Active Stocks
Mon Sep 25 2023 13:30:33
  1. Tata Steel share price
  2. 127.9 0.95%
  1. NTPC share price
  2. 239.9 0.82%
  1. Wipro share price
  2. 415 -0.87%
  1. Tata Motors share price
  2. 622 0.14%
  1. ITC share price
  2. 443.45 0.06%
Business News/ Money / Q&a/  How do I manage my son’s bank accounts?

My son, who was employed in India till 31 July 2021, left for the US on 8 August 2021 for his higher studies. In December 2021, he returned to India and stayed here for three weeks. During this period, he had filed his income tax return (ITR) for 2021-22. Thereafter, he left to complete his studies in the US. He joined a job there on 26 August.

He has four bank accounts. The first is a savings account with ICICI Bank, where he also has some fixed deposits (FDs). The second is with the State Bank of India. The third is with Citibank, where he has some FDs. This is also linked with his online trading account through which he has invested in shares and mutual funds. The fourth is operative account with Canara Bank, wherein he has some FDs. He also has a loan account with Canara Bank (after he took a loan from the lender to fund his higher education in the US). My Canara Bank account is linked with this account since his education loan was obtained jointly in our names.

Now, how should I manage all his bank accounts, given that I have been advised to open an NRO (non-resident ordinary) and NRE (non-resident external) account in his name? Do I need to file his ITR?

Name withheld on request

Under the exchange control law, when an individual leaves India for employment or for business or for vocation outside India or for any other purpose indicating his intention to stay abroad for an uncertain period, he would qualify as a “person resident outside India". As a “person resident outside India", his existing resident bank accounts should be designated as Non Resident Ordinary (NRO) Account. The residential status under the exchange control law is different from that under the Income-tax law.

Thus, your son is required to convert his existing resident (saving and fixed deposit) bank accounts to NRO (saving and fixed deposits) Account. For mutual funds and shares, he needs to inform the change of residential status to the mutual fund house and broker to update the records. It is advisable that you and your son consult with your bank and broker for necessary formalities and documentation to update the accounts as NRO. The ITR will need to be filed if your son’s taxable income in India exceeds the threshold limit of 2.5 lakh (before considering Chapter VIA deductions and certain specified exemptions) or if he fulfils certain conditions for mandatory filing of income-tax return in India.

Sonu Iyer is tax partner and people advisory services leader, EY India.

"Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!" Click here!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Updated: 25 Dec 2022, 11:16 PM IST
Next Story
Recommended For You
Switch to the Mint app for fast and personalized news - Get App