I came to Europe in 2019 for higher studies, started working in 2021. Will I be considered an NRI?

I came to Europe in August 2019 for higher studies and started working here in April 2021. Will I be considered an NRI as far as income taxes are concerned? How can I send money to my parents to pay back my loan and what would be the tax implications for them? Where can I park my earned money in India? Can I continue with my SBI account without conversion?

Divakar Vijayasarathy, Founder and Managing Partner, DVS Advisors LLP replies: Given the fact that you haven’t returned to India since August 2019, you will be considered a Non-Resident Indian for tax purposes for 2020-21. Assuming you are an Indian citizen and do not have Indian income exceeding Rs 15 lakh, then for 2021-22, you will be regarded as an NRI if you do not visit India. If you visit India and stay for 182 days or more, you will be considered as Resident and Ordinarily Resident; if the stay is less than 182 days, you will be considered as Non-resident. Park money earned in India like rent, dividend, pension, interest, etc. in an NRE account, for the reason that the interest received on the balance maintained in an NRE account is exempt from income tax in India, which is not the case in an NRO account.

Further, monies in NRE accounts are freely repatriable outside India. The amount received in an NRE account can be utilised for local disbursements including loan repayments, repatriation outside India, and investments in India. Opening a joint NRE/NRO account with your parents is permissible if a Power of Attorney is executed in their favour, for the purpose of making local payments. Remit the loan amount to your NRE/NRO account, from which your parents, as joint operators, can make the loan payment. Remitting money to your parents will not have any implications in your hands or in their hands, from an income tax perspective. Given that you have left India to stay abroad for an uncertain period of time, you must necessarily convert your existing SBI account into an NRO account.