Planning to return to India after years of being an NRI? Know what RBI, I-T department say about your foreign deposits

Your residency status determines what tax-related privileges you enjoy.
Did you stay in India for 182 days or more in the concerned FY?
Or
Have you stayed in India for 60 days or more in the concerned FY and 365 days or more in the preceding 4 financial years?
If you answer no to this, you are a Non-Resident.
However, if you answered yes to any of these questions, the next question is, have you been a resident in India in 2 out of 10 preceding years, and stayed in India for 730 days or more in the last 7 years?
If you answer yes to this, then you are a Resident and Ordinarily Resident, as per I-T laws. If you’ve answered no to this, you will be classified as a resident but not an Ordinarily Resident.
Source- The Economic Times Wealth July 14-20, 2025

An NRO account is maintained by non-resident Indians to manage their income, which they have earned in India. RBI says that these accounts should be converted to resident accounts upon return. As for taxation, the TDS (tax deducted at source) is applicable as an NRI till the NRO status exists. Post that, TDS will be deducted as per the resident's status.

RBI states that such an account should be converted to resident accounts or funds to be transferred to RFC (Resident Foreign Currency Account). Income tax will be applicable as on an NRE account, since an NRE account cannot be held by a resident of India. Notably, an NRE account allows an individual to manage their foreign income earned outside India.

As per the RBI, this account can be maintained till the deposit matures. After that, it needs to be converted to resident accounts or else, funds should be transferred to RFC. Notably, FCNR deposits allow NRIs to freely repatriate the principal and interest to their current place of residence, i.e. abroad. FCNR deposits also offer tax-free interest. As per I-T rules, the tax is exempted till the NRI has their NOR status after returning.

As per RBI, NRE and FCNR deposits and foreign inward remittances can be received in this account. I-T laws stipulate that interest income is exempted from tax till the NRI's NOR status remains. This account allows returning NRIs to hold funds in their foreign currency, without the need to convert them in INR.