NRO account

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sundeep (Querist)
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17 January 2020 After converting present S B A/c to a NRO account (conversion not yet done), Is it necessary to disclose all transactions in the account prior to conversion to the IT Dept ..Last two FYs , ITR is filed below Rs.2 Lakhs. No tax liability as resident. but in April'19 high amounts were withdrawn after foreclosing the FDs for marriage purpose.Is it mandatory to open a NRO account. I seek expert advice on this matter. (It should not happen like " Aa bail muzhe Maar")

Asha Kanta Sharma

Asha Kanta Sharma

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26 May 2020 When a resident Indian gains non-resident Indian status, it is mandatory by the law to change the resident status in the bank accounts. If you continue holding the resident bank account even after your resident status is changed for a long duration, you may have to pay penalties for it.

For converting a resident account to a NRI account, the account holder has to go through various formalities and submit additional documents.

Documents required for converting Resident Account to NRI Account
NRIs have to submit the following documents with the application form for converting resident saving bank account to an NRI account:

FATCA Declaration Form
FEMA declaration form
Declaration of P.O. Box (for NRI residing in UAE)
Copy of PAN card
Resident Bank account closure form
NRI Bank application form
2 passport size photographs
Foreign residence address
Copy of work permit or valid visa
Copy of passport
All the documents should be authorized by the competent authority.

Penalty for not converting to NRO Account
When the resident status of Indians changes to a non-resident (NRI), they have to close the existing resident saving bank account or convert them into NRO accounts. According to FEMA, continuing with the same resident status is illegal for NRIs.

As per section 13 of FEMA, 1999, the person contravening the act will be liable to pay a penalty up to 3 times the amount involved in it or Rs 2 lakh when the sum is not quantifiable. Further, a penalty of Rs 5,000 will be charged every day from the 1st day of intervention until the penalty is paid.

So, it is advised to convert the resident account to NRO account as soon as the Indian gets NRI status.

Post Conversion NRO Account Detail
After converting the resident account to the NRO account, some details remain the same and some changes. Here is the information of post-conversion NRO account details:

Update the bank account with existing holdings maintained with a bank in the ledger account.
The account number will remain the same.
Funds from savings account to NRO account will be transferred automatically.
If Indian address is not changed, no need to submit the proof.
Updating current overseas address proof is mandatory.
Income earned from interest on FDs and savings account will be taxed at a minimum rate of 10% and a maximum of 30%+surcharge.
Cheque book remains the same.
A new debit card will be issued with NRI account status.
Internet login ID and password will be the same.
Re-designate FDs from residents to NRO FDs.
When to convert resident account to NRO Account?
As per FEMA guidelines, after gaining NRI status, it is illegal to hold savings accounts in India with NRI's name. Although, the reasonable time duration to change bank account status is not defined in the FEMA regulations. NRIs can consider the period to be maximum of 3 months.

Continuing with the same resident savings account may attract hefty fines and penalties in India. NRIs can only maintain NRO/NRE/FCNR accounts in any designated bank in India.

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sundeep

sundeep (Querist)
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26 May 2020 Thanks for the advice. earlier two experts had replied to me that, NRO account has no link with NRI status in I T Return. Please click this link https://www.caclubindia.com/experts/details.asp?group_id=2778174. Now what should I do. I still do not have an NRO account and I have not yet declared NRI status.I was supposed to do all this in march 20,But Covid lockdowns started. Please Advice

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sundeep

sundeep (Querist)
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24 July 2020 I have found my prevous F Ys years form 26 AS updated with adding "section E" wherein some very high figures > 10L is shown by Bank/s. what are these figures. what do they indicate and what should be done about it by a tax payer. The figure obviouly is a cumulative figure of bank transactions. But unclear as to which particular transactions. one more column says mix or cash. please explain in details so it could be shared amongst my friends and well wishers. Also it will help the general public at large. Thanks in Advance.