NRI Returning to India

NRI Returning to India

NRI returning to India on a temporary or permanent basis are obliged to comply to the corresponding exchange control standards governed by the Foreign Exchange Management Act 1999 . In addition, returning NRIs should keep track of their assets, investments and revenue sources outside India in order to understand the resulting tax consequences as well as draw up a support plan to manage Indian and global tax exposures.

·  Finding and understanding of tax benefits on a return to India tax and regulatory purposes :

Your tax-determined residential status shall be determined by your period of abroad and shall be governed by the Revenue Tax Act 1961. The Foreign Exchange Management Act 1999 governs residential status for regulatory purposes, which is established based on your intent to stay in India. With the knowledge of your residential status, you can plan your finances and tax in order to benefit returning NRIs.

· To reduce global tax exposures, schedule your arrival in India (date/month) :

A tax resident in India, regardless of source, is taxed on their global income. Upon your return to India, you can benefit from offering tax revenues for a certain period only. Your foreign earnings are not taxable in India until you get the status of “Ordinary resident” for tax purposes. The date of your arrival in India determines when you will become an ordinary resident, allowing you to manage your money and investments to minimize the tax burden on your return to your home country.

· On return to India, holding and operating non-resident banking accounts, as well as their taxability: As a NRI, you may have either an NRE A/c, NRE A/c or Non-Resident Currency A/c. A NRE A/c is the Non-Resident NRE A/c. Within a certain period of time after your arrival in India, each of these accounts must be re-designated as a resident rupee account or a resident foreign currency account (RFC A/c).

· Holding and disposing of foreign assets, including real estate and investments: It is important to prepare your future course of action in connection to your foreign investments depending on the length and purpose of your stay in India. Your global income will be subject to taxation in India after you become a tax resident of the country. It is perfectly legal to keep foreign-acquired assets abroad.

· Managing Indian regulatory foreign sources of revenue and assets: Although you may now be resident in India, it is vital to understand the tax implications in India if you have foreign sources of income such as professional fees, royalties, honoraria, management consulting fees, and so on. Planning advance will allow you to understand the advantages of double taxation treaties. In addition, investment of foreign-sourced income may be planned simultaneously.

· Retirement planning, including retirement fund management held abroad and social security benefits taxability available abroad : In order to ensure that your pension benefits are safe and flow smoothly to you, plan your investment and know your annual tax liabilty for retirement purposes. Furthermore, we assist you in determining the taxability of social security, medical, and retirement benefits that accrue to you while you are abroad. To ensure compliance with the Indian tax regime, understand the implications of taxation on retirement funds held abroad.

· Filing returns in India and abroad, as well as claiming tax treaty benefits, to avoid income double taxation: We help you file your income tax returns in India and outside the India. If you are a resident outside the countries and plan to return to India, we will be able to guide and advise you on various tax planning measures and compliance requirements, including taking advantage of relevant treaty benefits to avoid double taxation.

Secondment & Deputation Planning

The growth of border crossings and globalisation has led to a significant increase in the movement of staff across international borders. But from a tax point of view, this leads to a number of problems for both the employer and the employee. Employees and corporations alike often experience difficulties in understanding their tax obligations for the period of the employee’s secondment or deployment. Certain areas in which individuals commonly need help include the identification of the status of residence and determination of taxable income in India and in the Country of Secondment and tax credit under the Double Taxation Convention arrangements.

Our services in this area include the following:

• Determining the seconded employee’s residency status and tax implications
• Filing Indian and foreign tax returns to take advantage of DTAA benefits to reduce the effect of double taxation.
• Examining the tax implications of ESOPs for seconded employees.
• Salary structuring in order to manage global tax exposures.
• The taxability of social security benefits is being investigated.
• Examining the tax implications for the company/employer.
• Transfer Pricing ramifications when a secondment/deputation is to a related enterprise.
• Salary cost reimbursement – tax implications in the hands of the Indian Company
• Examining whether the secondment results in the establishment of a permanent establishment in India for tax purposes.

COMPANY LAW UPDATE:

• Query: We have a query as – We are incorporating a company in which NRI is initial shareholder of the Company. Now, he wants to transfer the said share application cum subscription amount from his NRO Account maintained in India. So, is he required to file Form FCGPR in this respect with the RBI. Please advice?
• Answer:In case of transfer of subscription money from the NRO Account maintained in India by NRI to the Account of Company. There is no inflow of funds from a country outside India. So, it is not FDI. Thus, there is no requirement of filing Form FCGPR regarding the same.
  

  Popular updates:

• F&Q on NRI Income Tax Compliance (Help Centre)

  Key Provision for NRI Taxation