Question:
When a non-resident Indian (NRI) returns to India, what happens to his/herforeign currency non-resident (FCNR) deposit?
When an NRI returns to India, the onus is on her to notify the bank of the
change in the status from non-resident to resident so that the bank account can
be re-designated to resident account from FCNR.
As per Indian tax laws, interest income earned by an individual on her/his
FCNR account is only tax exempt in India if the individual qualifies as a
‘person resident outside India’, as per the Foreign Exchange Management Act,
1999.
However, interest earned on FCNR account will be taxable when an individual becomes resident in India. Upon becoming a resident, one cannot avail the benefits available to under the NRI status
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