All these years that you have worked abroad, you have amassed a bank balance in your country of residence. Now, you are planning to return to India. And you do have the option of bringing back the foreign currency to India in its original form – without converting to Indian Rupees. A resident foreign currency account (RFC) can allow you to do that.
Who is eligible?
- NRIs who have returned to India on or after April, 1992
- NRIs employed abroad for at least one year prior to his/her return to India
What can you deposit in a resident foreign currency account?
- You may deposit foreign exchange received from abroad as salary/business income in this account.
- You can also deposit funds received abroad from the sale of assets there. Other eligible funds are any dividend/interest/rent received abroad and the maturity/surrendered value of any life insurance claim abroad.
- You may transfer the existing balance of your NRE/FCNR accounts till the time of return to your RFC account.
- Monetary gifts that you received abroad.
- The withdrawal would be in Indian Rupees only.
However, you need to remember one thing. If the value of your cash deposits exceeds $5,000 or the combined value of the notes and the Travelers’ Cheques exceed $10,000, then you would need to submit a Currency Declaration Form (CDF) to the customs authorities as soon as you land in India.
Type of account
- You can maintain the account as a savings account (as an individual), current account, or term deposit (in all other cases).
- The account might be single or joint (with a resident close relative) on a “former or survivor” basis. However, the resident joint holder won’t be able to operate the account till the primary account holder is alive.
Eligible currencies
Not every currency of the world can be deposited in an RFC account. Certain banks might allow this facility only for USD and GBP; while some others might extend the facility to cover EUR, CAD, AUD, and maybe JPY. Before choosing your bank for opening this account, clarify this condition to avoid further hassles.
Tax implications
The interest that you would earn in your RFC account is taxable. You could, however, claim a TDS (Tax Deducted at Source) exemption on the interest earned if you have submitted an RNOR (Resident but Not Ordinarily Resident) declaration at the beginning of the financial year.
The rate of interest would vary by currency and also by term. You are not eligible to obtain a loan/overdraft facility from the bank against the RFC account balance.
Documentation requirements
- Collect the physical RFC Account Opening Form from the nearest branch of your chosen bank or download it from the bank’s website.
- Self-attested copy of the valid passport
- Self-attested copy of the expired work permit/employment visa that shows the proof of at least 1 year’s stay abroad
- Current Indian residence address proof
Nomination
For your RFC account, you can nominate a nonresident or a resident Indian. Upon the death of the account holder:
- In the former case, the balance would be remitted abroad
In the latter case, the nominee would receive the balance in Indian Rupees
