NRI returning India to settle down – advice please how can he minimize his taxes ?

POSTED BY Viswanath ON April 7, 2014 4:09 pm COMMENTS (5)


I am posting this question on behalf of my family friend (who is now 60 years), planning to return back to India for retirement.

He has the following questions

His gratuity is a lump sum money (approx. 30 Lakhs). Because he is a NRI, he is enjoying the benefits of tax free returns all these years.

Now the moment he comes to India (say April 2015), till what time he can hold this NRI account. If he has to convert this into local account in 6 months, he might have to pay tax.

So he wants to minimize the tax implications and has following thoughts:

1. Can he construct a house and show, he is paying the interest earned from the FD\’s as EMI. Will this be applicable if he already has one house?

2. Any other suggestions?

He has 2 sons, first one married and settled in US and second one doing his MS in US. 2nd son would be completing his studies next year. So he has no big commitments/responsibilities. He and his wife hold some mediclaim policies for old age.



5 replies on this article “NRI returning India to settle down – advice please how can he minimize his taxes ?”

  1. ashalanshu says:

    Dear Viswanath, the person in question can park the amount in debt fund to postpone his tax liability till the actual withdrawal happens. In case of FD, it’s tax every year but in case of debt fund, only in the year of receipt the tax ‘ll be applied. The tax for debt fund ‘ll be very less after 1Y of minimum holding holding due to benefit of indexation.



  2. Viswanath says:

    Thanks Ashal and Vijay. He is having in a mix – FDs and some in bank accounts. He does not hold a green card. Any other options to save tax?

  3. ashalanshu says:

    Dear Vijay, NRE account has nothing to do with green card holding. NRI status is dependent of one’s stay in India or outside India. 🙂



  4. vijay says:

    If he hold a green card why not continue holding on to the non-resident account? If his kids are in the US, he will anyway be going back and forth once a while…that should be good enough for all practical purposes to keep earning those tax free returns on his NRE FDs.

  5. ashalanshu says:

    Dear Viswanath, the amount is in FDs or what in bank account? The account should be converted to Resident ordinary account after returning to India permanently within 6 months from the date of arrival.



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