Nri- interest from banks

Dear Sir

1. Since you have already moved abroad without completing the formality of converting your regular saving account to NRO account, in that case, you can get copies of all your required documents(You would need to submit two photographs, a copy of your passport and copy of your visa.) attested by the Indian Embassy or Notary and send them to the branch.

2.The interest earned on NRO Account as well as the credit balances in account are taxed under the account holder’s tax bracket in India. The Bank will upfront deduct 30% TDS on interest Income .You can file its return and Claim Refund if you are falling within Basic exemption limit.

Thanks & Regards

Gyati

Dear Madam,

1.As mentioned earlier by me I could not complete the formality as we got  only Immigrant Visa & Green Card or NRI status can be obtained only after reaching USA. Even as on date we are on Imgrant visa only & we are expecting Green Card anytime.

2. Point 2 noted.

3. But further point is follows:

Our FDs are maturing in Nov'17. We have no other investment. My problem is that if I inform Banks now

(a). Will they continue the FDs till its maturity or ask me to foreclose the present FDs and open new FDs now itself under NRO? We would loose heavily(for period uptill now) if we Banks ask us to foreclose now. But at the same time I do not want to violate also.

(b). Since for NRO accounts TDS is to be done on interest payment (though ultimately no taxes will be payable as we both are below taxable limits), will IT dept issue notices or take action as for FY 16-17 no tax would be deducted based on 15H submitted in Apr'16 & for FY 17-18 only 10% will be deducted as we would not submit 15H.?

(c). Will the banks can create problem based on IT query as to why TDS was not done?

Have you please got any suggestion on point a, b & c above,

Subramanian.V

(now in USA)

vasusubram @ yahoo.com

As per FEMA provision when a person goes out of India for permanent settlement he becomes Non Resident. It is the duty of the person to declare to Banks or for that metter any department in which he is dealing in.

As per Income Tax Act. Prime requirement for submitting Form 15G or Form 15H is that person should be Resident in India.

So you have to check your residential status by both the acts.

Also keep in mind that global income will be taxable in USA so if you are earning below taxable limit in India but you have to show it in your US Tax Returns.

If you do not ask bank to convert your account from resident to NRO than it is violation of law only.

Your responsibility to update residential status as “non-resident” in all Indian accounts and investments is a requirement under the FEMA Deposit Regulations 2016 & arises when you become  a “person resident out of India” – and this will happen when you are outside India with an intention to settle permanently there – so, no need to update details now.  Let it remain as non-resident. As you get information on acceptance of your GC, you should initiate re-designation of accounts.

Having said this, when you file your returns in India, you need to check what is your residential status for the financial year as per Income Tax Act (it depends on the number of days of stay) and accordingly you can declare income and pay tax.

Once your status is updated to non-resident, TDS on NRO bank accounts & deposits will be 30.90% - you can claim it in Indian tax return.

Also make sure that if you qualify as a US person, you will also have to disclose Indian incomes in US tax return and also make FBAR/Form 8938 reporting in USA w.r.t. Indian bank accounts.