Why NRIs With Foreign Businesses Need Expert Tax Advice Before Returning

 

The idea and intent of returning to India after years abroad can evoke a mix of feelings. While it's exciting to return home, there are also a few things to take care of. The transition from abroad to India involves much more than relocation. Especially for those doing business overseas and planning to shift to India, they have to carefully review their logistics, as this requires meticulous tax planning. While it can be overwhelming to handle it all and to avoid unexpected liabilities, for this transition, an NRI returning to India with tax implications needs an expert tax advisor by their side.

This blog explains why expert tax advice becomes essential before making the move back home.

Change in Tax Residency Status Can Trigger Global Taxation

One of the significant shifts for NRIs returning to India is a change in their tax residency. Income received or earned in India is taxed as an NRI. However, once you become a resident of India, under Indian tax laws, your global income is taxable in India, including dividends, capital gains, and foreign business income. This is why NRIs need an expert to help them avoid unintentionally incurring higher tax liabilities.

Your Foreign Company Could Be Taxed in India

Another reason to hire a tax advisor for NRI tax implications when moving back to India is the Place of Effective Management (POEM) rule. If Indian authorities believe your foreign company is being managed from India after your return, it could be treated as an Indian resident company for tax purposes. This can lead to additional compliance burdens and worldwide taxation of foreign businesses in India. Hence, professional advisors can help you maintain proper governance structures so your business remains non-resident and compliant abroad.

Reporting Foreign Assets and Income Is Mandatory

Returning NRIs must comply with Indian Income Tax reporting rules and the Black Money (Undisclosed Foreign Income and Assets) Act. If NRIs fail to report foreign bank accounts, business holdings, or real estate, they may face severe penalties. Tax advisors help streamline documentation and ensure every asset is reported accurately.

Returning to India is a significant life decision that requires a well-planned, streamlined financial strategy to avoid tax liabilities and implications. Hiring an expert tax advisor from Neuron Wealth LLP minimizes risks, ensures compliance, and protects your global wealth.