to such account is received out of certain specified type of funds/accounts.It shall be noted that returning Indians are required to re-designate their NRE / FCNR a/c to Resident / RFC a/c immediately on their return to India.

Balance in RFC a/c can be utilized without any restrictions for remittance and / or investment abroad. It can also be utilized for maintenance of dependents or any other personal purposes outside India.

Interest on RFC a/c will be exempt from tax so long as returning Indian’s residential status under the Act is determined as “Non-Resident” or “RNOR”.

RBI permission is not required.

The benefit of concessional tax treatment under Chapter XIIA may continue even after NRI becomes a resident subject to conditions specified in the Act.