Resident Saving Account for NRI

Dear Sir,

Let me confess first that I am an income tax expert and not FEMA expert. But as per my limited knowledge on FEMA, you can not maintain resident saving account, if you are an NRI.

There is no specific penalty provided for not converting an ordinary savings account into a non-resident ordinary account. However, Section 13 of the Foreign Exchange Management Act, 1999 provides that if any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the RBI, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to Rs 2 lakh where the amount is not quantifiable. Where such contravention is a continuing one, further penalty that may extend to Rs 5,000 for every day after the first day during which the contravention continues. It is, therefore, desirable that an account should be converted into an NRO account without delay.

However, I don't anticipate any inquiry / notice coming f om IT department as they are mainly concerned about income tax and not FEMA.

Please feel free to call/revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

I also recommend you to convert the account at athe earliest.

Dear Sir,

Holding Resident saving account being an NRI is not an income tax department concern. It is more specifically dealt by the Reserve Bank of India and FEMA Regulations. so if you have offered the income for tax and duly disclosed it than nothing to worry for income tax notice.

Sir It is better you stop using the savings Account and transfer the funds from outside only to your NRE Account and not to your NRO Account also. Is there any specific purpose of sending money to NRO Account.

Also you need to instruct your Banker to change the status of Non resident in Fixed Deposit Accounts so that your Non Resident Status will be maintained every where in India to avoid any legal complications.

Hi

From the Income-tax perspective, there is no violation for which they will issue a notice to you. You need not worry about it. However, it is advisable to convert your bank accounts as per the prevailing FEMA/RBI laws.

Regards

Keerthiga Padmanabhan

Hello Sir,

You need not worry about receiving a notice but worst case you receive one, you may provide them a submission stating that you have already initiated the process of converting your savings into an NRO Account.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Hi,

You may get a Notice. But that shouldn't be an issue if you can provide proper explanation for not converting Resident Account into NRO/NRE Account.

It is good to note that you have already started the process of converting the Resident Account into NRO Account.

There is no point in worrying about a future problem which may or may not arise. Also, no point in worrying about an inadvertent error done in the past.

Enjoy your life. Cheers and best of luck for your future. If you do get a Notice, professionals like us are always available to help you in the best possible manner.

It is illegal under FEMA regulations to hold Resident Savings Account after you become a NRI. You need to convert it into NRO after becoming a NRI. As you have already initiated action to convert your Resident Savings Account to NRO account voluntarily, there may not be serious penal consequences.

As regards the Income Tax Act and returns are concerned, the income earned in India is offered to tax be they are from NRO account or Resident Savings Account. There is no issue on this count. You need not get worried about it.