Moving back to India from the Gulf: your tax status and your money

Your tax residence in the year you come back

The Income Tax Department treats you as resident in a year if you spend 182 days or more in India. 60 days or more in the year also counts, with 365 days or more in the 4 years before.

The longer 182-day limit in place of the 60 is for the year you leave India for a job abroad. In the year you come back to stay, the plain 60-day test applies. So 60 days in India can make you resident.

One more rule matters for Gulf workers. Take a citizen with income over Rs 15 lakh, not counting foreign sources. If they are not liable to tax in any country, India treats them as resident (section 6(1A)). The Gulf states charge no personal income tax, so ask an adviser whether this reaches you.

Residents are split again into "ordinarily resident" and "not ordinarily resident", which changes what is taxed. Ask your adviser which one you will be in the year you return.

Your end of service money and Indian tax

The Income Tax Department guidance for non-residents is silent on one point. It does not say how a Gulf gratuity is treated when you come back. The answer turns on your status in the year you are paid, and on where the money was earned.

So before you move the money, see an Indian tax adviser. Take your day count for the year and the date your employer pays you. Payment while you are still abroad and payment after you are back can be treated differently.

Your bank accounts when you return

• NRE account: the RBI says it should change as soon as you return for a job or your status changes. It becomes a resident account, or its money moves to an RFC account, at your choice.
• FCNR(B) deposits: they can run until they mature at the agreed rate, if you want.
• NRO account: it becomes a resident account when you return to stay.
• RFC account: any resident can hold one. It can take foreign currency paid as a pension, superannuation or other benefit by an employer abroad. There is no limit on how you use it. You can keep your end of service money in foreign currency there.

While you are still non-resident, NRO balances can go abroad up to USD 1 million a financial year. That year runs April to March.

Bringing cash in

There is no limit on the foreign currency you can bring. Declare it on the Currency Declaration Form at the airport above set limits. They are USD 10,000 in notes and travellers cheques together, or USD 5,000 in notes alone.

Sending it from the Gulf

These services send money online from each Gulf country, paid for in that country:

• From the UAE: Western Union and Remitly.
• From Saudi Arabia: Western Union and STC Bank.
• From Kuwait: Western Union, LuLu Money, BEC Pay and Al Mulla Exchange.
• From Qatar: Western Union.
• From Oman: ask your bank or an exchange house for a quote.
• From Bahrain: Western Union.

Ask each for a quote to India for the same amount, and compare what arrives.