I have been an NRI for the last 30 years and presently live in Hong Kong (HK). I am a salaried employee and pay all taxes legally and correctly in HK. I have bank accounts in Hong Kong where I keep my income in USD and Hong Kong Dollars. I also have investments in Mutual Funds and shares in USD made from my tax paid salary and held in the same banks (acting as brokers) where I maintain my savings accounts. Both these banks viz. HSBC and DBS in Hong Kong where I have savings and wealth management accounts have presence in India. I already have NRE & NRO accounts in HSBC India but do not have any account in DBS India as yet.
My queries:
a) I am planning to relocate to India but would also like to know what month is best for such relocation to get maximum status as NRI after relocation. For how many years I can maintain such NRI status?
b) What happens to my funds in my HK bank accounts? How long can I keep maintaining them without remitting to India in USD (can keep only in Fixed deposit in India) or converting to INR?
c) I earn dividends from my wealth management accounts in HK. In case I can maintain my Bank accounts in HK , will this dividend income earned in Foreign exchange need to be declared as foreign income and taxed in India ? What is the tax rate for such income? From which year I need to declare and pay tax on this dividend income?
An NRI returning to India needs to be in India for a period of less than 182 days in aggregate during the financial year to be a non-resident for that year. A non-resident coming back to India for good can remain “a resident but not ordinary resident” for maximum of two years. For a non-resident only his Indian income get taxed in India but for a resident but not ordinary resident his Indian income as well as income earned from a source or business connection in India gets taxed in India. After one ceases to be a resident but non ordinary resident, his global income become taxable in India.
As far as investments lying outside India are concerned, there is no restriction as to the time up to which you can retain them outside India. So there is no need for you to dispose of those investments soon and bring the money into India. Once you get the money back into India you can either keep the same in a Resident Foreign Currency (RFC) account which can any time be remitted back out of India or use the same in India the way you wish. However, once you become a resident for tax purposes, you will have to declare all your foreign assets and investments in your ITR.
Your dividend income from your investments outside India will remain tax free for two financial years and post that you will become a resident of India and therefore your global income including dividend earned in foreign exchange will get taxed in India. The dividends are treated like your regular income and get taxed at the slab rate applicable to you.
Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant on Twitter.
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I have been an NRI for the last 30 years and presently live in Hong Kong (HK). I am a salaried employee and pay all taxes legally and correctly in HK. I have bank accounts in Hong Kong where I keep my income in USD and Hong Kong Dollars. I also have investments in Mutual Funds and shares in USD made from my tax paid salary and held in the same banks (acting as brokers) where I maintain my savings accounts. Both these banks viz. HSBC and DBS in Hong Kong where I have savings and wealth management accounts have presence in India. I already have NRE & NRO accounts in HSBC India but do not have any account in DBS India as yet. My queries: a) I am planning to relocate to India but would also like to know what month is best for such relocation to get maximum status as NRI after relocation. For how many years I can maintain such NRI status? b) What happens to my funds in my HK bank accounts? How long can I keep maintaining them without remitting to India in USD (can keep only in Fixed deposit in India) or converting to INR? c) I earn dividends from my wealth management accounts in HK. In case I can maintain my Bank accounts in HK , will this dividend income earned in Foreign exchange need to be declared as foreign income and taxed in India ? What is the tax rate for such income? From which year I need to declare and pay tax on this dividend income? An NRI returning to India needs to be in India for a period of less than 182 days in aggregate during the financial year to be a non-resident for that year. A non-resident coming back to India for good can remain “a resident but not ordinary resident” for maximum of two years. For a non-resident only his Indian income get taxed in India but for a resident but not ordinary resident his Indian income as well as income earned from a source or business connection in India gets taxed in India. After one ceases to be a resident but non ordinary resident, his global income become taxable in India. As far as investments lying outside India are concerned, there is no restriction as to the time up to which you can retain them outside India. So there is no need for you to dispose of those investments soon and bring the money into India. Once you get the money back into India you can either keep the same in a Resident Foreign Currency (RFC) account which can any time be remitted back out of India or use the same in India the way you wish. However, once you become a resident for tax purposes, you will have to declare all your foreign assets and investments in your ITR. Your dividend income from your investments outside India will remain tax free for two financial years and post that you will become a resident of India and therefore your global income including dividend earned in foreign exchange will get taxed in India. The dividends are treated like your regular income and get taxed at the slab rate applicable to you. Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant on Twitter. Subscribe to Mint Newsletters * Enter a valid email * Thank you for subscribing to our newsletter. Never miss a story! Stay connected and informed with Mint. Download our App Now!!