Moving abroad is a whirlwind of visas, packing, and new beginnings. In the chaos, most Non-Resident Indians (NRIs) forget one tiny, yet consequential detail: their old Indian Savings Account.
You might think that account is just sitting there quietly, earning a bit of interest for your next Goa trip. However, in the eyes of the Reserve Bank of India (RBI), that resident account is a ticking time bomb.
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The 182-Day Rule: From “Resident” to “Violator”
Under the Foreign Exchange Management Act (FEMA), your residency status changes once you have been abroad for more than 182 days in a financial year.
Keeping a regular resident savings account after this transition isn’t just “forgetful”—it’s a legal violation. FEMA regulations mandate that once your status changes, you must designate your accounts as NRE or NRO.
Decoding the “N-Alphabet Soup” (2026 Cheat Sheet)
If the different account types make your head spin, here is the simplified breakdown of where your money should actually live:
1. NRE (Non-Resident External) Account
The Use Case:
Best for your foreign earnings (USD, GBP, AED, etc.) being sent back to India.
The Benefit:
It is a “Tax-Free Party.” Interest earned is exempt from Indian income tax, and the principal is fully repatriable (you can take it back abroad whenever you want).
Source: RBI Master Direction on NRI Accounts.
2. NRO (Non-Resident Ordinary) Account
The Use Case:
For income generated within India (e.g., house rent, stock dividends, or pension).
The Catch:
It’s a “Tax Magnet.” Interest is usually subject to a ~31.2% TDS (Tax Deducted at Source). It is hardworking but strictly regulated.
Fact-Check: Can You Move Money from NRO to NRE?
There is a common myth circulating in the NRI community that money in an NRO account is “trapped” and cannot be moved to an NRE account.
This is false. Since 2012 (per *RBI Circular A.P. (DIR Series) No. 117), NRIs are permitted to transfer funds from their NRO account to an NRE account up to a limit of USD 1 Million per financial year.
The “Checkpoint”: Form 15CA & 15CB
While the transfer is legal, you can’t just hit a “transfer” button and be done. You need a “Checkpoint”:
- Form 15CB: A certificate from a Chartered Accountant (CA) certifying that taxes have been paid on the funds.
- Form 15CA: An online self-declaration filed by the remitter.
- Bottom Line: No CA signature = No transfer.
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The Verdict: Don’t Ghost the RBI
Managing your transition to NRI status is about more than just convenience; it’s about keeping your hard-earned money in the “White” and staying compliant with 2026 regulations.
Our Advice:
- Convert your existing resident accounts to NRO immediately.
- Open an NRE account for your foreign savings.
- Consult a professional to handle your 15CA/CB filings to avoid penalties.
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