The notifications issued in July / September 1992 do not grant general permission to returning Indians to carry on business / profession abroad. This would still require Central Government’s permission under section 27 of FERA.

As a measure of practical convenience, other assets such as cars, jewellery and household durables were usually sold and proceeds remitted to India / credited to bank accounts abroad, to be held with RBI permission. It seem’s that such assets can also continue to be held, especially in the light of Notification Nos 116 and 117 dated 7th September, 1992, granting general permission to operate foreign currency accounts and make payments to non-residents respectively.

Planning

General
As a result of the general exemptions referred to above, matters have become much simpler. However, before returning to India, one would have to apply one’s mind to several issues including the following:

(i) Whether the conditions stated in the notification granting general exemption are satisfied; for example condition of one year’s residence abroad.

(ii) Implications of RFC account.

(iii) Whether NRE / FCNR accounts are to be converted into rupee accounts or RFC accounts.

A few other miscellaneous issues may also be considered as given in the succeeding paras.
 

Timing of return
Under the Income-Tax Act, a person becomes resident in India if he is in India for 182 days or more in the relevant financial year or he has been in India for 60 days or more in the relevant year but 365 days or more in the 4 preceding years. Accordingly, it is better to ensure return after 1st October, of the relevant financial year. This is assuming that the returning Indian has not been in India for more than 365 days in the preceding 4 years.
 

Liquidation of Indian investments made on repatriation basis
Investments such as shares in Indian companies made through remittances from abroad should be liquidated and sale proceeds be repatriated abroad. This also acts as a hedge against rupee devaluation and would not be possible once the NRI becomes resident in India.
 

Money Talk

Investment in India