Bank Accounts abroad.

m07el2 · Post by **m07el2** » Sat May 26, 2007 1:16 pm

Thanks in advance to this excellent and well informing forum!

I am a GC holder and have returned to India. To maintain my GC, I have my bank accounts in the USA remain open(along with paying taxes etc.,) but are almost dormant.

Question is: Should I require any permission from the RBI to keep these bank accounts open in the USA?

Reason I ask: On researching on the internet, I found the following on one or two sites: FERA-1999 permitted returning indians to maintain their bank accounts abroad. However FEMA-2000 is silent on this issue and hence best, to receive permission from the RBI.

Can anyone offer me insights on the above?

Thanks much.

insane · Post by **insane** » Sat May 26, 2007 7:59 pm

Since 2004, you are allowed to keep a foreign account open. However, the Income tax rules that after 6 months of becoming a resident in India, all foreign accoutns should be closed (any funds brought in after that will be treated as income in India and taxed).

m07el2 · Post by **m07el2** » Sat May 26, 2007 9:57 pm

insane;26226Since 2004, you are allowed to keep a foreign account open. However, the Income tax rules that after 6 months of becoming a resident in India, all foreign accoutns should be closed (any funds brought in after that will be treated as income in India and taxed).[/quote]

a) since 2004 - allowed to keep for.acct. OPEN.

b) But, after 6 months of becoming an indian resident - all for.accts should be closed.

I am sorry, I am confused between (a) and (b).

Also, it was my understanding (b) was applicable to indian citizens gone abroad on a temporary visa - say students etc.

Pls offer your suggestions. Thanks.

Desi · Post by **Desi** » Sun May 27, 2007 1:57 am

OP,

To my knowledge, you can keep your US bank account open without permission from RBI.

As an Indian resident you will be taxed on global income and hence any interest earned in the US accounts will have to be declared on your Indian tax returns and taxes paid. If you pay any taxes to USA, you can claim foreign tax credit for this in India.

Desi · Post by **Desi** » Sun May 27, 2007 1:59 am

insane;26226Since 2004, you are allowed to keep a foreign account open. However, the Income tax rules that after 6 months of becoming a resident in India, all foreign accoutns should be closed (any funds brought in after that will be treated as income in India and taxed).[/quote]

Can you provide some link / substantiation for the above claim, please?

It seems to me that what you are stating is plain wrong. Please correct me if you have substantiation.

m07el2 · Post by **m07el2** » Sun May 27, 2007 12:41 pm

Thank You Desi, for your help.

Whew! that makes me better. I was seaching high and low through the RBI website for forms that is used for declaring foreign currency accounts...

m07el2 · Post by **m07el2** » Sun May 27, 2007 9:12 pm

Desi;26250OP,

To my knowledge, you can keep your US bank account open without permission from RBI.

As an Indian resident you will be taxed on global income and hence any interest earned in the US accounts will have to be declared on your Indian tax returns and taxes paid. If you pay any taxes to USA, you can claim foreign tax credit for this in India.[/quote]

Pardon me for sounding silly, but, that means miniscule payments/withdrawals not exceeding five dollars once in 3 months can be done online from these accounts, say, payment to a credit card issued in the USA? Will this violate any rules/regulations of FEMA?

Thanks in advance.

Desi · Post by **Desi** » Mon May 28, 2007 5:38 pm

m07el2;26298 Will this violate any rules/regulations of FEMA?

Thanks in advance.[/quote]

To my knowledge, no rules are violated. You can use the money in account to give gifts, pay taxes (Indian or foreign), purchase goods, remit it back to India etc - all these are legitimate activities.

m07el2 · Post by **m07el2** » Mon May 28, 2007 6:41 pm

:) Thanks for your help and time, appreciate it.

Leha-Leha · Post by **Leha-Leha** » Tue May 29, 2007 2:20 am

m07el2;26298 Will this violate any rules/regulations of FEMA?

Thanks in advance.

Here is an excerpt from FEMA FAQs calrifying this issue.

V. Facilities to returning NRIs/PIO

Returning NRIs/ PIO

May continue to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India, if such currency, security or property was acquired, held or owned when resident outside India.

May open, hold and maintain with an authorised dealer in India a Resident Foreign Currency (RFC) Account to transfer balances held in NRE/FCNR(B) accounts. Proceeds of assets held outside India at the time of return, can be credited to RFC account. The funds in RFC accounts are free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment in any form outside India.

Here is the link for those who want to read more on FEMA...

http://www.rbi.org.in/scripts/FEMA_FAQs.aspx

Cheers!!