How do I handle my son’s financial institution accounts?

My son, who was employed in India until 31 July 2021, left for the US on 8 August 2021 for his increased research. In December 2021, he returned to India and stayed right here for 3 weeks. During this era, he had filed his revenue tax return (ITR) for 2021-22. Thereafter, he left to finish his research within the US. He joined a job there on 26 August.

He has 4 financial institution accounts. The first is a financial savings account with ICICI Bank, the place he additionally has some fastened deposits (FDs). The second is with the State Bank of India. The third is with Citibank, the place he has some FDs. This can be linked together with his on-line buying and selling account by means of which he has invested in shares and mutual funds. The fourth is operative account with Canara Bank, whereby he has some FDs. He additionally has a mortgage account with Canara Bank (after he took a mortgage from the lender to fund his increased schooling within the US). My Canara Bank account is linked with this account since his schooling mortgage was obtained collectively in our names.

Now, how ought to I handle all his financial institution accounts, provided that I’ve been suggested to open an NRO (non-resident peculiar) and NRE (non-resident exterior) account in his identify? Do I have to file his ITR?

—Name withheld on request

Under the change management regulation, when a person leaves India for employment or for enterprise or for vocation exterior India or for every other goal indicating his intention to remain overseas for an unsure interval, he would qualify as a “individual resident exterior India”. As a “person resident outside India”, his present resident financial institution accounts ought to be designated as Non Resident Ordinary (NRO) Account. The residential standing beneath the change management regulation is completely different from that beneath the Income-tax regulation.

Thus, your son is required to transform his present resident (saving and stuck deposit) financial institution accounts to NRO (saving and stuck deposits) Account. For mutual funds and shares, he wants to tell the change of residential standing to the mutual fund home and dealer to replace the information. It is advisable that you just and your son seek the advice of along with your financial institution and dealer for obligatory formalities and documentation to replace the accounts as NRO. The ITR will have to be filed in case your son’s taxable revenue in India exceeds the edge restrict of ₹2.5 lakh (earlier than contemplating Chapter VIA deductions and sure specified exemptions) or if he fulfils sure circumstances for obligatory submitting of income-tax return in India.

Sonu Iyer is tax companion and other people advisory providers chief, EY India.

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