NRI returning India for permanente settle and NRE fixed deposit interest taxability

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Anand Prakash Garg (Querist)
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15 February 2025 I stayed oversees 30 years. In FY 2024-25 returned to india (stayed oversees 184 days) with the intention to settle here.

1. For FY 2024-25, I returned to india on 2nd October 2024 (stayed oversees 184 days) with the intention to settle in India.
Am I NRE for FY 2024-25?

2. For FY 2025-26, I plan to stay oversees 184 days and rest of period in India.
Will I be considered as NRE taking in to account if any changes in current finance budget 2025.

IF I stay < 120 days in India, makes any difference.

3. For FY 2026-27, I will become NOR or Resident.

4). What about my NRE deposits (convereted in rupees) for above Financial Year?
Can I convert to RFC account , once I become NOR or Resident.

5). Are my NRE deposits interest taxable ?

6). When I must report to bank ie. in which financial year?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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12 August 2025 1. Are you NRE for FY 2024-25 if returned on 2nd Oct 2024 after 30 years abroad?
Residential status for tax is based on physical presence in India.

You mentioned you stayed overseas for 184 days in FY 2024-25 (1 April 2024 to 31 March 2025).

Since you returned on 2nd October 2024, the days spent in India in FY 2024-25 = 181 days (Apr 1 – Oct 1).

Condition for Resident: You must be in India for ≥182 days in the financial year. You are just 1 day short.

However, alternate condition: if you have been in India for 365 days in last 4 years and 60 days in FY 2024-25, then you will be resident.

Since you stayed abroad 30 years, this condition will be met.

So you will be considered Resident for FY 2024-25, not NRI.

2. For FY 2025-26 if you plan to stay overseas 184 days and rest in India:
If you stay overseas ≥ 182 days, you might be treated as Non-Resident for FY 2025-26.

But if you stay less than 120 days in India in FY 2025-26, the Finance Bill 2025 introduced new rules for “Resident but Not Ordinarily Resident (RNOR)”.

So, if you stay <120 days, you can be RNOR and enjoy some tax benefits.

Your residential status depends on exact days of stay; it's important to track carefully.

3. For FY 2026-27: Resident, NOR or RNOR depends on physical presence and past 10 years’ stay.
After becoming resident for 2 years, you can become Ordinarily Resident (OR) if you satisfy conditions of 730 days stay in last 7 years and 2 years in previous 10 years.

4. What about your NRE deposits converted into rupees?
Once you become Resident, you cannot continue NRE accounts; you need to convert them to RFC (Resident Foreign Currency) accounts or other resident accounts.

You should inform your bank about the change in residential status and convert accordingly.

5. Are NRE deposit interests taxable?
For NRIs, interest on NRE deposits is tax-free in India.

But once you become Resident or RNOR, interest income on NRE deposits becomes taxable.

6. When to report change of residential status to bank?
You must inform your bank immediately after becoming Resident in India (in the relevant financial year).

Usually at the time of filing Income Tax Return or when maturity/renewal of deposits occurs.

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