Resident Indian to NRI change

Taxation
#1

Hi @Quicko ,

if a resident Indian is going onsite(US/Canada) for work purpose, what are all the things he needs to consider with respect to following

a.) If investing via mutual funds(directly or via advisors). Can we continue to invest in MF or any change needed
b.) If investing in stocks directly (Can we continue to invest via the existing account or any change needed)
c.) Bank account usage(Can we continue to transact using the existing Indian bank account or any change is needed).

Request you provide your valuable pointers in this regard and please add any other points that we need to consider.

Thanks,
Sudheer

#2

@AkshayAtur Can you.

#3

Hey @sudheer_kumar

If you are going onsite for work purpose and if your residential status remains the same then you can continue to invest in MF and stocks in the same manner. If in case your residential status changes then you will have to open an NRE account to park your foreign income and to manage the income earned in India you need to open an NRO account.

Hope this helps!

#4

Hi @Quicko ,
Thanks for the reply. How is this residential status determined. Is it based on duration of stay outside India like >1 year we are considered NRI?

#5

Yes, it is based on the duration of stay in India.

Use this calculator for determining residential status:

An individual may have any one of the following residential status:

AA] Resident and ordinarily resident in India.
BB] Resident but not ordinarily resident in India.
CC] Non-resident

First determine whether resident or non-resident; then resident & ordinary resident(AA) or resident but not ordinarily resident(BB).

An individual will be treated as a resident in India for a year if he satisfies any of the following conditions (may satisfy any one or may satisfy both the conditions):

1] He is in India for a period of 182 days or more in that year; or
2] He is in India for a period of 60 days or more in the year and for a period of 365 days or more in immediately preceding 4 years.

However, in respect of an Indian citizen and a person of Indian origin who visits India during the year, the period of 60 days as mentioned in (2) above shall be substituted with 182 days.

Individuals not fulfilling any of the above conditions will, hence, be a [Non-Resident (NR)]

Further, A resident individual will be treated as resident and ordinarily resident in India during the year if he satisfies the following conditions:

1] He is resident in India for at least 2 years out of 10 years immediately preceding the relevant year; or
2] His stay in India is for 730 days or more during 7 years immediately preceding the relevant year.

#6

thank you such @San78. This is helpful.

#7

Hey @sudheer_kumar

The residential status of an individual is based on the duration of stay in India. The residential status is different from the citizenship of a person. For instance, a person can be a citizen of India but not a resident.

For income tax purpose there are 3 types of residential statuses:

  • Ordinary Resident of India
  • Resident but Not Ordinary Resident of India (RNOR)
  • Non-Resident of India (NRI)

A person can be considered as a resident individual if they fulfil either of the below mentioned primary conditions:

  1. He/She lived in India for 182 days or more during the financial year OR
  2. He/She lived in India for at least 60 days in a financial year and at least 365 days in the last 4 years.

You can read in detail about it here

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