I have been a non-resident Indian for the past 25 years, living in UAE. I am 60 years old now. I want to return to India for good in the near future. I own a few freehold properties in UAE at the moment, fetching rental income. Once I return to India and lose the NRI status, I understand that I will maintain the RNOR status for the next 3 years. My understanding is that I will not be asked to pay tax for the overseas income (funds coming into my NRE account from my overseas properties) during my RNOR status period. My questions are:
- Is there any upper limit of funds being brought in from sales proceeds and/or rental income from these properties while I have the RNOR status?
- Can I still own an overseas property after I lose the RNOR status and become a ordinary resident?
- Please clarify if the assumptions stated above are correct.
3 Answers
Dear Sir,
Yes, you are allowed to keep your RNOR status for up to 3 financial years post your return back to India. The taxation will be very much in line with that of an NRI and therefore income that you may earn outside of India (while you may have returned back) will continue to be not taxed in India.
Under RNOR status - any income earned outside India is not taxable and income earned in India is taxable.
However, once you have attained the status of a Resident, all of your income within and outside India will be taxable in India, barring any concessions that may be available under the Double Taxation Avoidance Agreement between India and the country from where your overseas income has arisen.
So, once your become Resident Indian, any income earned outside India, will also be chargeable to income tax.
I am not sure on the threshold limit of funds that can be transferred.
I have read that any capital receipts like sale proceeds from properties after payment of taxes upto to US $ 1 million per calendar year can also be repatriated or transferred to NRE bank account after complying with required formalities.
Kindly take advice from an NRI taxation expert / CA.
Kindly read :
https://www.relakhs.com/double-taxation-avoidance-agreement/
You can check your Residential status (NRI/RI/RNOR) online..click here..
Dear Sreekanth,
Thank you very much for the candid reply. One thing I observed from your reply was that I may have to apply for permission to RBI before bringing in the sales proceeds of the overseas property if I sell it after I give up the NRI status (right now it is not required). Do I have to seek the RBI permission when I have the RNOR status?
The other thing I observed is that I can - if I wish- continue to own a overseas property even after becoming a Resident. Its just that the money earned outside India and brought into the India will be fully taxable, irrespective of it is the rental income or sales proceeds. Is my understanding correct?
Thanks and regards
Manickam
Dear Sir,
Regarding the threshold limit (RBI's rules), suggest you to take advice from a CA (who is an expert in NRI taxation matters).
Regarding the later part of your query - Even, if you do not get the income into India, still it needs to be declared in your Indian Income tax return and is taxable, but subject to DTAA.
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