For a lot of Non-Resident Indians (NRIs), moving back to India after spending time in another country marks a special occasion as well as a smart life decision. Relocation requires you to handle many tasks, but tax planning should always be considered a major priority. Once they go back to India, how taxable NRIs are will depend on their place of residence, their sources of foreign earnings, and any inactive foreign assets they may own. If you don’t plan well, these budgeting matters can grow to be hard to handle. If you anticipate these changes, your compliance will be easier, you’ll pay less in taxes, and your wealth will not be threatened for years to come. Planning your taxes well can ensure you have enough money and no worries after returning home. Now we will discuss the tips by the NRI tax consultant.
What tips are advised by the NRI Tax Consultant?
Understand your residential status
In India, the amount of income tax you need to pay is mostly decided by your residential status, set according to how many days you lived there in the financial year. You may still be classified as an RNOR or an NRI in the year you return. If you have RNOR status, you are exempt from paying taxes on income you get in other countries. Tax planning flexibility is available to a person with this status since it is valid for up to three years. Nearly, you can make the best decisions on returning home, making foreign investments, and handling taxes if you identify your residential status appropriately. It is advised to hire an NRI tax consultant for understanding the complex taxation process.
Plan repatriation of funds wisely
Make sure you plan well in advance how to move your foreign earnings and investment money out of your home country when you go to India. Performing strategic fund transfers prevents the need to pay extra taxes and follows the necessary rules as defined by FEMA. There are no worries when using accounts like NRO, NRE, FCNR for legal and trouble-free transfers. You should know that taxes on interest from NRO accounts could be deducted by the bank, either under TDS. Discuss your options with a tax advisor to find out the quickest and least taxed method of shifting funds, all the while following the regulations.
Review your global income and assets
When your resident status becomes “Resident,” you are required to report and tax worldwide income according to Indian tax laws. This includes income from foreign investments like stocks and dividends, overseas rental property, and interest earned on foreign banks. It is wise to consider and possibly consolidate or sell underperforming foreign investments so that tax inefficiency or legal non-compliance is avoided. Also, Indian citizens are required to disclose foreign assets on an annual basis in their ITR (Income Tax Return) under the foreign asset schedule. Smooth financial integration is enabled through early scrutiny.
Utilize RNOR tax benefits
For a maximum of three fiscal years, returning non-resident individuals (NRIs) who meet the requirements to be considered residents but not ordinarily residents (RNORs) are eligible for preferential tax treatment. Unless it is received in India, your overseas income during this time, including interest, capital gains, and rental income, is often not subject to taxation in India. This allows you to shut unnecessary accounts, repatriate money, reassess your global financial structure, and align your investments with Indian tax laws. A gradual and tax-efficient shift to full Indian tax residency is made possible by RNOR status, which serves as a buffer and prevents rapid worldwide income taxation. You should hire an NRI tax consultant to utilize RNOR tax benefits.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.