Non-resident account

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 August 2017 I am US citizen with Overseas Citizenship of India living in India permanently after my retirement. Can I open and hold non-resident trading and bank accounts while being resident in India ?

Sunil

Sunil (Expert)
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20 August 2017 You are OCI and not NRI. Therefore you have to satisfy both RBI and income tax rules for Non Residents for opening bank accounts. RBI will be expecting you to declare all your accounts abroad and in India once you are resident overseas citizen. Once you become resident of India as per Income Tax, you will be expected to declare all your foreign bank accounts as well. However, as you are not an NRI and are OCI, all benefits of being OCI should still be available to you including opening of the bank accounts. Do not confuse Citizenship with Residence. A citizen of another country can open account while resident of India but you have the additional status of OCI and all benefits will continue by virtue of OCI. You have to follow rules of RBI only. They have definied and put restrictions on NRI and have defined NRI as Indian passport holder. You are not Indian passport holder so your OCI status still holds good even if you are in India for long duration on permanent stay. As far as Income Tax is concerned, the day your status changes from Non resident to Resident you will have to follow rule for taxation for all your income worldwide, declare foreign accounts and take advantage of tax treaty between India and US.

Without knowing your technical facts, I hope I have answered sufficiently for you to seek proper guidance according to your status. I am leaving this query unresolved in case someone has a better answer.

Querist : Anonymous

Querist : Anonymous (Querist)

21 August 2017 Thanks for your effort, Sunil. I have all resident accounts so far and an investment consultant advised me to open/convert my trading account from resident to non-resident so I am seeking expert opinion here.

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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03 August 2024 As an Overseas Citizen of India (OCI) who is now a resident in India, the treatment of your accounts and investments is subject to specific regulations under the Foreign Exchange Management Act (FEMA) and the Income Tax Act in India. Here’s a detailed overview:

### **1. **Resident Status**

Since you are now living in India permanently and have assumed residency status, you are treated as a resident under Indian regulations.

### **2. **Types of Accounts**

**Resident vs. Non-Resident Accounts:**
- **Resident Accounts:** These are accounts held by individuals who are resident in India.
- **Non-Resident Accounts:** These include Non-Resident External (NRE) accounts, Non-Resident Ordinary (NRO) accounts, and Foreign Currency Non-Resident (FCNR) accounts, which are meant for individuals who are non-residents of India.

### **3. **Trading and Bank Accounts**

**Bank Accounts:**
- **As a Resident:** You should maintain your bank accounts as resident accounts. Non-Resident External (NRE) or Non-Resident Ordinary (NRO) accounts are intended for individuals who are non-residents or who are residents but have income from abroad.

**Trading Accounts:**
- **As a Resident:** You must hold your trading accounts as resident accounts. Non-Resident Indian (NRI) trading accounts are designated for NRIs.

### **4. **Conversion of Accounts**

**Converting Accounts:**
- If you have accounts classified as non-resident (e.g., NRE or NRO accounts) and you have become a resident, you should convert these accounts to resident accounts. This applies to both bank accounts and trading accounts.

**Process for Conversion:**
- **Bank Accounts:** Contact your bank to convert your NRE/NRO accounts into resident savings accounts.
- **Trading Accounts:** Notify your brokerage or trading platform to convert your NRI trading account to a resident trading account. They will guide you through the process which may involve updating KYC details and providing proof of residency.

### **5. **Regulatory Compliance**

**FEMA Regulations:**
- Under FEMA, holding non-resident accounts while being a resident is not permitted. You must ensure compliance with these regulations by converting all non-resident accounts to resident accounts.

**Income Tax Considerations:**
- Income earned in India and investments held as a resident are subject to Indian tax laws. Ensure all income and investments are declared appropriately.

### **6. **Expert Advice**

Given the complexity of regulations, it is advisable to:

- **Consult a Financial Advisor:** Seek advice from a qualified financial advisor or tax consultant who can guide you through the conversion process and ensure compliance with all regulatory requirements.
- **Review FEMA Regulations:** Ensure you understand and comply with FEMA regulations to avoid any legal or financial issues.

### **Summary**

- As a resident in India, you should maintain resident bank and trading accounts.
- Convert any non-resident accounts you hold to resident accounts.
- Consult a financial advisor to facilitate the conversion and ensure compliance with regulations.

Taking these steps will help you avoid any complications related to account management and regulatory compliance.