I have a small family business in India and I will be moving to Australia for a 3-year assignment. I have investments worth Rs12 lakh in mutual funds and stocks. Can I continue to stay invested in them? I can withdraw this money and my father can invest on my behalf. From a tax perspective, what will be a smarter thing to do? Please advise.
—Manpreet Singh Rekhi
You may stay invested in the shares and mutual funds through a non-resident demat account (NR demat account).
Under the exchange control laws, when an individual leaves India for taking up employment or for carrying on business or vocation outside India or for any other purpose indicating his intention to stay outside India for an uncertain period, his existing resident bank account should be designated as a non-resident (ordinary) account (NRO account) due to change in residential status. The residential status under the exchange control law is different from that in income-tax laws.
You will need to inform the change of residential status to the bank where you have the resident demat account. A new NR demat account will be opened and securities would be transferred from the resident demat account to NR demat account. The resident demat account will be closed.
