Ans.
Recent immigrant upon leaving India is required to
declare about change in Residential Status and his intention to stay abroad.
Such declaration can be a simple communication and may be shared with different
authorities like Bank, Brokers, Companies etc. The authorities shall make record of change in
Residential status from Resident to Non-Resident and accordingly, re-designate
the Indian bank accounts/assets as under:
|
Asset
|
Treatment
to be given
|
|
Resident Savings Bank a/c
|
Re-designate
to NRO Savings a/c
|
|
Resident Current a/c
|
Re-designate to NRO Current a/c
|
|
Resident Fixed Deposit (FD)
|
Re-designate
the Resident FD to NRO FD.
Further it
is to be noted that depending on Bank’s policy and procedures, FD may be directly
designated to NRO FD or may be pre-matured and then a new NRO FD may be
opened.
|
|
Shares, Debentures, Bonds, Units of
Mutual Funds, etc.
|
Can continue to hold these investments.
However, need to Inform all companies, funds, Brokers etc. as to change of
residential status from Resident to “Non- Resident”.
|
|
Immovable Property (Commercial/Residential/Agricultural
Land/Plantation etc.)
|
Can continue to hold and deal in
whatsoever manner upon becoming Non-Resident
|
Tax implications:
Generally, a Recent Immigrant, based on Assets
held in India, earns following income in India:
a. Interest Income
b. Dividend Income
c. Capital Gains
d. Rental Income
The taxability of said sources of income shall be determined based on the
Residential Status of the said immigrant in India, as per the Income-tax Act,
1961
Accordingly, the Recent Immigrant
shall have to determine his residential status for the relevant FY as per the
Income-tax Act, 1961. The taxability of income
earned by Recent Immigrant shall be
as under:
- If he/she is a ROR in the year of
departure, both income earned in and outside India shall be taxable in India
and
- If he/she is a RNOR for the FY, income
which is received, earned or accrued in India shall be taxable in India.
Further, income earned outside
India from business controlled or profession set-up in India shall also be
taxable in India.
- If he/she is a Non-Resident for the FY,
only income which is received, earned or accrued in India shall be taxable in
India.
Therefore, Recent
Immigrant should carefully plan his/her date/month
of departure from India to maintain NRI/RNOR status and try to avoid tax on
global income.
If the Recent Immigrant qualifies to be Non-resident of India, then the
income from the said Assets in India would be taxed at rates as applicable to
Non-resident of India as per the provisions of the Income-tax Act, 1961, which
has been explained in the Chapter No. 14 on TDS and Tax Liability in India in
this Booklet. Further, the said Recent Immigrant shall also be entitled to
claim benefit/ relief under Double Taxation Avoidance agreement as entered in
between India and Resident country of the said Immigrant, as explained in the
Chapter No.22 on Double Tax Avoidance Agreement (DTAA) in this Booklet
Further,
any individual whose taxable income in India for the relevant FY exceeds the basic exemption limit (i.e. Rs.
2,50,000/- for FY 2023-24), is liable
to file ROI in India before the prescribed due date. There are also other
exceptional cases, where one is liable to file ROI in India. It is important
for Recent Immigrant to evaluate and continue to comply with ROI filing
requirement in India, as applicable.