I am seeking your advice on this topic.
I am investing in mutual funds (via SIP) from past 5 years and recently started investment in stocks also. I am using FundsIndia platform for these investments. Status of this account in “Resident” since I was working in India during that time but now I am working abroad from past few years on a official assignment, so technically I am a NRI now but not sure how long I will be working abroad as its depending on my official assignment, which means I may go back to India in future and become “Resident” again.
Now I want to know what is the impact of changing my resident status to my existing investment. Do I need to change my status in my investment portfolio from “Resident” to “NRI”?
If Yes, then what are the implication/impact on my existing investments? What are the consequence if I don’t disclose and change the status?
My point is, in case if I change the status and tomorrow if I have to go back then the my investment period till now would be wasted.
Also, because of this I have stopped my investment in PPF because of latest rules for NRI.
Please suggest and provide your advice on this.
Many thanks for your past guidance.
God bless you and Take care!
If your current Residential status is NRI, advisable to inform about your status change to your AMCs/FundsIndia.
Related article :
Residential Status – NRI or Resident? & NRI Taxation
It may be noted that some Indian mutual fund companies do not allow US/Canada NRI to invest in the wake of FATCA norms.
FATCA Compliance Requirements & Impact on Your Mutual Fund Investments
Residential status change will not impact your investment period..
You may also inform about your status change to your Demat service provider as well.
You will need to inform the change of residential status to the bank where you have the resident demat account. A new NR demat account will be opened and securities would be transferred from the resident demat account to NR demat account. The resident demat account will be closed.
Related article :
Mutual Funds Capital Gains Taxation Rules FY 2018-19 (AY 2019-20) | Capital Gains Tax Rates Chart
Thank you for your response.
What are the consequence if I don’t disclose this and don’t change the status? As it might possible that I may go back to India in future and become resident again.
It is illegal for an NRI to continue to hold their normal Resident bank accounts.
It is also necessary to inform all the companies of whose shares you hold, and UTI/MFs about change in your status. If you have a demat account, it is not necessary to inform the companies but informing the DP is a must.
There can be issues with the Indian IT dept and/or US authorities So, choice is yours!
Before becoming an NRI, there are a couple of things you need to manage with respect to your financials. Some of them are:
- Converting your bank account to an NRO account
- The withdrawals from the PPF account are non-repatriable and need to be deposited in the NRO account
- If you are invested in any mutual funds, you need to update your mutual fund KYC with these fund houses
Thanks for your response.
It was told to me (from funds India) that I need to stop my current investment as it is linked with my saving account and create new investment with new NRO account, so my current investment will be impacted.
My friend has suggested another option to open a demat account with my father/mother’s name and do your further investment using there account (as they are resident of India and senior citizen).
and let the current investment open with your current saving account unit you manually transfer/close current investment.
Can you share your comments on this? Any concern do you see with this?
Yes, you can gift the amount to your Parents and then the investments can be made in their names. No issues on that front!
In case, you transfer your investments, do watch out for Tax implications if any.
Related articles :
- Mutual Funds Capital Gains Taxation Rules FY 2018-19 (AY 2019-20) | Capital Gains Tax Rates Chart
- What is Double Taxation Avoidance Agreement (DTAA)? | Is Income earned outside India Taxable?
- Budget 2018 LTCG Tax on Equity Mutual Funds & Important Implications
- 10% LTCG Tax on sale of Stocks/Equity Mutual Funds | Budget 2018-19 Proposal
Thanks again Sreekanth,
Do you see any complication or concern using parents account for own investments and while doing redemption/selling of stocks in future?
Suggest you to Gift the monies to your parents via non-cash mode transactions only. They can also declare this in their Income Tax Returns as Exempted Incomes. Do note that Gifts are tax-free in this case.
They in-turn can invest the monies in their names in MFs/Stocks as per your requirements.
They can make you a Nominee for these investments (or) they can write a WILL accordingly.