NRO Conversion vs Closing Account and Gifting to Mother (NRI Since 2016)

Dear Expert,

 

I am an NRI since 2016 and have a resident savings account in India. I have not converted it to an NRO account until now. The funds in this account were saved from my foreign income.

 

Now I want to regularize the situation. I see two options:

 

1. Convert my resident savings account to an NRO account (with proper NRI declaration), OR

 

 

2. Close the account and gift the funds (about ₹21 lakhs) to my mother by cheque (she is not a taxpayer).

 

 

 

Which is safer and more compliant with FEMA and Income Tax rules?

 

I want to avoid future issues. Please advise.

 

Thank you.

Replies (3)
Quick Summary
An NRI who has been living abroad since 2016 is seeking guidance on how to regularise their Indian resident savings account. They are considering two options: converting the account to an NRO account or closing it and gifting the funds to their mother. The primary concern is to ensure compliance with FEMA and Income Tax regulations and avoid future penalties. Advice is sought on the safest and most compliant approach, including potential penalties for late conversion.

First convert it to NRO account, then if you wish, you can gift (any) amount to your mother whidh will be tax free in her hands.

Yes correct. Not converting resident account to NRO is itself an offence.

 

Please regularaise urgently.

I am nri since 2016 so pls advise if I have to face any penalty for late conversion request and also please advise from income tax point of view.

I have only interest income against the funds i have and that interest income is under the income tax limit

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