Your Complete Guide for Tax Rules for NRIs Returning to India

The Tax Rules for NRIs Returning to India Depend on Their Residential Status in the Country. Considering This, an NRI is Not Liable to Pay Tax on the Income He/she Earned Outside India. However, if the NRI Returning to India Gets an RNOR Status and is Eventually Converted Into Rnor, Under the Income Tax Laws, He/she is Liable to Pay Tax on Their Global Income.

No, You Do Not Need to Close Your NRE/ NRO Account After Coming Back to India. However, You Need to Redesignate These Accounts to a Resident Savings Account. Additionally, You Can Also Opt for the Transfer of Funds Into a Resident Foreign Currency (RFC) Account. Further, You Can Keep Your FCNR Accounts Till Their Maturity Date.

The Tax Implications of NRIs Returning to India Depend on Their Residential Status in the Country. Considering This, an Nri is Eligible to Claim a 30% Standard Deduction on Rental Income and Municipal Taxes Paid. Additionally, Depending on the Nature of the Capital Asset and Holding Period, Capital Gains Tax is Taxable at 12.5 % to 20% Slab Rates Plus Applicable Surcharge and Cess.

Generally, the Interest Earned on NRE Accounts is Tax-free in India After Returning to India, Till You Hold Rnor Status. Additionally, You Need to Convert Your Nre Account to a Resident Savings Account. However, Once Your Status Changes to Ror, the Interest Earned From This Account Becomes Taxable in India.

There is No Direct Penalty Imposed on NRIs in India for Not Declaring Their Nri Status. However, Under the Income Tax Act and the Foreign Exchange Management Act (Fema), Significant Legal and Financial Penalties Are Imposed on the Related Non-compliance. These Penalties Generally Came From Misrepresenting Your Residential Status for Tax Purposes in India and Failing to Convert Your NRE/ Nro Account to an Indian Savings Account.