Can my NRI son buy foreign currency of his country of residence from the funds of his Non-Resident Ordinary (NRO) account while visiting India?
—Name withheld on request
Under exchange control law, NRO account can be debited in Indian Rupee for the purpose of making local payments in India, transferred to other NRO accounts or remittance of current income abroad subject to foreign exchange regulations . Remittance outside India up to $1 million per financial year is allowed from the balance maintained in the NRO account on production of documentary evidence and a certificate from a Chartered Accountant in the prescribed format, subject to payment of tax in India. Remittances in excess of $1 million would require special permission from the Reserve Bank of India (RBI). As a result of the operation of the NRO account, the account holder cannot make available foreign exchange to any person resident in India for reimbursement in rupees or in any other manner.
I am going to Canada next year. I have invested in some mutual funds and stocks through some online apps. I want to keep my units and shares and redeem them later. For future redemption purposes, is it sufficient to convert my registered bank account into a Non-Resident Ordinary (NRO) account and link it to my folio? If not, what else is needed?
—Kumar Chinmay
Under the Exchange Control Act, when a person leaves India for employment or business or business outside India or for any other purpose indicating an intention to stay abroad for an indefinite period, his existing resident bank account will be converted into an NRO account. should be designated as You have to open a new non-resident demat account on repatriable or non-repatriable basis and transfer your securities from a resident demat account to a non-resident demat account.
Sonu Iyer is EY India’s Tax Partner and People Advisory Services Leader.
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