Friday, August 25, 2023
HomeMutual FundMy wife has an onsite assignment; what should she do with current...

My wife has an onsite assignment; what should she do with current investments?

A Facebook group Asan Ideas for Wealth member recently posted a question about onsite assignments and action to be taken with current investments in India. We asked SEBI registered flat fee-only investment advisor Chandan Singh Padiyaar to expound on his reply to the question. It is reproduced here with the member’s permission.

About the author: Chandan Singh Padiyar is a SEBI Registered Investment Advisor, part of the freefincal list of fee-only advisors and fee-only India. His journey has been profiled earlier: Fee-only Advisor Journey: Chandan Singh Padiyar finds Inner Peace. If you wish to work with Chandan on your financial plan, you can contact him via his website: padiyars.

My wife has gone to Europe for a medium-time onsite assignment in late July. The expected timeframe of return is  April/ May 2024. Her base location is India, and her employer will continue with a minimum EPF contribution during the tenure of the assignment. From February 2024, she will be out of the country for 182 days. So, does that mean she will be treated as an NRI for tax purposes? What compliances does she need to follow, given the situation?

The Understanding is correct, as she will be out of India for over 182 days for FY 2023-24.  ‘Non-resident Indian’ is an individual who is a citizen of India or a person of Indian origin who is not a resident of India. Thus, to determine whether an individual is a non-resident Indian, his residential status must be determined under Section 6. As per section 6 of the Income-tax Act, an individual is said to be non-resident in India if he is not a resident in India and an individual is deemed to be resident in India in any previous year if he satisfies any of the following conditions:

  1. If she was in India for a period of 182 days or more during the previous year or
  2. If she is in India for a period of 60 days or more during the previous year and 365 days or more during four years immediately preceding the previous year.

However, regarding an Indian citizen and a person of Indian origin who visits India during the year, the period of 60 days, as mentioned in (2) above, shall be substituted with 182 days. A similar concession is provided to the Indian citizen who leaves India in any previous year as a crew member or for the purpose of employment outside India.

The Finance Act, 2020, w.e.f., Assessment Year 2021-22, has amended the above exception to provide that the period of 60 days as mentioned in (2) above shall be substituted with 120 days if an Indian citizen or a person of Indian origin whose total income, other than income from foreign sources, exceeds Rs. 15 lakhs during the previous year. Income from foreign sources means income that accrues or arises outside India (except income derived from a business controlled in or a profession set up in India).

Note: The Finance Act 2020 introduced new section 6(1A) to the Income-tax Act 1961. The new provision provides that an Indian citizen shall be deemed a resident in India only if his total income, other than from foreign sources, exceeds Rs. 15 lakhs during the previous year. For this provision, income from foreign sources means income that accrues or arises outside India (except income derived from a business controlled in or a profession set up in India).

However, such an individual shall be deemed an Indian resident only when he is not liable to tax in any country or jurisdiction because of his domicile or residence or any other criteria of similar nature.

Thus, from Assessment Year 2021-22, an Indian Citizen earning a total income over Rs. 15 lakhs (other than from foreign sources) shall be deemed a resident in India if he is not liable to pay tax in any country.

A person shall be deemed to be of Indian origin if he, or either of his parents or any of his grandparents, was born in undivided India.

What must be done with her mutual funds and direct equity investments (via Zerodha)?

She must update the NRI KYC with MFs and the Demat Account. As per Zerodha: A resident Zerodha account can be used even after going abroad if the stay is less than six months. If it is more, a resident would be considered NRI, and the resident account would have to be converted to an NRO account,

Apart from that, she is the sole holder of her salary account (HDFC), the first holder of a savings account in SBI, and the second holder in some other savings account where the first holder is a resident Indian.

As per RBI Regulations, a Non-Resident Indian (NRI) cannot open and operate a regular resident Savings Account. Further, any account should be converted into an NRI Account by the bank before one gets NRI status. An NRI needs to open a Non-Resident External (NRE) or Non-Resident Ordinary (NRO) Account to do any banking transactions in India. However, depending upon the transactional requirements of the NRI/PIO, he/she can decide to open either an NRE or NRO Account or even both.

Hence, all accounts where she is a primary account holder must be converted to NRO accounts.

Where she is a second holder, the account operation will be converted to former or survivor, and she won’t be able to operate the respective account.

Her PPF investment for the current FY was already made in April ( she had no idea this assignment would come up then).

As the PPF account was opened when she was a Resident Indian, she can continue the PPF account till maturity with regular contributions.

 Also, what are the rules regarding remittance?

There are no specific rules for remittance. As such, she is free to remit her earnings as she wishes.

Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!

Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1000 investors and advisors use this!

New Tool! => Track your mutual funds and stocks investments with this Google Sheet!

Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.

Podcast: Let’s Get RICH With PATTU! Every single Indian CAN grow their wealth! 

Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let’s Get Rich with Pattu Podcast

You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.

Lets Get RICH With PATTU podcast on YouTube
Lets Get RICH With PATTU podcast on YouTube

  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter with the form below.
  • Hit ‘reply’ to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your mailbox! Subscribe to get posts via email!

Explore the site! Search among our 2000+ articles for information and insight!

About The Author

Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.

Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.

Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   

Our new book for kids: “Chinchu gets a superpower!” is now available!

Both boy and girl version covers of Chinchu gets a superpower
Both boy and girl version covers of Chinchu gets a superpower.

Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision-making and money management is the narrative. What readers say!

Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!

Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. – Arun.

Buy the book: Chinchu gets a superpower for your child!

How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!

Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or you buy the new Tactical Buy/Sell timing tool!

We publish monthly mutual fund screeners and momentum, low volatility stock screeners.

About freefincal & it’s content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)

Connect with us on social media

Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.

Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)




Please enter your comment!
Please enter your name here

- Advertisment -
Google search engine

Most Popular

Recent Comments