How an NRI can repatriate money from India
I left India to take a job in Australia in 2019. As I was unaware of the different bank accounts and the need to designate my existing bank account as an NRO account, I continued to manage my Indian bank account. I contributed money to this account and used these funds to invest in Indian secondary stock markets. Now I realized my mistake. Can I convert my existing Indian bank account to an NRE/NRO account and repatriate earlier returned funds to India?
A person becomes a non-resident under the Foreign Exchange Management Act (FEMA) as soon as he leaves India to take up employment outside India, whereas a person generally becomes a non-resident under the income tax laws based on his physical stay in India. . Strictly speaking, a person must inform their banker of the change in their residential status under FEMA as soon as their flight takes off. However, in practice this is not done, and out of ignorance many people do not do this. You can now inform your banker about the change in your residential status and the bank will designate your existing bank account as an NRO account.
If you had opened an NRE account which can only be opened after one becomes a non-resident under FEMA, you could have contributed the money to that account. The money in the NRE account can be repatriated without any limit. You could also have invested in India through this NRE account and refunded all the money made on the sale of these investments.
Since the money was paid into your usual bank account, you cannot fully refund the money made on the sale of your investments in India. However, a non-resident is allowed to deposit up to 10 lakh USD every year from his NRO account every year. So you can repay up to this limit every year if the total value of your investments exceeds USD 10 lakh.
Balwant Jain is a tax and investment expert and can be reached on [email protected] and @jainbalwant on Twitter
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