If a Non Resident Indian (NRI) invests in mutual funds and he becomes resident later, what will happen to his mutual fund investments made prior to his return to India? Will it attract Income Tax? And what about the fund in bank account which he sent while he was an NRI?
- Ramesh Popat
On becoming a resident Indian, you must inform your banks and mutual funds about your change of status within a reasonable time. You may be able to continue holding your mutual funds after informing the fund house about your change of status. It will not be possible to say what exactly will happen to your bank account as you haven't given the details of your bank account. Non Resident Ordinary accounts have to be converted to resident savings bank account. Foreign Currency Non-Resident (FCNR) accounts can run till maturity. However, earnings in Non Resident External (NRE) savings account will have to be transferred to resident savings account or transferred to Resident Foreign Currency (RFC) account. Also, you will not able to continue with your NRI demat account. You will have to open a resident demat account and transfer all your existing investments to it.