Please consult a professional CA in India as well as CPA in country of his current residence. It seems there are quite a few irregularities.
But he has a domestic Savings Bank account that was opened when he was in India.
As a NRI, one cannot hold Domestic Savings Account, this is violation of Foreign Exchange Management Act [FEMA]. Please have this converted to NRO [Non-Resident Ordinary] Account ASAP.
He has Fixed Deposits in Rupees, in the same bank.
If there were normal FD's; these are not allowed. These need to NRO-FD's.
Recently, he got a notice from IT dept about FD. Now, how can he convert his SB (and FD) accounts to NRE account into the same or any other bank, without getting taxed?
Any interest on NRO Account is taxable in India. Tax has to be paid. Similarly this should be reported in the country of residence [for most countries. Some relief on tax can be claimed under DTAA [Dual Tax Avoidance Agreement] if there is such arrangement between India and said country
Funds in Savings / NRO account cannot be transferred to NRE Account. These can be repatriated to US under the Liberalized Remittance Scheme upto 1 million a year. There are some paperwork Form 15CA/CB required. A CA certificate is required. Read more at Liberalized Remittance Scheme and here.
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