How to convert a Resident account to NRI account
Now, If an Indian Resident becomes an NRI then he/she has a compulsion to change their resident status in the bank accounts. If he/she fails to do so then they may need to pay the penalties for it.
In this article, we will learn about converting a resident account to NRI account.
NRI’s are obliged to open two types of NRI accounts that are based on the Repatriable (NRE) and Non-Repatriable (NRO) basis. The point that must be noted is that NRIs can only convert the savings bank account to NRO account. It is done as NRIs are not allowed to transfer money to an NRE account.
To convert a resident account to an NRE account an investor is require to close the account and then open a NRE Account. The NRI can transfer the fund present in their resident account to another resident account on the name of family member.
Steps to convert the resident account to NRO Account
The process to convert a resident account to NRI account is described below:
1. Contact the bank where you hold your resident or savings account and then ask them to convert their resident account to NRO account.
2. Fill in the application form and get it signed by the account holder.
3. The collateral photocopies of the required supporting documents.
4. Get the notary of photocopies done from the Indian Banks with the overseas branch/notary public/ Indian consulate.
5. Self-attest the copies of all the required documents.
6. You are also required to attach the receipts if holding any FD with that account.
7. Further, send the form along with the documents to the bank address.
Documents Necessary to convert Resident Account to NRI Account
A certain set of documents is required to convert a Resident account to an NRI account. The documents are listed below:
1. FATCA Declaration form.
2. FEMA Declaration form.
3. Declaration of P.O. Box (for the NRIs trading in UAE).
4. PAN Card copy.
5. Account closing form of Resident Bank Account.
6. NRI Bank Application form.
7. Two passport size photographs.
8. Foreign Residence address.
9. A valid visa copy or work permit copy.
10. A passport copy.
The documents have to be authorized by the competent authority.
NRO Account Post conversion details
While converting the account from resident to NRO there are some details that remains same or changes. The information of the NRO account post conversion are:
1. The bank account details must be update with the existing holdings as maintained with the bank in the ledger account.
2. The account number of the account does not change.
3. There will be an automatic transfer of funds from the savings account to the NRO account.
4. There is no need to submit an address proof, in case the address has not been changed.
5. It is meant compulsory to update the present overseas address proof.
6. The income earned from the interest on the FDs and savings account then it will be taxed at the minimum rate of 10% and with a maximum of more than 30% surcharge.
What is the tenure of converting a resident account to NRO account?
According to the FEMA guidelines, after achieving an NRI status. It is illegal to hold the savings account with India in the name of the NRI. The reasonable time duration of changing a bank account status is undefined. But NRIs consider the time to be maximum of 3 months.
It must be done on time because in India heavy fine and penalties are charged for not updating the information on time.