Returning NRI Tax Checklist: 90 Days Before and After Moving

Returning to India permanently, but you haven't thought about the NRI return-to-India checklist? Confused? Moving back to India as an NRI is not just a relocation. This requires proper financial, administrative, and tax planning. Once you return to India, your tax obligations change significantly.

Also, within 1 month of your return, you need to inform banks of the residency change, convert your NRI accounts to RFC, disclose foreign assets in Schedule FA, and more.

Want to know more about the returning NRI tax checklist and how it helps you relocate to India smoothly? Then you are in the right place. This blog provides complete information for the 90 days before and after moving to India. Read on to get all the details.

Quick Overview

The table below showcases a quick overview of the 90 days before and after moving to India:

Now, let's review the 90-day returning NRI tax checklist before moving to India. 

90–60 Days Before Moving: Check Your Tax Residency and Return Date

Start your checklist by determining your tax residency in India as per your return date. Your tax residency depends on how many days you stay in India during a financial year. For each financial year, India determines residential status separately, and the year runs from 1 April to 31 March. As a result, your residential status may depend on your return date.

• Non-Resident Indian (NRI)
• Resident but Not Ordinarily Resident (RNOR)
• Resident and Ordinarily Resident (ROR)

However, do not assume that once you return to India, you will receive RNOR status automatically for a fixed period. Eligibility for RNOR status depends on your current-year and past-year stays. 

Prepare your travel record containing:

• Arrival and departure dates from India
• Number of days you spend in India during each financial year
• Copies of passport pages and immigration records
• Your residential status in India in past financial years
• Planned return date

Once you prepare your travel record, check whether shifting your return date affects your residential status and tax obligations in India.

For instance, if you plan to return to India in December, it may increase the number of days you spend during the financial year (April to March). Depending on your previous travel history, it may change your residential status and tax obligations in India. Also, don't choose a return date to reduce your taxes in India. You also need to consider other factors as well:

• Exit-tax rules
• Foreign country tax residency
• Property sale timelines
• Employer settlement dates
• Family and immigration requirements
• Vesting of employee stock

Tax Status Under FEMA

Apart from Indian income tax law, you also need to consider your residential status in India under the Foreign Exchange Management Act (FEMA). This matters because your FEMA residential status affects your bank accounts, foreign exchange transactions, and investments. In simple terms, it is different from your tax status under Indian income tax law. 

Quick Actions to Take

You need to complete the following actions:

• Determine the days you spend in India
• Year-wise, prepare a travel history
• Check whether you qualify as RNOR or not
• Check your return date with pending foreign income and transactions
• Separately determine your residential status under FEMA and income tax law
• Avoid making any major transaction before checking your tax position in both countries

This was all about the 90-day before returning NRI tax checklist. This checklist will also help in tax planning for returning NRIs. Moving ahead, let's know what to do 60-30 days before moving to India.

60–30 Days Before Moving: Review Foreign Income, Assets, and Pensions

The next step towards the NRI return to India checklist is to prepare a list of all your foreign-earned income and assets. First, make a list of your foreign income containing:

• Salary, bonus, or final employment payments
• Dividends
• Foreign bank interest
• Overseas rental income
• Employee stock compensation
• Business or freelance income
• Capital gains
• Pension and retirement distributions

Maintain proper records of every amount you will receive, or that arises. This is because a late transfer of previously earned foreign income in India is not treated the same way as receiving it for the first time.

After that, list the assets you held in the foreign country, such as:

• Employer stock plans
• Foreign bank accounts
• Shares, ETFs and mutual funds
• Overseas property
• Brokerage and investment accounts
• Foreign pension accounts
• Trust or signing authority arrangements, where applicable
• Interests in foreign partnerships or companies

Further, mention the purchase date, original price, bank statements, reinvested distributions, and foreign taxes paid for each of your foreign investments and assets. These records may be needed when calculating capital gains or foreign asset reporting in India. 

If You Are Selling a Foreign Asset

If you are selling a foreign asset before returning to India, compare the following things:

• Your tax obligation in the foreign country
• Possible Indian tax
• DTAA relief 
• Foreign tax credit
• Currency conversion
• Long-term investment goals

No law requires NRIs to sell their foreign assets or investments before returning to India. It depends on their choice and preferences. Also, report any pension or retirement account you held outside India separately. With that in mind, before withdrawing from a 401(k), IRA, or other overseas pension account, check the tax obligations you face in both countries. Know that holding an RNOR status does not prevent you from paying taxes on your pension income.

Also, contact your foreign bank and investment platforms to confirm whether they allow you to keep your accounts after a change in residential status. This is because some foreign investment accounts let you keep your existing account but restrict you from opening a new one.

Quick Actions to Take

Take the following actions:

• Prepare a list of all your foreign assets and income.
• Download the purchase and cost records of all your foreign assets
• Check for pending investment or property sales
• Review your retirement and pension accounts
• Confirm whether you can continue to hold your foreign financial and investment accounts
• Before making a major transaction, compare your tax obligations in both countries

Now that you know the 60-day financial checklist for returning NRIs, let's cover the 30-day final checklist for NRIs returning to India. 

Final 30 Days Before Moving: Collect Tax and Financial Documents

In your financial checklist for returning NRIs, focus on documentation. This is one of the most essential parts of planning your return to India, so plan accordingly. It becomes difficult to recover your bank statements and residential status once you close your foreign contact number. To avoid this hassle, download all your important documents before moving to India. It includes:

• Foreign tax returns
• Salary statements
• Tax assessments and notices
• Final employer settlement
• Withholding statements
• Foreign tax-payment certificates
• Bank statements
• Brokerage and capital gains report
• Property purchase and capital improvement documents
• Pension contribution and withdrawal records
• Rental income and expense records
• Mortgage statements
• Insurance policies
• Business or freelance invoices
• Employee stock-plan statements
• Tax residency certificates, where relevant

Also check whether you use your foreign contact number for two-factor authentication on your online account. If so, update your online accounts before canceling the number.

In Case You Are Leaving Your Job Abroad

Before leaving your job abroad, gather the following information:

• Final salary date
• Unused leave payment
• Bonus eligibility
• Stock vesting or exercise deadlines
• Gratuity or end-of-service benefit
• Tax withholding on the final settlement
• Pension contribution statement

Keep copies of these documents in a secure online platform. Additionally, arrange them by country, financial year, and income. Also update your email address. Do not close your foreign bank account automatically before returning to India. Check whether you can keep them open even after your residential status changes, whether they are useful financially, and whether it is practical to retain them. 

Quick Actions to Take

Further, take the following actions:

• Download foreign tax returns and assessments
• Save investment cost and transaction records
• Collect proof of your paid taxes
• Update mobile numbers and recover access
• Obtain your final employment and pension statements
• Keep your documents country- and financial-year-wise
• Confirm whether you can access your foreign bank and brokerage accounts in the future, also after your residential status change

So these are the things to do before moving back to India. Now, moving ahead, here's what you should do in the first 30 days after you return to India. 

First 30 Days After Returning: Update Bank Accounts and KYC

Your returning NRI tax checklist doesn't end after you move to India. Once you have permanently shifted here, contact your Indian banks and financial institutions about your return and change in residential status.

Do not wait to become an ROR under Indian income tax law to update your bank accounts. As mentioned earlier, banking treatments follow FEMA regulations, which you need to assess separately. Considering this, request your bank to review your:

• NRE account
• NRO account
• FCNR deposits
• NRE fixed deposits
• Resident savings accounts
• Eligibility for an RFC account

Under FEMA, once an NRI returns to India permanently, they can no longer hold NRE and NRO accounts. In this case, you have two options: convert your NRE and NRO accounts to a resident foreign currency (RFC) account or close them. An RFC account allows you to retain your permitted funds held in NRE and NRO accounts in foreign currency. Additionally, you can hold your FCNR deposits till their maturity date. 

The correct treatment of your NRE and NRO account depends on the account type and RBI regulations. For a better idea, it is advisable to confirm with your authorized dealer bank. You can also visit the Reserve Bank of India website to verify the applicable foreign exchange and deposit rules. Apart from this, also notify your permanent return in India to:

• Stockbrokers
• Mutual fund houses
• Pension administrators
• Depository participants
• Banks holding deposits or loans
• Insurance companies

Additionally, update your KYC details like:

• Tax residency
• Country of residence
• Residential address
• Bank mandate
• FATCA/CRS declaration
• Mobile number and email address
• Nominee information

NRI Portfolio Investment

If you hold an NRI portfolio investment or trading arrangement, ask your Indian broker what is required for account conversion as a resident. You also need to update your residential status in your Indian investment portfolio.

Quick Actions to Take

You can take the following actions:

• Contact your Indian banks and financial institutions and notify them about your permanent return to India.
• Ask them for account-wise NRE and NRO account conversion.
• Check whether holding an RFC account is a good option.
• Update your FATCA, KYC, and tax residency.
• Update your residential status in mutual funds and demat account.
• Review contact and nomination details.
• Obtain written confirmation of account changes.

Do this within the first 30 days, as per your NRI returning to India checklist. Now, let's review the returning NRI tax checklist you should consider after your return. 

30–60 Days After Returning: Confirm Your Indian Tax Position

Once you update your bank details and KYC after returning to India, check your residential status in India for that financial year. As mentioned earlier, for tax purposes, India determines a person's residential status each year based on how many days they stay in the country. So do not use your previous year's residential status when filing your ITR in India. Make a simple tax position summary consisting of the following information:

If you qualify for RNOR status, check which of your foreign income is taxable in India and which is not. This is because holding this status does not exempt all your foreign income from Indian taxes. Additionally, you must pay tax on your Indian-source income.

Further, if you start a business or employment in India, review the following things:

• Salary withholding
• Advance-tax requirements
• Indian capital gains
• Business or professional income
• Rental income
• Interest on redesigned bank accounts

Start preparing for filing your first ITR in India after your return. Depending on your income source, foreign assets, capital gains, and business interests, choose your ITR form. To review your Form 26AS, taxpayer information summary, and annual information statement, visit the Income Tax Department portal.

Quick Actions to Take

Take the following actions to know your tax position in India:

• Determine your residential status
• Separately classify your foreign and Indian source income
• Check whether your foreign income is taxable in India
• Review Indian TDS and advance tax exposure
• Choose the correct ITR form as per your income type
• Review Form 26AS and AIS
• If you are not sure about your residency status in India, it is advisable to take the help of a cross-border tax expert

This is how you can confirm your tax position in India in the first year after your return. Next, let's look at the NRI moving back to India checklist for preparing ITR and reporting foreign assets. 

Final 90-Day Checklist for Returning NRIs

This is the final returning NRI tax checklist that you need to consider when filing your first ITR after returning to India. It helps you establish a reporting system you can use in the first and later years to file tax returns. Start by updating the foreign asset record that you made before your return:

• Asset name and country where you held the asset
• Asset type or account
• Ownership percentage
• Opening and closing date
• Earned income
• Paid foreign taxes
• Joint ownership or signing authority
• Maximum and closing account balance

Once you gain ROR status, you are liable to report your foreign assets in Schedule FA on your income tax return. When holding NRI or RNOR status, you are not obliged to report these in your ITR. 

Further, once you are liable to report your foreign assets after returning to India in Schedule FA, you need to mention the following assets:

• Foreign bank accounts
• Overseas shares and securities
• Foreign custodial and brokerage accounts
• Foreign property
• Foreign trusts
• Financial interest in foreign entities
• Accounts over which you hold signing authority

Even if your foreign asset is not generating income, you also need to report it in your ITR. 

Further, if you are liable to pay tax on your foreign income in India, and that income is already taxed in the source country, you can apply for DTAA relief. This prevents double taxation on the same income. To claim DTAA relief, you need the following documents:

• Foreign tax return
• Withholding certificate
• Income statement
• Tax-payment receipt
• Applicable DTAA treaty provision
• Calculation of exchange rate
• Form 67 

Becoming an Indian resident does not end your eligibility for claiming DTAA relief. It is still available if you are liable to pay tax on the same income in two countries, i.e., one is the source country and the other is your country of residence.

Before applying for DTAA relief, reconcile:

• Foreign income taxable in India
• Income reported in the relevant ITR
• Paid foreign taxes claimed as credit
• Bank and investment statements
• Schedule FA disclosures

Quick Actions to Take

Here is a quick list to consider when preparing your ITR and reporting your foreign assets in it:

• Update your foreign asset information that you made before your return to India
• Check whether you need to fill out Schedule FA
• Collect evidence of your paid foreign taxes
• Review whether you are eligible for DTAA relief and foreign tax credit
• Fill out Form 67, where applicable
• Check foreign income with asset disclosure
• Keep all supporting documents on hand

This was all about the foreign asset and financial checklist for returning NRIs. Moving further, let's take a quick overview of the 90-day returning NRI tax checklist in the next section. 

Final 90-Day Checklist for Returning NRIs

Here is a quick 90-day checklist for returning NRIs in India:

Consider this returning NRI tax checklist when planning to move to India permanently.

Final Thoughts

Lastly, for a smooth transfer to India, it is vital to consider both countries and their tax obligations. A returning NRI tax checklist makes this much easier to handle and manage. It helps you understand your tax residency in both countries, what to do with your foreign assets and income, and how to stay compliant with India's tax rules and regulations. 

If you are still confused and need help in planning your return to India, connect with Savetaxs. Our team of financial and cross-border tax experts will help you manage your investments and stay compliant with Indian and foreign rules and regulations. Additionally, they will assist you in choosing the correct return date, so you can get the benefit of both NRI and RNOR status for a longer period.