Being well-versed with the law is necessary for the citizen so that, he may not get stuck into any problem or issues. For the non-resident Indians, there are many laws and orders that they always have to keep in consideration in order to precede happy life. In this article, we are going to highlight about the five most essential financial steps that are necessary for the NRI tax payers and something that they should importantly learn and also implement.
Converting Bank Accounts to NRO Account
The first step is conversion of bank accounts to Non-Resident (Ordinary) account (NRO) by submitting an application to your bank. NRO savings account functions like your regular savings account which can be used to make all legitimate rupee payments in India. You can also remit foreign earnings in this account which will be converted into Indian rupees.
Opening NRE/FCNR Account
As NRO account is a non-repatriable account, it may be advisable to open a Non Resident (External) Account (Rupee Denominated) (NRE) or Foreign Currency Non Resident (Foreign Currency Denominated) Account (FCNR) to invest your foreign earnings in India. These accounts are highly beneficial as funds held in NRE and FCNR accounts can be freely remitted outside India. Interest earnings on NRE and FCNR accounts are tax free.
Updating Joint Bank Accounts
You are permitted to hold a joint NRE bank account with a resident who is your close relative on a “former or survivor basis”, i.e. only the first holder can operate the account during his lifetime.
Safe Deposit Locker
In case your locker is not operated within the stipulated time, banks have the right to cancel the allotment of the locker and open the locker, even if the rent is paid. Thus, it would be advisable to either close the locker or add resident joint holder in the locker. Banks may also permit you to continue the locker in case of genuine reasons like you are out of India due to a transferable job etc. In such an event it is better to intimate the bank accordingly.
Updating Demat Accounts/Intimating Investee Entities
You can continue to hold your existing investments that were done before your change in residential status. However, these securities will be held on non-repatriable basis. There are further restrictions on the type of activities which can be conducted in these entities like agricultural activity or real estate business is prohibited. Thus, you need to intimate all investee entities of change in residential status.
Contact a trustworthy NRI tax service company and that could provide you with the best solution for everything. Next time you won’t get stuck to any tax law when they would be there serving you in your needs.