How to Report Foreign Accounts in the Indian ITR?

Resident Indians must mandatorily disclose all foreign accounts, assets, and income in Schedule FA of ITR-2 or ITR-3, even if the account has a zero balance or is inactive. Details required include account number, peak balance, and interest earned (reported in Rs.). Failure to report attracts severe penalties up to Rs. 10 lakh under the Black Money Act.

What are the FEMA Penalties for Non-Compliance?

Contravention penalties of up to 3x the amount involved or up to Rs. 2 lakh (whichever is higher). Additionally penalty of up to Rs. 5000 per day for ongoing violations after the first day. The Enforcement Directorate (ED) handles adjudication, which may involve the confiscation of property or assets. While primarily civil, willful default can lead to imprisonment for up to 5 years. Common violations include failing to re-designate NRE/NRO accounts post-residency.

NRI Returning to India

How to Manage Foreign Bank Accounts When Moving Back to India?

By Manish Prajapat |Last Updated: February 21, 2026

How to Manage Foreign Bank Accounts When Moving Back to India?

As an NRI, you may have various bank accounts in India, including NRO (Non-Resident Ordinary), NRE (Non-Resident External), and FCNR (Foreign Currency Non-Resident). When you plan to move back to India, you must either convert or close these accounts as mandated by the Reserve Bank of India (RBI). FCNR deposits can be held until maturity, and foreign accounts can be maintained if permitted by the host country, but Indian tax implications apply.

Moreover, incorrect updates or slow changes in your account statuses, as well as failure to comply with RBI and tax regulations, could lead to penalties, frozen funds, and tax complications. In this blog, we will discuss more about what all NRI needs to do after returning to India and how they can manage their foreign bank accounts after this transition.

Manish Prajapat(Tax Expert)

Mr Manish is a financial professional with over 10 years of experience in strategic financial planning, performance analysis, and compliance across different sectors, including Agriculture, Pharma, Manufacturing, & Oil and Gas. Mr Prajapati has a knack for managing financial accounts, driving business growth by optimizing cost efficiency and regulatory compliance. Additionally, he has expertise in developing financial models, preparing detailed cash flow statements, and closing the balance sheets.

Frequently Asked Questions

A person is considered a 'Person Resident in India' if they stay in India for more ≥ 182 days in FY for employment, business, or any other purposes, indicating the ≥ 182 day intent. Unlike Income Tax residency (economic ties), FEMA mainly focuses on the duration and purpose of stay and notifies immediately upon return.

You must notify all Indian banks holding NRI accounts (NRE/NRO/FCNR/demat/insurance) within 30 days of residency change. RBI provides a 90-day grace for resdesignation. Use registered post/email for proof.

You must convert the NRE account to a resident foreign currency (RFC) account (retains USD/EUR principal + interest and is fully repatriable) or domestic rupee savings/FD within 90 days. After conversion, the interest is subject to taxation at slab rates.

Upon returning to India permanently, Non-Resident Ordinary (NRO) accounts are re-designated as resident savings accounts (non-repatriable). While FCNR can be converted into an RFC account or a Resident Rupee Fixed Deposit. Balances can be transferred seamlessly, and no forced closure, but credits post-90 days violate the rules of FEMA.

Yes, Indian residents can continue to use foreign bank accounts opened while they were non-residents (or inherited). Additionally, no new accounts can be opened without specific RBI approval. There are no repatriation restrictions from abroad to India. However, mandatory disclosres is required in the ITR under Schedule FA if the peak balance is more than Rs. 50,000.

How to Manage Foreign Bank Accounts When Moving Back to India?

Frequently Asked Questions

When Does an NRI Become a Resident Under FEMA Rules?

What is the Notification Timeline for Banks and Authorities?

What Happens to NRE Accounts Upon Becoming a Resident?

What are the NRO and FCNR Account Conversion Rules?

Can Residents Continue Using Foreign Bank Accounts?

How to Manage Foreign Bank Accounts When Moving Back to India?

Frequently Asked Questions

When Does an NRI Become a Resident Under FEMA Rules?

What is the Notification Timeline for Banks and Authorities?

What Happens to NRE Accounts Upon Becoming a Resident?

What are the NRO and FCNR Account Conversion Rules?

Can Residents Continue Using Foreign Bank Accounts?