I am a male NRI who retired and came back from US to India for good in Aug 2019 and am retired since then. I am a US citizen. My age is 66. Almost all my money is invested in US in stocks. My total deposits in banks in India is less than $10,000. I own a house in Mumbai. What is my current immigration status? Am I currently “Resident but not ordinary Resident”? Should my savings Accounts in Indian be NRO and NRE savings accounts or regular savings accounts? What are the rules applicable to me regarding tax filings? Which country tax returns do I have to file? My income is zero since I moved but still I would like to file US taxes as I have previous capital losses in stocks and for withdrawals from my IRA account. Is it a requirement that I have to file tax returns in India and/or US tax returns? If yes, what Indian tax forms I have to use and what are Indian tax deadline dates for filing the income tax returns? I still invest in US stocks and get some dividend and interest on them. I also get some interest in my Indian savings accounts. Are there any reimbursement rules if I file taxes in both countries?
Answer: You were “resident but not ordinary resident” for two financial years i.e. 19-20 and 20-21. From financial year 21-22 you are a proper resident of India for tax purposes. You can keep your investments outside India as long as you want. Since you have assets outside India and are a tax resident of India, you have to mandatorily file an Income Tax Return (ITR) in India irrespective of whether you have any income in India or not and will have to disclose details of all you foreign assets owned as well as bank accounts maintained by you outside India in your ITR to be filed in India. You can use ITR 2 for filing your taxes in India in case you do not have any business income. The due date for filing your ITR in India is 31st July every year however, you can file it by 31st December of the next year with late filing fee.
Residential status under Foreign Exchange Management Act (FEMA) and income tax law is determined differently as the purpose of both is different. You had become a resident of India under FEMA the day you landed in India with intention to spend your retirement days in India. So you should have got all your bank accounts designated as ordinary accounts from NRO/NRE once you came back to India for good. Since you are a tax resident of India, your global income will get taxed in India. However, you can claim tax credit for taxed paid in US on the income which is being taxed in India. I am not aware about the requirement to file your income tax statement in US but I feel you will have to file your tax statement in US as well because you have income from your investments in US.
Balwant Jain is a tax and investment expert and can be reached on [email protected] and @jainbalwant on Twitter
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