Returning Indian/Recent Immigration
Returning Indian (RI) – NRI Returning to India Tax and FEMA Guide
At Casela Advisors, we specialize in helping Non-Resident Indians (NRIs) navigate their financial, legal, and tax responsibilities when planning a permanent return to India. A Returning Indian (RI) may continue to hold assets and generate income both in India and abroad. It is critical to manage these financial affairs in line with the Foreign Exchange Management Act (FEMA), 1999, and the Income Tax Act, 1961 to ensure full compliance and avoid legal or financial pitfalls.
If you’re an NRI preparing to move back to India, consult our expert Chartered Accountants for NRI tax planning and cross-border compliance.
Key Aspects Every Returning NRI Should Know
1. FEMA Compliance for Returning NRIs
Returning NRIs must notify their change in residential status as soon as they decide to settle in India permanently. Although FEMA does not prescribe a strict timeline, early communication with the following is essential:
- Authorized Dealer Banks (where NRO/NRE/FCNR accounts are held)
- Depositories and Mutual Fund Houses (where investments are held)
These entities will reclassify your accounts and holdings from “Non-Resident” to “Resident” status.
2. Impact on Assets Under FEMA
A. Overseas Assets
All foreign assets—such as overseas bank accounts, real estate, stocks, insurance policies, and company investments—acquired during your NRI status can continue to be held post-return. There’s no need to liquidate or repatriate unless you choose to do so.
B. Indian Assets
| Bank Account Type | Action Required Upon Return |
|---|---|
| NRO Account | Re-designate to Resident Account |
| NRE Account | Re-designate to Resident Account or RFC Account |
| FCNR Account | Can be held till maturity; post maturity, convert to Resident or RFC Account |
Resident Foreign Currency (RFC) Account
A powerful tool for Returning Indians:
- Fully repatriable and maintained in foreign currency
- Interest income is tax-exempt under Section 10(15)(iv)(fa) while the individual holds RNOR status
- Can be used freely for domestic or overseas payments
- Can be converted back to NRE/FCNR if the person becomes a non-resident again
3. Repatriation Limits Post-Return
- As an NRI: Repatriation from NRO account is permitted up to USD 1 million per financial year
- As a Resident (RI): Repatriation allowed under Liberalized Remittance Scheme (LRS) up to USD 250,000 per year
4. Reporting to RBI – Not Required
There is no mandatory requirement for Returning Indians to report their change in residential status or to seek approval from the Reserve Bank of India (RBI) for retaining foreign assets.
Income Tax Act Compliance for Returning Indians
1. Taxability of Global Income Based on Residential Status
Your tax obligations depend on your Residential Status (RS) under the Income Tax Act:
| Status | Taxation of Foreign Income |
|---|---|
| Non-Resident (NR) | Foreign income not taxable |
| Resident but Not Ordinarily Resident (RNOR) | Foreign income not taxable, except if controlled from India |
| Resident and Ordinarily Resident (ROR) | Global income taxable in India |
Plan your return strategically to maintain NR or RNOR status and minimize global tax exposure. Our expert NRI tax consultants in India at Casela Advisors help optimize your stay days for tax efficiency.
2. Asset & Liability Reporting Requirements
A. Assets and Liabilities (AL) Schedule
- Mandatory for individuals with total income > ₹50 lakh/year
- Must disclose Indian and overseas assets and liabilities
B. Foreign Assets (FA) Schedule
- Applicable to ROR taxpayers
- Requires disclosure of all foreign-held assets, whether owned, beneficially owned, or held as beneficiary
3. Taxability of Interest Income for Returning Indians
| Account Type | Tax Treatment |
|---|---|
| RFC Account | Tax-exempt interest (while RNOR) |
| NRO Account | Interest fully taxable |
| NRE Account | Becomes taxable upon change of FEMA status to Resident |
| FCNR Account | Tax-exempt until RNOR status is retained |
Returning NRIs may consider converting NRE deposits to RFC deposits to continue enjoying tax benefits under the RNOR classification.
4. Tax on Specific Income Types
- Pensions from former overseas employers may be taxed in India, subject to DTAA provisions
- Capital Gains on overseas assets: Generally not taxed while NR or RNOR, but taxable if ROR
- Foreign Exchange Assets: Continue to enjoy concessional tax rates under sections 115C to 115I until maturity or transfer
5. Aadhar and Return Filing
- Aadhar is mandatory for Resident taxpayers
- Must be quoted in ITR if income exceeds the threshold
- Obtain Aadhar upon your return to India to comply with filing requirements
How Casela Advisors Helps Returning Indians
At Casela Advisors, we offer comprehensive services for Returning NRIs, including:
- Expert consultation from Chartered Accountants in India
- Tax planning and return filing for Returning NRIs
- FEMA compliance and account re-designation assistance
- Advisory on RFC account setup and DTAA benefits
- Full support for Foreign Asset Reporting and ITR filing
Recent Immigrant – Tax & FEMA Compliance for Indian Citizens Settling Abroad
At Casela Advisors, we assist Indian citizens planning to relocate abroad permanently with the necessary legal, tax, and FEMA-related compliance in India. A Recent Immigrant is an individual who leaves India with the intention to permanently settle in another country — whether for work, business, or personal reasons.
As a trusted NRI tax consultant and Chartered Accountant in India, we help you structure your financial, tax, and asset-related affairs so that your transition from resident to non-resident is smooth, compliant, and optimized for global tax exposure.
Who is a Recent Immigrant?
A Recent Immigrant is someone who has taken up permanent residence in a foreign country. Evidence like:
- Employment visa or work permit
- Permanent residency card (e.g., Green Card)
- Tax Residency Certificate (TRC) from the new country
- Business incorporation documents abroad
… can help establish your Non-Resident status under Income Tax Act and FEMA with Indian authorities.
FEMA Compliance for Recent Immigrants
While the Reserve Bank of India (RBI) does not mandate direct reporting of change in residential status, you are advised to intimate key financial institutions when your status changes from Resident to Non-Resident:
- Authorized Dealer (AD) Banks
- Stock Brokers and Depositories
- Mutual Fund Houses
- Insurance Providers and Other Investment Bodies
This communication should happen as soon as you finalize your move overseas.
Treatment of Indian Assets under FEMA
| Asset | FEMA Treatment |
|---|---|
| Resident Savings or Current Account | Must be re-designated to NRO Account |
| Fixed Deposits (FDs) | Convert to NRO FD (may require premature closure & rebooking) |
| Shares, Bonds, Mutual Funds | Can continue to hold; must inform companies/funds about residential status change |
| Immovable Property in India | Can retain and manage freely after becoming Non-Resident |
You are also allowed to retain and deal in Indian life insurance policies, pension schemes, inherited assets, etc., even after moving abroad.
Investments Made Under LRS (Liberalized Remittance Scheme)
If you previously invested in foreign stocks, real estate, or assets under LRS, you may generally continue to hold them. However, RBI has not issued specific regulations, so we recommend consulting our team at Casela Advisors for guidance on compliance and reporting.
Business Ownership in India or Abroad
- You may continue to be a proprietor, partner, director, or trustee in Indian businesses.
- You may also continue to operate overseas businesses established under the Overseas Direct Investment (ODI) scheme.
Note: Complexities may arise in certain transactions, permissions, and RBI filings. Seek professional advice to avoid violations.
NRO, NRE, FCNR Accounts – Key Differences
| Account Type | Eligibility & Features |
|---|---|
| NRO Account | For Indian income (rent, pension, dividends); taxable; repatriation up to USD 1 million/year |
| NRE Account | For foreign income; fully repatriable; interest income tax-free (subject to FEMA status) |
| FCNR (B) Account | Only in foreign currency; term deposit with fixed maturity; tax benefits applicable under conditions |
Once you become a Recent Immigrant, you’re not eligible for remittances under Liberalized Remittance Scheme (LRS) anymore.
Income Tax Act, 1961 – Tax Compliance for Recent Immigrants
Taxation Based on Residential Status
Once you become a Non-Resident under the IT Act, only your Indian-source income is taxable in India. Foreign income is not taxable unless received or accrued in India.
You should:
- Inform your bank, employer, and payers of your new Non-Resident status
- Ensure TDS (Tax Deducted at Source) is applied at appropriate rates
- File your ITR in India as a Non-Resident for all future years
Forms 30A and 30C – Tax Clearance (Optional, But Advisable)
Although rarely practiced, the Income Tax Act prescribes:
- Form 30C – For notifying intent to leave India permanently
- Form 30A – For obtaining tax clearance
We advise consulting our experienced Chartered Accountants for NRIs to evaluate whether you should opt for this formality based on your situation.
Tax Rates Applicable to Non-Residents
- Section 115A: Tax on mutual fund income received in foreign currency at 20% (specific conditions apply)
- Slab rates may apply in other cases depending on the income type
- DTAA (Double Taxation Avoidance Agreement) may help reduce tax liability both in India and the country of residence
Important Financial Steps Before Departure
Before leaving India, a Recent Immigrant should:
✅ Plan your departure to optimize residential status for the fiscal year
✅ Re-designate all bank accounts and deposits to NRO/NRE as applicable
✅ Inform banks, mutual funds, PPF authorities, and companies of status change
✅ Ensure PPF accounts are not extended while being an NRI
✅ Apply for a Tax Residency Certificate (TRC) in the new country
✅ Consider issuing a Power of Attorney (PoA) to a trusted family member in India
✅ Stay compliant with ITR filing as Non-Resident in future years
Why Choose Casela Advisors for NRI & Immigrant Tax Planning?
We specialize in cross-border taxation, FEMA compliance, and NRI banking advisory. Whether you’re planning to leave India permanently, or have recently moved abroad, our expert Chartered Accountants for NRIs in India can assist with:
- Residential Status evaluation
- Re-designation of accounts (NRE/NRO/FCNR)
- DTAA advisory & Tax Residency Certificate application
- Indian income tax return filing for Non-Residents
- Compliance with FEMA & RBI regulations
Make your move abroad stress-free and fully compliant.
📞 Contact Casela Advisors today – Your trusted NRI Chartered Accountant in India
