I will be moving back to India in FY25. Should I take the money I earned abroad with me? If so, is this subject to tax? If not, what are the tax implications in India going forward?
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There is no obligation to do so. The Indian Foreign Exchange Management Act allows you to keep your money outside India even after you return.
If you choose to transfer your income to India, no additional tax will be charged. If you choose to keep your money outside India, the tax implications depend on your residency status. As long as you qualify as a Resident But not Ordinarily Resident (RNOR), income earned and accrued outside India is not subject to Indian tax unless it comes from a company managed in India or in a profession incorporated in India.
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Once you become a resident and ordinarily resident (ROR), your global income, including any income from funds held abroad, becomes taxable in India. At that point, you can use the applicable Double Taxation Agreement (DTAA) to reduce the withholding tax (tax charged at source) in the country where the money is held. You must also declare your foreign assets in your Indian income tax return, under the Schedule of Foreign Assets.
Harshal Bhuta is a partner at PR Bhuta & Co. Chartered accountants.
