We are planning to go to Australia. We have invested in FDs, PPF, EPF, Mutual Funds, Shares and Liquid Funds. Do we now need to invest these instruments in Non-Resident External (NRE) or Non-Resident Ordinary (NRO) account or can we allow them to continue till maturity?
– Name withheld on request
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 An NRE account can be opened afresh. Residential status under exchange control laws is different from under income tax laws.
Thus, you need to convert your existing Resident (Savings and Fixed Deposit) bank accounts to NRO account.
As a NRI, the PPF account can be continued till maturity on non-repatriation basis (no remittance outside India) and the account will be closed on maturity. For mutual funds and shares, you need to inform the change in residential status to the fund house and the Indian company respectively.
my son lives in canada and sends 25,000 every month to his mother to pay the monthly installment of the car loan. Is this amount taxable? Also, does my wife need to show or declare the same in her Income Tax Return (ITR)?
– Name withheld on request
Under the India Income Tax (IT) Act, money remitted by a son outside India to his mother’s savings account in India will not have any income tax effect in India. Since the transfer is not taxable in India, there is no need to report it in ITR in India.
Sonu Iyer is EY India’s Tax Partner and People Advisory Services Leader.