Navigating home: Financial steps for NRIs returning to India

livemint.com:

MUMBAI: Many dream of working or studying abroad, but what happens when they decide to return home? Navigating the financial maze of starting afresh can be challenging.

Consider 32-year-old Dhavnish Shukla, who worked in insurance in the UK for over four years before deciding to return to India. Upon his return, Shukla faced the complex task of bringing back his money, converting his non-resident Indian (NRI) bank account, and managing various other financial adjustments.

From changing account statuses to managing foreign income and assets, returning to India after living abroad comes with a host of financial considerations for NRIs.

Here’s a comprehensive guide, crafted with expert insights, to help NRIs smoothly transition back to life in India. Please note that this article is for illustrative purposes and you should seek professional advice before making any decisions.

When an NRI comes back to settle in India, they can either be classified as a Resident and Ordinarily Resident (ROR) or a Resident but Not Ordinarily Resident (RNOR) for tax purposes. This classification significantly impacts how they are taxed.

If an NRI becomes an ROR, they are liable to be taxed on their global income, similar to other Indian residents. Conversely, if they hold RNOR status, their foreign income is exempt from taxation in India. The distinction is crucial, especially if the taxation in the foreign country is less than in India. For instance, if a foreign country levies a 20% tax while India levies 30%, an RNOR can benefit by paying only the foreign tax rate.

“RNOR is a no-brainer if a foreign country levies less or no tax," said Harshal Bhuta, a chartered accountant who mostly works with NRI clients. “The UAE takes no personal income