Bank Account in India after becomming US Citizen

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usdude205

New Member
What happens to your bank account in India after you get US citizenship? Mine is not a NRI account. I understand that as soon as you get Naturalization certificate, you cease to be a citizen of India. Do we have time to hold on till we get OCI or should one close the existing account and open again after getting OCI. I understand that if you get OCI, you can have bank account in India.

Please help.

Thanks.
 
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usdude205 said:
What happens to your bank account in India after you get US citizenship? Mine is not a NRI account. I understand that as soon as you get Naturalization certificate, you cease to be a citizen of India. Do we have time to hold on till we get OCI or should one close the existing account and open again after getting OCI. I understand that if you get OCI, you can have bank account in India.

Please help.

Thanks.
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Nothing will happen to your account if you just leave it alone. You could mess it up if you try to muddy the waters. Just leave it alone. Bank would not know that you became USC unless you tell them.
 
mpotturi said:
Just leave it alone. Bank would not know that you became USC unless you tell them.
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Just curious, is that legal? Also, could you please tell what you mean by "messing it up" and "muddying the waters'?
 
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No it is not legal. In fact even as a green card holder you need to change the status of your bank account.

As a GC holder you were a Non Resident Indian (NRI). Once you get USC you are no longer an Indian, let alone a Non Resident Indian. Once you apply for the OCI, thats a different story.

Now switching to bank accounts. Legally, once you reside outside India as NRI or OCI you need to open an NRO or NRE account.

Furthermore, the issue of muddying waters is not that big. I had accounts in India for teh longest time. Then during one trip I went to teh banks invloved and told them of the change in my status, closed the old accounts, created new NRO/NRE type accounts. No big deal.

Perhaps the longer you keep them as they are and depneding on the amount of money being transacted etc, you may get into trouble if you do not rectify the situation. But thats just a guess on my part. :)
 
aashn said:
Just curious, is that legal? Also, could you please tell what you mean by "messing it up" and "muddying the waters'?
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Have you ever dealt with any govt agency in India and try to get the job done perfectly LEGALLY? Most of the banks are govt undertakings btw. If you did, then probably you know what I mean by muddying the waters.
 
banjo said:
Now switching to bank accounts. Legally, once you reside outside India as NRI or OCI you need to open an NRO or NRE account.
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So, banjo, if I understand you correctly, is it true that if an LPR had NRE accounts, then after becoming a USC, the NRE accounts can continue to be maintained, but just have to be updated with the new change in the nationality status of the account holder?

b) If that is true, are there any changes to the tax implications? I assume that the interest income generated by the NRE accounts are exempt from taxes with the Indian government. Should that income be reported as income while filing taxes with the IRS?

c) Lastly, if one decides to close the NRE account(s) and move the funds back to the US (repatriate?), is there a problem with that? Will the new funds be counted as income of some sort? I would imagine, of course, the interest generated now would be subject to taxes under IRS. But is there anything else to be aware of?

Thanks a lot.
 
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mpotturi said:
Have you ever dealt with any govt agency in India and try to get the job done perfectly LEGALLY? Most of the banks are govt undertakings btw. If you did, then probably you know what I mean by muddying the waters.
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No, I haven't had to deal with it. But I understand what you mean in terms of dealing with bureaucracy. But speaking personally though, I'd rather deal with whatever headache now, than do something illegal and deal with it later, but that's me.
 
aashn said:
So, banjo, if I understand you correctly, is it true that if an LPR had NRE accounts, then after becoming a USC, the NRE accounts can continue to be maintained, but just have to be updated with the new change in the nationality status of the account holder?

b) If that is true, are there any changes to the tax implications? I assume that the interest income generated by the NRE accounts are exempt from taxes with the Indian government. Should that income be reported as income while filing taxes with the IRS?

c) Lastly, if one decides to close the NRE account(s) and move the funds back to the US (repatriate?), is there a problem with that? Will the new funds be counted as income of some sort? I would imagine, of course, the interest generated now would be subject to taxes under IRS. But is there anything else to be aware of?

Thanks a lot.
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Well I am not yet a UCS and therefore do not have proof of how things will flwo with regards to personal experience. But it is my understanding that as a USC and an OCI (which you should apply for immediately) you will require little or no change with regards to your NRE accounts.

I have no idea what the tax implications are for repatriating money from NRE accounts. But again from what I read about OCI, I believe there are no differences between an NRI and an OCI wioth regards to taxes and financial stuff except OCI cannot buy farm land.

I myself am currently struggling to get RBI clearance to trade shares in India. That is turning to be a poorly documented process.

With regards to Banks and muddying the water, banks in India are getting much better. Plus you can use CitiBank if you want but I felt the service sucked there. I myself am now looking at ICICI as a depository for dematerialized shares, as a brokerage, and as a bank for NRE accounts.

I have not been asked any questions at any bank as to why I did not convert to NRI account status earlier. They want your NRI businees, so they wont screw around. Also, another option is to simply close your existing Indian bank accounts, withdraw all money (of course), and then go to another bank and open an NRO/NRE account.

CitiBank does not offer Depository services if you have an NRI/NRE account with them.
 
mpotturi said:
Have you ever dealt with any govt agency in India and try to get the job done perfectly LEGALLY? Most of the banks are govt undertakings btw. If you did, then probably you know what I mean by muddying the waters.
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The whole process takes 30 min. if you know the bank manager else it takes 1 hour max. If you are still afraid you may want to simply close the account and open and NRE/NRO with one of the private banks (Citibank,ICICI etc.) You can open those accounts from right here in the US. Once the accounts are opened you have free money transfers, online money transfers, bill payment facilities in india etc. Your parents can use ATM machines in India and pay their bills using your account, its simply great!
 
Non-Indians with PIO/OCI can hold NRE/NRO accounts ONLY

Dear All,

One of the benefits for OCI clearly says that it provides parity with NRIs with respect to financial benefits. Specifically:

Parity with NRIs (Non-Resident Indians) in financial, economic and educational fields EXCEPT in relation to acquisition of agricultural and plantation properties.

http://www.indiacgny.org/php/showContent.php?linkid=384

Thus, you should change you accounts when you have a chance.
Please note, Banjo it is not a trivial process when dealing in India. I am not sure if all branches of the nationalized banks understand the status of OCI.
 
Banking in India

Thanks Guys for all your views.

After reading all the replies, I think I will open a CitiBank or ICICI account and move my money there.

BTW, I assume that you can open a NRI account from here in US. Can someone point to the correct website for this?

Thanks.

usdude.
 
ICICI They have an online account feature. Never used it so can't comment on how efficient it is.

CitiBank They too have an online application. But I opened my account in New Delhi. While CitiBank seems appealing I did not like that idea that they cannot handle the brkerage and stock depository functionality. Though they told me they can when O was opening teh account. Otherwise they are pretty ok. They even sent me a 1099 form for interest earned in India.... damn!!!!! LOL


usdude205 said:
Thanks Guys for all your views.

After reading all the replies, I think I will open a CitiBank or ICICI account and move my money there.

BTW, I assume that you can open a NRI account from here in US. Can someone point to the correct website for this?

Thanks.

usdude.
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For non-citixens of India only OCI has NRI Previlages

usdude205 said:
Thanks Guys for all your views.

After reading all the replies, I think I will open a CitiBank or ICICI account and move my money there.

BTW, I assume that you can open a NRI account from here in US. Can someone point to the correct website for this?

Thanks.

usdude.
Click to expand...

I am not sure one can hold NRE/NRO accounts until they hold an OCI.
For PIO, it is stated that "Parity with Non-Resident Indians (NRI) in respect of facilities available to the latter in economic, financial, educational fields etc. except in matters relating to the acquisition of agricultural/plantation properties. PIOs would be eligible for benefits as available to NRIs from time to time."

http://www.indiacgny.org/php/showContent.php?linkid=53
 
sv2707 said:
I am not sure one can hold NRE/NRO accounts until they hold an OCI.
For PIO, it is stated that "Parity with Non-Resident Indians (NRI) in respect of facilities available to the latter in economic, financial, educational fields etc. except in matters relating to the acquisition of agricultural/plantation properties. PIOs would be eligible for benefits as available to NRIs from time to time."

http://www.indiacgny.org/php/showContent.php?linkid=53
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Actually citibank allows PIO card holders to open NRE accounts, so it may be OK
 
State bank opened my NRE account and only asked for my Indian passport, I wasn't US citizen then, they only ask where you live that's it. Most banks do same. Even after becoming US citizen, lot of places want copy of old Indian passport as that has your address in India. Their paper work doesn't work with foreign addresses.
 
Thanks, banjo and others.
banjo said:
They even sent me a 1099 form for interest earned in India.... damn!!!!! LOL
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So does that mean, the interest earned in India is taxable in the US?
 
Thank you, very much, JoeF. I didn't know that. Any pointers on where to find more information about this? Like how to report the interest as income, etc?
 
aashn said:
Thank you, very much, JoeF. I didn't know that. Any pointers on where to find more information about this? Like how to report the interest as income, etc?
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Thats easy, form 1040 schedule B has instructions on this. If I remember correctly you report it on line 7a. Even more simple if you have tax software like Taxact, you just type in the numbers and account name and the software completes your entries. You may be liable to pay indian taxes, depending on your status and place of residence, best is to check with your bank in india(i.e. citibank or icici ).
 
aashn said:
Thanks, banjo and others.

So does that mean, the interest earned in India is taxable in the US?
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Yes, you will get a 1099-INT every year as long as you earn interest in the NRE accounts.
 
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