Need Expert Advice?Our Gurus Can Help

Samkit Maniar |118 Answers |Ask -Follow

Tax Expert - Answered on May 26, 2024

CA Samkit Maniar has eight years of experience in income tax, mergers and acquisitions and estate planning.
He has graduated from Mumbai’s N M College of Commerce and Economics and has completed his CA from The Institute of Chartered Accountants of India."... more

Asked by Anonymous - May 18, 2024Hindi

I am an NRI for the past 30 years setling back India. Returned one and half month back. What are the statutory guidelines to be followed for my 1. NRE account 2. NRE deposits 3. NRO account 4. NRO deposits. I want to put my money in fds for max duration at the current interest rates. Please advice the best way to implement.

Ans: You will need to convert your bank accounts asap by consulting with your relationship manager with the bank you have necessary accounts.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

MoneyReply

You may like to see similar questions and answers below

Anil Rego |346 Answers |Ask -Follow

Financial Planner - Answered on Apr 06, 2022

Question by Prem - Apr 06, 2022Hindi

Shall appreciate your expert advice based on the following facts: Am 59 years old & came back to India on 6th November ’20 after my stint with an MNC overseas, for 14 years & 9 months. What is going to be my status for the previous financial year viz. 2020-21 as well as current financial year i.e. 2021-22? All my overseas salary up to 5th of November ’20 were transferred to my NRE Rupee or US $ fixed deposits. I do have some small income in the form of dividend on shares, interest on ordinary rupee FDs, house rent etc. Most probably, I will not be working abroad any more. What will be the tax treatment of my NRE deposits which are going to mature in future or have been renewed after my return to India in November’20? As per my standard instructions to the banks, the same are being auto-renewed on due dates. I would like to know if there are any specific investment products other than NRE/RFC FDs, for the NRIs whose status has changed in the current fiscal year or is going to change in near future. Most all my savings are in INR only, but classified under NRE deposits.

Ans: The status of FY2020-21 would be NRI and the status in FY2021-22 would be RNOR (Resident but not ordinarily resident). So you need to convert the NRE to resident account immediately after returning to India. If you fail to convert your NRE account within 3 months of the return, it will be considered as a violation of Foreign Exchange Management Act (FEMA) and attract a penalty.

After you return to India, any interest earned on NRE account will be taxable. You can opt to transfer your funds from NRE account to RFC account upon return

Though there are no specific products for returning NRIs, there are a whole range of investment options available for you apart from Bank Deposits. The most common are mutual funds, bonds, stocks, insurance, etc. You can choose to invest based on factors that suit you including risk, return, liquidity, etc. Options like PPF that are not available for NRIs become available when your status changes to Resident Indian.

Money

Mihir Tanna |851 Answers |Ask -Follow

Tax Expert - Answered on Sep 06, 2022

Question by Vipin - Sep 06, 2022Hindi

I would be grateful if you could provide some clarifications for the given queries: 1) What will be the implications, if the primary holder aged 76 years, encashes the matured FDs? 2) Will there be any tax deduction if the matured FD amount is transferred to the bank and not withdrawn? 3) Will there be a tax deduction if the whole amount (approx 12 to 13 lakh) is withdrawn from the bank? 4) What is the cash withdrawal limit in a year without getting any tax liability? 5) Once the TDS/TCS on the Fixed Deposit is deducted at the bank, then does the bank also charge any tax for the maturity amount deposited in the bank and not withdrawn? 6) Once the TDS/TCS on the Term Deposit is deducted at the post office, then does the post office bank/savings bank also charge any tax for the maturity amount deposited in the bank and not withdrawn?

Ans: Tax is always on the income portion. So in your case, interest income will be taxable on accrual system or cash system (as chosen by you for such Income).

Usually taxpayers offer income on accrual system as per Interest Certificate issued by the bank (irrespective of the fact that interest amount will be credited to bank on maturity).

If you choose not to renew FD, the amount will be credited to your savings account and on that balance also you will earn interest as per rate of interest for savings account. Savings Interest Income is also taxable above Rs 50,000 for senior citizens.

Interest Income is taxable irrespective of the fact you withdraw amount from bank account and bank will deduct TDS on interest in deposit (not on savings interest).

Money