Q556. Foreign citizen living in India can open resident bank account

Question: Hello, I have a specific question regarding Bank Accounts opening by NRI's in India. As per RBI guidelines a Foreigner can open NRE/NRO accounts in India. According to RBI the time duration of NRE/NRO is for 6 months. My questions is a Foreigner Citizen who is living in India for more than 182 days in India during a financial year and getting salary in Indian Currency is eligible for which kind of bank account. As per my understanding if a person lives in India for more then 182 days then he/she has to change its Status to resident and close there NRO/NRE accounts. In that case RBI says they have to open RFC accounts but in those accounts NRI has to deposit in foregin currency and they can withdrawal in INR. So in that case if person getting salary in INR how can use this account. I hope you understand my question. Looking forward to read you soon. Regards Divyamanu Answer: I will try and answer your question, you decide whether I understood your question or not and if you require further clarification I will try to clarify further. A foreign citizen who is working and living in India should be able to open a resident bank account in India without having to wait for 182 days. There is some confusion on the 182 days stay and becoming a resident. The number of days in India is not the only factor that will make a person resident in India for taxation purposes. What you appear to be suggesting is that a foreigner who comes to India for employment, will remain a non-resident until he/she has stayed in India for more than 182 days. I believe, when a person enters India for employment purposes, they are considered to be residents and taxable from day one! They can also open resident rupee bank account. As of June 2011, RBI allows foreigners who are employed in India to maintain their Indian bank account even when they complete their employment in India and move out of India. They can simply reclassify their resident back account to NRO account*. *To view the RBI notification CLICK HERE

Six month time duration period of bank account not applicable to NRIs

NRE/NRO accounts are for NRIs and foreigners of Indian origin. In such cases there is no six month restriction. Indian origin

foreigners can maintain NRE or NRO accounts for as long as they wish. The six month time duration limit does not apply to them.

RBI six month time duration is meant of foreign tourists of who are not of Indian Origin. Foreign tourists when visiting India can open a Non Resident Ordinary (NRO) savings or current account with any bank that deals in foreign exchange. These accounts can be operated for a maximum of six months. Tourist visas are for only given for six months and hence such accounts must be closed within the six month period. Foreign tourists must deposit foreign currency in their NRO accounts which is converted to Indian currency and deposits are held in Indian Rupees. At the time of departure, when such a tourist closes their account, RBI has given permission to banks to convert the balance in the account to foreign currency, provided the account is closed within the six month period and no local rupee funds have been deposited in this account. Follow up question on next page . . .

Disclaimer: Information provided is for general knowledge only and should not be deemed to be professional advice. For professional advice kindly consult a professional accountant, immigration advisor or the Indian consulate. Rules and regulations do change from time to time. Please note that in case of any variation between what has been stated on this website and the relevant Act, Rules, Regulations, Policy Statements etc. the latter shall prevail. © Copyright 2006 Nriinformation.com

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Q556. Foreign citizen living in

India can open resident bank

account

Question: Hello, I have a specific question regarding Bank Accounts opening by NRI's in India. As per RBI guidelines a Foreigner can open NRE/NRO accounts in India. According to RBI the time duration of NRE/NRO is for 6 months. My questions is a Foreigner Citizen who is living in India for more than 182 days in India during a financial year and getting salary in Indian Currency is eligible for which kind of bank account. As per my understanding if a person lives in India for more then 182 days then he/she has to change its Status to resident and close there NRO/NRE accounts. In that case RBI says they have to open RFC accounts but in those accounts NRI has to deposit in foregin currency and they can withdrawal in INR. So in that case if person getting salary in INR how can use this account. I hope you understand my question. Looking forward to read you soon. Regards Divyamanu Answer: I will try and answer your question, you decide whether I understood your question or not and if you require further clarification I will try to clarify further. A foreign citizen who is working and living in India should be able to open a resident bank account in India without having to wait for 182 days. There is some confusion on the 182 days stay and becoming a resident. The number of days in India is not the only factor that will make a person resident in India for taxation purposes. What you appear to be suggesting is that a foreigner who comes to India for employment, will remain a non- resident until he/she has stayed in India for more than 182 days. I believe, when a person enters India for employment purposes, they are considered to be residents and taxable from day one! They can also open resident rupee bank account. As of June 2011, RBI allows foreigners who are employed in India to maintain their Indian bank account even when they complete their employment in India and move out of India. They can simply reclassify their resident back account to NRO account*. *To view the RBI notification CLICK HERE