318. Transfer residency from UK

to India

Q: Dear Mr Chand First of all a very Good Evening Many thanks for hosting such an informative portal as government information still remains so scarce. I am Paediatric Pulmonologist based at Leicester UK and I am planning to return to Kolkata by the end of this November - this is after having stayed in UK for nearly 16 years. Surely you would appreciate that this no simple task to move from an organised set-up to uncertainty. I am struggling and this is taking its toll and would wonder whether you would be able to help me in this regard. I have a few queries and please could you please provide some answers for them. I have a *British passport with and Overseas Indian Citizenship (OCI)*giving me parity with NRI in financial aspects. I would be joining a leading Women's and Children's hospital as a Paediatric Pulmonolgist and hence would be drawing a salary from the institution. My wife still retains her Indian Passport with UK Residency but she is not working and i have a dependent child who is only 10. Additionally, my widowed mother and grandmother would be staying with us at Kolkata. 1. So would my tax status be same as a local Indian earner i.e. all the brackets. Do I need a tax accountant and if so could you suggest someone who has sufficient knowledge. 2. What tax saving measures would you suggest? 3. What would happen to my NRE accounts, pension funds and mutual funds and their tax benefits? Please note that whatever i have invested in India are taxed income from UK. 4. Any advice on my UK property and UK tax free investments 5. What would be my status when transferring my used objects through shipping to Kolkata. Would Customs treat them as transfer of residence (as like for NRIs) or as like for foreign nationals. I know I have asked a few many questions. However, given that i am out of the country for that long and trying to come back, your help in aiding me to settle back would be well appreciated. Eager to hear from you and thanking you all in anticipation With warm regards Name Withheld A. I understand it is no easy task to move back to India after spending 16 years abroad. For most of your questions, I think you would be well advised to consult a professional. I can however, offer a few suggestions. 1. For the first two years, your income in UK if any, will NOT be taxed in India. As you mention, your tax status will be the same as a local Indian earner. A good chartered accountant would be able to help you and is worth the expense. Speak to a few accountants and see who you feel comfortable with. 2. Chartered accountant in India can suggest tax saving measures after accessing your financial affairs. 3. NRE accounts would have to be designated to local accounts. NRE can go into a Resident Foreign Currency (RFC) account. Foreign pension can also be deposited into your bank accounts. 4. Before leaving UK, you should adjust your UK residency as a tax saving measure. An accountant in UK can guide you with questions on your UK property and investments and how to minimize your tax liability in UK. As both UK and India have a tax treaty, you will be protected to some extent from double taxation. 5. You can claim transfer of residency as other nri's. (As a guideline, some transfer of residency rules are provided on this page) Many people return to Indian for various reasons, some are able to adjust while others cannot. You also have a 10 year old child who will have to make adjustments in schools in India. Those planning a permanent move to India after a prolonged absence, should avoid buying assets such as real-estate immediately on arrival in India and wait for a few months to see if they are comfortable enough to settle in India. Perhaps renting for a few months should be considered. TRANSFER OF RESIDENCE RULES A person who has been residing abroad for a minimum period of two years and who is transferring his/her residence to India can import his/her personal effects and household goods free of duty subject to condition that the articles have been in his/her or his/her family's possession and use abroad for a minimum period of one year. Items listed in Table - I below will attract duty @ 15% (whether used or new ) plus 2% cess on duty amount. These items can be up to a ceiling of Rs.500000/-. Not more than one unit of each of these items shall be allowed to be imported per family. Items listed in Table II below are exempted from customs duty. New Household Goods and Personal Effects, however, will not be allowed to be cleared free of duty. All the articles should be in his/her possession PRIOR to arrival and goods should have been shipped prior to his/her arrival to India . To prove possession of the goods, a person should have all the purchase receipts or bills and should produce them if demanded. Shipment by sea should be made within 30 days of the date of arrival of the passenger in India or 60 days prior to arrival. If the cargo is sent by air, the shipment should be made within 15 days of the arrival of the passenger or 30 days prior to his arrival. In the past two years the passenger should not have made short visit stay in India for more than 180 days in total. Visit to India above this period may be condoned by Commissioner of Customs on sufficient grounds. If the period of stay abroad is shorter than two years a shortfall of two months may be condoned by the Assistant Commissioner on sufficient grounds. Period above this can be condoned by the Government only. The passenger should not have claimed/availed Transfer of Residence concession during the preceding 3 years of his/her stay abroad. Items in Table I below (whether used or new) can be imported only on payment of duty @ 15% plus 2% cess on duty amount and not more than one unit of each of these items shall be allowed to be imported per family. The total aggregate value of such goods shall not exceed Rs.500000. TABLE -I 1. Color TV/Monochrome TV. 2. Micro Wave Oven 3. Dish Washer 4. Music System 5. Air Conditioner 6. Refrigerator of capacity above 300 liters. 7. Deep Freezer 8. Video Camera or the combination of any such video camera with TV receiver or sound reproducing apparatus or video reproducing apparatus. 9. Work Processing Machine. 10. Fax Machine 11. Portable Xerox machine 12. Home theater 13. DVD player. TABLE -II. ( The below mentioned items are free of duty on Transfer Of Residence.) 1. Video Cassette Recorder or Video Cassette Player or Video Television Receiver or Video Cassette Disk Player. 2. Washing Machine. 3. Electrical or Liquefied Petroleum Gas Cooking Range. 4. Personal Computer (Desk Top Computer). 5. Laptop Computer (Notebook Computer) 6. Domestic refrigerators of capacity up to 300 liters or equivalent. Check the customs website http://www.cbec.gov.in/travellers.htm for detailed information on transfer of residency.