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Say an Indian citizen goes abroad on a work-visa for ten months. Given that her status changes to NRI after 182 days, is she now obligated to re-designate her savings accounts in India as NRO until she returns? What are the possible consequences of not doing so?

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Yes it is mandatory to change it to NRO. One need not wait for 182 days, and can do it before departure as well if you have valid work visa and letter etc.

Not doing so is violation of FEMA.

  • But isn't it impractical to expect temporary NRIs to do this? Sometimes, you don't know at the time of leaving India how long you are going to be abroad. What if someone returns in 200 days? They'll have to re-designate back and forth in a matter of 3 weeks? – ottodidakt Nov 12 '16 at 17:27
  • If you are sure, do it before you leave. Else do it once you know. All it takes is communication to bank with some paperwork. – Dheer Nov 13 '16 at 1:10
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    Fixed a minor typo. – Dilip Sarwate Aug 16 '18 at 14:28
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See Section 2(v) of https://www.incometaxindia.gov.in/pages/acts/foreign-exchange-management-act.aspx : the definition of a non-resident as per FEMA is complex and poorly written. You need to see whether you would be an NRI as per it. The definition is based on "preceding financial year" as opposed to "up until a current time point". If you go by it, in your case, your status won't change to NRI right after 182 days outside India in that financial year, but only after the end of that financial year. But by that time, if you are back in India, it would be contradictory to say you are an NRI. Had they used "current financial year", then your status would change to NRI right after 182 days outside India. Moreover, if you take up employment outside India, as per the definition, your stay outside India doesn't have to be more than 182 days to be considered a non-resident; you would be an NRI right after you leave (Section 2(v)(i)(A)(a)).

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