Bank steps to take while returning permanently to India

NRI Biz Matters

- HP Ranina

Question: I am returning to India for good before the end of this month as I am planning to take up employment with a Global Capability Centre.

Will I have to convert my NRE account into a resident account? I also have a Non-Resident (Ordinary) Account. Will I be able to remit funds from my Indian bank account to finance my children's foreign education expenses?

ANSWER: According to the rules set out in the Reserve Bank of India's Master Direction, a nonresident who returns to India for the purpose of taking up employment or starting a business or vocation would need to inform his bank where he has a Non-Resident (External) Account and/or a Non-Resident (Ordinary) Account, so that these accounts would be designated by the bank as resident accounts. The interest on the Non-Resident (External) Account which you have earned up to the date of its conversion to a resident account would be exempt from tax if you have satisfied the conditions to be classified as resident but not ordinarily resident.

You will be eligible to avail of the benefit of the Liberalised Remittance Scheme, which is applicable to all resident Indians. You can remit funds every year from your resident account up to $250,000 for meeting the expenses of your children's overseas education, their maintenance as well as for any medical expenses which you or your family may have to incur in future. This benefit can be availed every year indefinitely.