Do I need to bring the money I earned abroad when returning to India?

I will be moving back to India in FY25. Do I need to bring the money I earned abroad with me? If yes, will it be taxed? If no, what are the tax implications in India in the future?

-Name withheld on request

There is no obligation to do so. Under India’s Foreign Exchange Management Act, you are allowed to keep your funds outside India even after you return.

If you do choose to remit your earnings to India, they won't incur any additional tax. If you choose to keep your funds outside India, the tax implications depend on your residency status. So long as you qualify as Resident But not Ordinarily Resident (RNOR), income earned and accrued outside India is not subject to Indian tax unless it is derived from a business controlled in or a profession set up in India. 

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Once you are Resident and Ordinarily Resident (ROR), your global income, including any earnings from foreign-held funds, becomes taxable in India. At that point, you can use the appropriate Double Taxation Avoidance Agreement (DTAA) to reduce the withholding tax (tax deducted at source) in the country where the funds are held. You will also need to report 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.

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