WHEN SHOULD NRI'S CLOSE NRE-NRO-FCNR ACCOUNTS- By CA Sriram Rao 

Your understanding is wrong. FD opened when you were NOT an NRI will remain as it is. NRE FD can be opened only with the money earned from OUTSIDE India. By your logic a person with 10 Crore fund moves to Dubai and start a pan shop there, all his money will become NRE and interest earned will be tax free. He may be getting 50 to 60 lakhs per year interest and normal tax will be 15 to 20 lakhs. By your logic he can save the tax and spending half of it can live in Dubai.

Thank you very much for your kind words. Please subscribe and keep sharing the videos

I am also still looking for the answer as some individuals got stuck in india due to lockdown and lost the job of such a extended leave. What is govt saying on their residential status? It would be great help if Bhat sir Shriram Sir kindly clarify this point. Thanks again for informative video.

As far as bank accounts are concerned, situation will not differ for NRI's and OCI's...

We will do a separate video on this issue It is a major issue . Thanks for suggesting the topic

Hi Phani,did you get an answer for your above question?

I am also waiting for the above reply or video

Agree with you 200%. You never come out ahead with declining exchange rate and the tax filing and other paper work. Not worth it.

Can continue till maturity...

NRI can maintain the account in his name jointly - either or survivor basis only… cannot maintain jointly and severally

*Scenario 1: If the First applicants status changes to Resident Indian, then the account will need to be converted to Resident SB account. And the joint applicant in this account continues to be NRI, then the account mode of operation can be changed to FORMER OR SURVIVOR. * Scenario 2: if the primary Applicant continues to be a NRI, but, the joint applicant's status changes to Resident Indian, then the Customer id status of the joint applicant will need to be changed to Resident Indian status, and change the mode of operation of this NRE / NRO account / deposits to FORMER OR SURVIVOR. Hope this clarifies

If the period of stay is short then he can maintain NRE accounts... if the period of stay is long and indefinite, then better to close NRE accounts as he would be an Person Resident in India...

@@sriramrao2514 For NRIs that are US Citizens, they are always considered tax residents of USA wherever in the world they reside and for however long. So when you try to open a resident bank account in India with any bank in India, you are not allowed to open a resident bank account if you are a tax resident of any country other than India. Same happens for opening resident demat account in India. There is a lot confusion in the actual implementation of this resident/non-resident status esp. as it applies to US Citizens with OCI card who are residing in India. You are saying one thing, but the big banks (HDFC, ICICI, Axis, etc) treat this differently, and they explicitly disallow resident bank/demat accounts to NRIs with US Citizenship.

@@bhaumin I agree that there are lot of misconception around this even with bankers… FYI- opening, maintaining and closing of any kind of bank accounts are governed by FEMA regulations and not Income Tax Act… practically I have seen that even bankers are getting confused about this as then take into account residential status as per Income Tax Act rather than FEMA which is not correct way of handling things in India… It is correct that once a person becomes US Citizen, he becomes Tax resident of US, it this a provision as per US laws and it is also possible that a person being IS Citizen becomes a tax resident of India as per Income Tax act also… this position is called as Dual-residency and to solve this there are tie-breaker rules in article 4 of India-US DTAA

No , you should not hold Resident account as a NRI . Convert Resident account to NRO account and give that account number for crediting your pension

@@NRIMoneyClinic Thank you, sir. I will do, sir.

* If you're looking from a Banking point of view : Indian passport holder with a valid PR or a Canadian passport holder with a OCI, both will be eligible to open a NRE / NRE account in India. * From Indian Taxation/ filling of Income tax in India / Ascertain Resident Indian status - point of view : This will depend on the NRI, if he/she is out of India for X number of days in a FY as per income Tax of India rules to qualify as a NRI. If you're holding Indian passport with valid Canadian PR or if you're holding a Valid Canadian Passport with OCI , but if you're in india for X number of days and qualify as a Resident Indian as per Income tax rules, you'll be liable to file taxes and pay necessary taxes here in India, provided you qualify as a Resident Indian (after considering RNOR Status).

This is good question to address. It would be logical if NRI status is granted only when the person acquires foreign passport.

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money earned from Indian business including trading using money from India is taxable. You can start another trading account for NREs and using NRE fund can do trading. The profit or loss will be credited or debited to NRE account.

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If you reside in US, you must file the FBAR every year and report EVERY bank account and investments in the rest of the world. where you have a signing authority (in other words you are joint owner- NO EXCEPTIONS). This is a serious matter. Failure to do so and if caught (Indian ITO - has reporting agreements to US=IRS), can result in 50% penalty on the amount invested in India Plus other fines. You have to disclose in your returns all the income earned in India and anywhere else in the world. This is the LAW. If you are a US tax payer it is best to get rid of all investments in India which is a head ache from the point of view of filing US returns, and stay invested in US where things are a lot easy and transparent.

1. NRO/ NRE will get re-designated to resident accounts 3. Correct

These rules are made because of some reasons..especially to prevent money laundering and black money prevention.

As far as FEMA is concerned, if you are able to establish intent with documentary evidence, then you can continue to maintain NRO/NRE accounts. If stay increases for a prolonged period of time, then it is difficult to establish intent also.

Dear CA. Sriram, thanks a lot for the response and your guidance is much appreciated. Dr. Bhat and CA. Sriram are doing a marvelous job for enriching uninformed NRIs with their vast knowledge.👍👍

What IT department knows or does not know is none of our concern, we must know what is law and act accordingly. As far as residential status under FEMA is concerned, one must give priority to 'intention' of either going outside of India or coming to India rather than 'physical stay'. However, if physical stay has to be considered, then yes, under FEMA previous years stay has to be verified in order to determine residential status of this year...

That will not affect your NRE accounts .

@@NRIMoneyClinic thanks... because we didn't came here in a intention for permanent return and also our job is still there in abroad and our slary is dispersed every month there and we have salary slip from school for evey month.

Will soon do a video this topic

@@NRIMoneyClinic pls , awaiting.

Pl let me know since I have also come back to India due to pandamic n do not know when I will.l return since the situation abroad has not yet improved n also international Flights have not yet started. Pl advice?

The rules are same explained in the video for a PIO/OCI card holder

@@sriramrao2514 Thanks SR… Even if I’ve no income in India & I survive on my pension & SS? Which I’ll have to transfer every month to survive?

As explained in the video; opening, maintaining & closing of NRE/NRO/FCNR accounts are governed by FEMA regulations. As per FEMA Act, there are only 2 types of residential status one being a Person Resident in India (PRI) and another Person Resident Outside India (PROI). Only PROI can maintain NRO/NRE/FCNR accounts. If a person is PRI, then he has to close his NRO/NRE accounts and FCNR can be maintained till the date of maturity. RNOR status is given under Income Tax Act and it does not have any bearing as far as opening, maintaining and closing of NRO/NRE/FCNR accounts. Income Tax Act is concerned only about taxing your income. If you earn interest from NRE account, the same will be exempt if you are a PROI under FEMA and it will be taxable if you are PRI under FEMA irrespective of your residential status under Income Tax Act. If you earn FCNR interest the same will be exempt from tax till you are NRI or RNOR under Income Tax Act. To know more about RNOR status, you can check out these videos ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-pKQKwtwvUH4.html ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-fDF2ZsFM-cM.html

Thank you very much for your kind words . Articulation is required while pleading a case . While presenting the taxation matters , what is required is precision which the faculty has done very well. Your point is very well taken in positive spirit . Please subscribe and keep sharing the videos

Do you know that these 70 million people generated income from outside India and they have deposited the money to India. I hope you understand this. This is the reason - not that they were making money in India and not paying. Do you know that NRI TDS is 33% unlike a resident. Please do read before commenting.

This question can be better answered by your banker.

As I understand from my bankers, the NRE savings will have to be converted Resident savings account, but the NRE FDs can continue. However all the interest accumulated on NRE FDs from the time of status change are to be included in Resident taxable income and tax must be paid. On maturity, the NRE FDs will get converted to Resident FDs.

@@karthiksury1587 most of the times the bankers are ill informed. Don’t believe me, check the below link yourself, which RBI’s master direction 5R… check para 4.9 of ‘Part II - Opening, holding and maintaining accounts in India by a person resident outside India’ - therein www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10198

@@sriramrao2514 thank you. I thought it will benefit many. Hence I posted

@@karthiksury1587 thank you so much

NRE/NRO accounts must be closed/re-designated to resident accounts as soon as person comes back to India for permanent settlement /after resgining/losing job or for exercising employment/business in India. Because on the date of arrival itself, such person would become a person resident in India as per FEMA. FCNR can be held till maturity. One can check it yourself, RBI’s master direction 5R… para 4.9 of ‘Part II - Opening, holding and maintaining accounts in India by a person resident outside India’ - therein... Its entirely a misconception that NRE could be held for 6 years upon arrival... there was never such rules... As soon as returning, a person can convert NRE to RFC and continue to hold foreign currency that....

There is another video on this channel by name what happens to NRE FD when ypu return .. please watch and be guided

Sir, if a resident bank deposit holder adds his NRI daughter as second deposit holder, will it become FEMA violation? Pls reply.

First of all please understand there is no 242 days rule at all... what you are talking is from the point of view of 120 days rule which has come into force after Finance Act 2020, and this specific amendment is under Income Tax Act and Not under FEMA. Further, this 120 days rule applicable only to person visiting India and not to returning NRI's as when they are returning they are not on visit.... To know more about Residential Status under Income Tax Act & RNOR status under Income Tax Act including 120 days rules please check the below videos... ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-pKQKwtwvUH4.html ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-fDF2ZsFM-cM.html FEMA regulates opening, maintaining and closing of various types of bank accounts. Under FEMA there are only 2 status either a Person is resident in India (PRI) or person resident outside India (PROI). If one becomes PRI then he cannot maintain NRO/NRE/FCNR accounts. NRE/NRO accounts must be closed/re-designated to resident accounts as soon as person comes back to India for permanent settlement or for exercising employment/business in India. Because on the date of arrival itself, such person would become a person resident in India as per FEMA. FCNR can be held till maturity. You can check it yourself, RBI’s master direction 5R… para 4.9 of ‘Part II - Opening, holding and maintaining accounts in India by a person resident outside India’ - therein www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10198 Taxation of NRE interest depends on one’s residential status under FEMA. If a person is resident outside India as per FEMA, the NRE interest will be exempt under Income Tax Act. FCNR interest is exempt in the hands of a person who is a non-resident or RNOR under Income Tax Act. RNOR status is available only under Income Tax Act and not under FEMA. Under FEMA there are only 2 status either a Person is resident in India or person resident outside India.

As explained in the video; opening, maintaining & closing of NRE/NRO/FCNR accounts are governed by FEMA regulations. As per FEMA Act, there are only 2 types of residential status one being a Person Resident in India (PRI) and another Person Resident Outside India (PROI). Only PROI can maintain NRO/NRE/FCNR accounts. If a person is PRI, then he has to close his NRO/NRE accounts and FCNR can be maintained till the date of maturity. RNOR status is given under Income Tax Act and it does not have any bearing as far as opening, maintaining and closing of NRO/NRE/FCNR accounts. Income Tax Act is concerned only about taxing your income. If you earn interest from NRE account, the same will be exempt if you are a PROI under FEMA and it will be taxable if you are PRI under FEMA irrespective of your residential status under Income Tax Act. If you earn FCNR interest the same will be exempt from tax till you are NRI or RNOR under Income Tax Act. To know more about RNOR status, you can check out these videos ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-pKQKwtwvUH4.html ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-fDF2ZsFM-cM.html

As explained in the video; opening, maintaining & closing of NRE/NRO/FCNR accounts are governed by FEMA regulations. As per FEMA Act, there are only 2 types of residential status one being a Person Resident in India (PRI) and another Person Resident Outside India (PROI). Only PROI can maintain NRO/NRE/FCNR accounts. If a person is PRI, then he has to close his NRO/NRE accounts and FCNR can be maintained till the date of maturity. RNOR status is given under Income Tax Act and it does not have any bearing as far as opening, maintaining and closing of NRO/NRE/FCNR accounts. Income Tax Act is concerned only about taxing your income. If you earn interest from NRE account, the same will be exempt if you are a PROI under FEMA and it will be taxable if you are PRI under FEMA irrespective of your residential status under Income Tax Act. If you earn FCNR interest the same will be exempt from tax till you are NRI or RNOR under Income Tax Act. To know more about RNOR status, you can check out these videos ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-pKQKwtwvUH4.html ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-fDF2ZsFM-cM.html

@@sriramrao2514 Thanks Sriram Sir, for your detailed reply. I watched the 2 Videos on RNOR status and found them to be very informative.

Yes, it would apply provide he has bank accounts in India..

Interest on FCNR deposits will be exempt in the hands of a person who is non resident (NR) or Not Ordinarily Resident (RNOR) as per Income Tax Act. If he becomes Ordinarily Resident, then interest from FCNR will be taxable. Unlike FCNR deposits, NRE deposits can not be continued till maturity. It needs to be closed. Payment of taxes is a remedy under Income Tax only. If NRE deposits are still maintained even on becoming Resident under FEMA, it would be violation of FEMA and will attract penalty in the form of compounding fees..

NRO and NRE accounts can be maintained in the form of term deposits also. When a NRI returns to India and becomes a resident, such term deposits need not be converted into resident accounts until maturity. Forcing them to close such term deposits before maturity date will entail loss of interest to the depositor. The same way FCNR deposits can be continued till maturity date, NRO and NRE term deposits also can be maintained till maturity date. Of course, the interest earned on these deposits, while being a resident, will be taxed in terms of rules applicable to Residents.

This also a violation under FEMA. You can always approach banker and convert these accounts to NRO. If questioned from RBI through your banker via a valid notice then one might have to plead before RBI for compounding of offences after explaining their case in hand and pay the lower compounding fees rather than hefty penlaties.

No, if a OCI comes back to India for good means, he also becomes resident in India as per FEMA... hence he also cannot maintain NRE... he need to convert NRE to resident SB...

Thank you very much for your feedback. Point noted. Yours was an accurate estimate.