Faq

Q1. If a person moves abroad for employment, what happens to their status in India?

A1. They become an NRI for FEMA purposes and must update their KYC and bank accounts accordingly.

Q2. Can an NRI continue using a normal resident savings account?

A2. No. Once non-resident, the resident savings account must be converted to an NRO account. It cannot remain a resident account.

Q3. Should the investor update their Mutual Fund KYC to NRI?

A3. Yes. The investor must change KYC status to NRI and update tax residency, address, and bank details.

Q4. What should be done with the existing resident savings account?

A4. It should be converted to an NRO account (Resident account cannot be converted to NRE).

Q5. Should the investor open an NRE account as well?

A5. . Yes, if he wants to bring money from Malaysia into India.

NRE account is ideal for:

-Remitting foreign salary to India

-Maintaining funds freely repatriable back to Malaysia (no limit)

Q6. How should money be handled? — NRE or NRO?

A6. -Salary earned abroad → send to NRE account

-Existing Indian income (rent, interest, etc.) → stays in NRO account

Foreign salary should NOT be deposited into an NRO account unless necessary, because NRO has repatriation limits and tax implications.

Q7. Can the investor invest in Mutual Funds through NRO account?

A7. Yes, NRIs can invest using NRO funds, but MF redemption is subject to TDS.

Q8. Can the investor invest in Mutual Funds through NRE account?

A8. Yes. NRE-based investments have the advantage of free repatriation of funds, depending on scheme rules.

Q9. What is the most compliant and appropriate setup for this investor?

A9.-Convert existing resident savings account → NRO account

-Update MF KYC to NRI

-Open a new NRE account for salary remittances from Malaysia

-Invest future funds using NRE account, if repatriation flexibility is desired

-Existing un-invested amount in the old savings account can now be used through the NRO account for MF investments (with TDS on redemption)

Q10. Why can’t the existing savings account be converted to NRE?

A10. Banks do not allow a resident savings account to be converted into an NRE account.

NRE account must be opened freshly, not converted.

Final Recommendation

-Convert current resident savings account to NRO

-Update investor KYC to NRI

-Open new NRE account for foreign salary

-Invest existing funds via NRO, and future remittances via NRE

-This ensures the entire investment structure is legally correct, FEMA-compliant, and tax-efficient.