What to Do with NRE/NRO Accounts if You Are No Longer an NRI
For many individuals who have returned to India, the question of what to do with their NRE (Non-Resident External) and NRO (Non-Resident Ordinary) accounts is a pressing concern. These accounts can hold significant amounts of money, and the tax implications and account closure policies are important to understand.
Understanding NRE and NRO Accounts
NRE and NRO accounts are specific types of foreign currency accounts offered by banks to non-residents of India. NRE accounts were designed for non-residents who have returned to India and plan to retain their savings in India. NRO accounts, on the other hand, are for non-residents who do not intend to retain their savings in India and want to transfer them out when they return.
What Happens When You Are No Longer an NRI?
When an individual returns to India and is no longer an NRI, they have several options regarding their NRE and NRO accounts:
1. Close the Account
If you no longer need the account number and the money in the account, the simplest option is to close the account. You can do this by visiting the bank branch and informing them of your decision. The bank will process the closure and withdraw any remaining funds.
2. Transfer to a Regular Savings Account
Another option is to convert the NRE or NRO account into a regular saving account. For example, the NRE accounts can be rechristened as Residents Foreign Currency Accounts (RFC), and NRO accounts can become ordinary deposit accounts maintained by any other resident. This process involves submitting a formal application to the bank, confirming your status as a resident of India.
When converting an NRO account to a regular account, the bank will monitor your status and account activity. If there are any doubts or if you are no longer a resident, the bank will revert the account to its original status.
3. Withdraw the Funds
Another option is to withdraw all the funds from the NRE or NRO account. You can either leave the funds in a regular savings account or choose to spend the money. This is a straightforward process but may have tax implications depending on the purpose and amount of the withdrawal.
Steps to Follow
To convert your NRE or NRO account to a regular savings account or to withdraw the funds, follow these steps:
1. Approaching the Bank
Visit the branch of the bank where you maintain your NRE or NRO account. You can also do this online if the bank offers such services.
2. Application
Submit a formal application to the bank, stating that you have returned to India and are no longer an NRI. The application should include your personal details and proof of your current resident status in India.
3. Document Verification
The bank will verify your status as a resident through documents such as a passport with a recent entry visa-stamped page or an Indian Pan Card. This will confirm your eligibility to convert the account.
4. Conversion Process
Once the bank has verified your status, the NRE or NRO account will be converted into a regular savings account. Any interest earned on the NRE account will be taxable, and during the conversion, the account will be credited with this interest.
Conclusion
Returning to India as an NRI can involve several complications, particularly with managing NRE and NRO accounts. By understanding your options and following the correct process, you can ensure that your financial affairs are in order. Whether you choose to close the account, convert it to a regular savings account, or withdraw the funds, make sure to follow the procedures diligently to avoid any issues.
Keywords: NRE accounts, NRO accounts, conversion process, return to India, non-resident status