Home / Money / Personal Finance /  Is NRO account necessary for moving abroad?

We are planning to move to Australia. We have investments in FDs, PPF, EPF, mutual funds, shares and liquid funds. Do we need to now invest these instruments in a non-resident external (NRE) or non-resident ordinary (NRO) account  or can we let them continue till maturity?

— Name withheld on request


Under the exchange control law, when an individual leaves India for employment or business or for vocation outside India or for any other purpose indicating his intention to stay abroad for an uncertain period, his existing resident bank account should be designated as an NRO account. An NRE account may be opened afresh. The residential status under the exchange control laws is different from that under the income-tax laws.

Thus, you are required to convert your existing resident (saving and fixed deposit) bank accounts to NRO account.

As a non-resident Indian, the PPF account may be continued till its maturity on non-repatriation basis (no remittance outside India) and the account will be closed on maturity. For mutual funds and shares, you will need to inform the change of residential status to the fund house and Indian company, respectively.


My son lives in Canada and sends 25,000 every month to his mother for paying the monthly installment of a car loan. Is this amount taxable? Also, does my wife need to show or declare this in her Income Tax Return (ITR)?

— Name withheld on request


Under the India income-tax (I-T) Act,  the funds remitted from outside India by a son to the savings account of his mother in India will not have any income-tax implications in India. As the transfer is not taxable in India, there is no requirement to report the same in the ITR in India.

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

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