369. Converting resident bank

accounts to non resident bank

accounts

Q: Sirs, Your website "www.nriinformation.com" is good. However, it does not answer the following question. We need authentic information on the same. A person has gone abroad on a work visa for a particular period of about 3 or more years, and is now designated as NRI. The person has one to two previous savings bank accounts operating since several years before becoming NRI. The person has been filing Income Tax retuns regularly since several years. The savings bank accounts remain as it is. i.e. before going abroad the bank accounts were not converted to NRO or NRE or other type. When transfering foreign exchange to India, as is done by most people, the same is officially sent to the previous savings bank accounts. Is it ok? Please note that though the person earns income in India from dividends, interest, etc., in bank accounts, yet the same is very less, and is within the Taxable limit. Please give authentic information in the matter. Thanks. A. From what I understand by reading your emailed question: • When a person goes abroad to work, his status is NRI (non-resident India). Any local resident bank accounts in this case, must be converted to Non resident bank accounts. A person who goes abroad for work, cannot legally keep resident bank accounts in India. They must notify their bank of their NRI status and the bank must close the resident accounts and open non-resident accounts for the account holder. If the bank knows that the account holder is a NRI and still continues to allow resident accounts to exist, they are breaking the law. If the account holder fails to notify his/her bank of the change in their residential status. Then they are breaking the law. • Filling a regular tax return in India does not exempt a NRI from following the existing laws that apply. • When transferring money from abroad, it can be transferred to any legally held bank account. A local resident, who receives money from abroad, will naturally get the money in his resident bank account, as local residents cannot hold Non-resident accounts. However, when a Non-residents transfers money to himself, he needs to transfer the money to his/her non-resident account in India. I suggest you contact your bank manager in India and clarify with him what 'authentic information' applies in your case.