NRE / NRO / FCNR accounts, converting when you return.

• FEMA residence: distinct from Income Tax residence. FEMA Section 2(v) defines 'person resident in India' broadly — stays in India for more than 182 days during preceding FY OR intends to come to India for employment / business / stay for uncertain period.
• Trigger of residence: once NRI's intention to stay in India for uncertain period crystallises (job in India, settlement plan, bringing family), FEMA residence may trigger even before 182 days physical presence.
• Conversion obligation: 'within reasonable time' of becoming resident, NRE / NRO / FCNR accounts must be converted / designated as resident. 'Reasonable time' interpreted by banks as 60-90 days typical but not strictly defined.
• Continuing to operate NRE / NRO as resident = FEMA breach. Prolonged breach can trigger compounding under Section 13.

1. Regular Savings Account

• Standard rupee-denominated resident account.
• NRO account typically re-designated as regular savings. Same account number, different flag.
• Interest fully taxable at slab rate.
• Form 15G / 15H can be submitted to avoid TDS where applicable.

2. RFC (Resident Foreign Currency) Account

• Available only to Indian residents who were previously NRIs for a continuous period of 1+ year.
• Denominated in: USD, GBP, EUR, JPY, CAD, AUD + others.
• Fully repatriable — funds can be remitted abroad freely for any permissible purpose.
• Interest taxable in India at slab rate (foreign-source but received in India).
• No cap on balance.
• Typically used by returning NRIs who may re-expatriate; preserves foreign currency.
• Source of funds: NRE / FCNR maturity proceeds (transferable); foreign currency brought into India during return move; pension / superannuation from foreign employer.

3. FCNR-B account (maturity)

• Existing FCNR-B deposit (foreign currency fixed deposit opened as NRI) can continue until maturity.
• At maturity, must be transferred to RFC account (not auto-renewable as FCNR-B once resident).
• Interest tax-exempt until maturity (per earlier NRI status rules).

4. RFC(D) Deposit (Resident Foreign Currency Domestic)

• For Indian residents who weren't previously NRI (e.g., forex gift receipt, pension from foreign source).
• Non-repatriable.
• Different from RFC — chosen by never-NRI residents.

1. Determine FEMA residence trigger date: when did you become resident under FEMA? Typically arrival + settled intention date.
2. Notify bank: visit NRE / NRO / FCNR bank with change-of-status declaration + supporting documents (Indian address proof, employment letter, flight ticket).
3. NRO account: typically re-designated as regular savings. Same account number. Interest from NRO continues; TDS at resident rate (10% without Form 15G/H).
4. NRE account: must be closed or converted. Options:
5.   — Transfer balance to Regular Savings (if NRE funds are repatriable, they lose that status once converted).
6.   — Transfer to RFC (preserves foreign currency + repatriable status).
7.   — Early-close NRE and remit funds abroad before becoming resident.
8. FCNR deposit: continue until maturity; then transfer to RFC. Early-close is penalty-chargeable.
9. PIS (Portfolio Investment Scheme) account: close / transfer securities to resident demat.
10. Mutual fund + demat KYC: update to resident. Change of address + bank account linking.
11. Insurance policies: notify insurer of status change.
12. Credit card + loan accounts: notify of status change.

• Returning NRI typically gets RNOR status for 2-3 years post-return (per Section 6(6) — see RNOR guide).
• During RNOR: foreign-source investment income + overseas rental + foreign capital gain remain non-taxable in India. Only India-source + foreign business controlled from India + foreign profession set up in India are taxable.
• RFC interest: taxable in India (received in India) — even during RNOR.
• NRE interest: during RNOR, interest from NRE / FCNR period before residence trigger remains tax-exempt (as it accrued during NRI status). Interest on balance after FEMA residence trigger is taxable even if account is still technically NRE.
• Full resident status (post RNOR, typically year 4): global income taxable. Foreign Tax Credit (Section 90/91) available.
• Planning: during RNOR window, consolidate foreign assets, repatriate large amounts (while tax-free in India via RNOR exemption), structure holdings to minimise post-RNOR tax hit.

Last updated: 2026-10-15.