17 January 2020
Is it mandatory for a NRI to have a NRE/NRO account in India.Even though his/her income is below 2.5 lakhs with /without TDS on interest from FDs in bank
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.
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 qat large. Thanks in Advance.
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