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Anil Rego |388 Answers |Ask -Follow

Financial Planner - Answered on Jan 28, 2021

Anil Rego is the founder of Right Horizons, a financial and wealth management firm. He has 20 years of experience in the field of personal finance.
He’s an expert in income tax and wealth management.
He has completed his CFA/MBA from the ICFAI Business School.... more

Question by Mragank on Jan 28, 2021Hindi

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I am working in UAE for the past 2.5 years.

I was in India when lockdown was announced and I was stuck in India for more than 6 months until flights were resumed. During lockdown I was employed and was getting salary per month.

My question is whether I'll be considered as NRI or not for FY 2020-21? Also, on what income I'll have to pay tax, is it on my total salary or the amount I'd transferred in India. This is when I'll not be considered as NRI.

Ans: For the year, for NRIs stuck in India, the finance ministry has made norms for determining the residency status. This is by discounting the period of stay in India due to the lockdown.

The period of stay in India due to lockdown will not be counted for determining the tax residency.

A circular to be issued excluding the period of stay of these individuals up to the date of normalization of international flight operations, for determination of the residential status for FY20-21.

The circular says that that those who have been quarantined in India on account of coronavirus on or after March 1, 2020, and departed on an evacuation flight on or before March 31 or have been unable to leave India on or before March 31, their period of stay from the beginning of the quarantine to the date of departure or March 31 will not be taken into account for determining tax residency.

You can check this circular, to verify its applicability to you.

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.

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Anil Rego |388 Answers |Ask -Follow

Financial Planner - Answered on Apr 06, 2022

Question by Prem - Apr 06, 2022Hindi

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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.

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