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It’s a common practice among NRIs to carry some amount of Indian currency with them when they leave the country, mainly for the convenience of not having to exchange forex into rupee when they return the next time.  With Demonetization of 500 Rs and 1000 Rs notes which are not valid from 8 Nov 2016, questions that NRI are asking is how to exchange Rs 500 and 1000 Rs notes. This article talks about How do NRIs change their old 500 Rs and 1000 Rs notes, Tax on Deposits in NRO account,Difference between NRO And NRE account, Government Committee on Demonetization for NRIs and Others, RBI directive that NRIs, foreigners can’t leave with Rupee. What Passengers coming to India have to declare?

How do NRIs deposit Rs 500 and Rs 1000 notes from 2 Jan 2017?

Among Indian citizens, two categories of individuals can avail of the facility of depositing  Specified Bank Notes (SBNs), old 500 Rs and Rs 1000 notes,

  • Resident Indians who were abroad during the period from November 9 to December 30, 2016, from January 2, 2017 to March 31, 2017
  • Non-Resident Indians(NRIs) who were not in India during the period from November 9 to December 30, 2016.
    • This facility is not available for Indian citizens resident in Nepal, Bhutan, Pakistan, and Bangladesh.
    • NRIs can deposit old Notes from January 2, 2017 to June 30, 2017 only once.
  • This facility will be made available through five of the offices of the Reserve Bank viz. the Reserve Bank offices at Mumbai, New Delhi, Chennai, Kolkata, and Nagpur.
Only the NRIs who were not present in India during the period from Nov 9 2016 to Dec 30 2016 are eligible to deposit old 500 Rs and 1000 Rs notes once during the tenure of the facility ie January 2, 2017 to June 30, 2017.  One can read RBI notification at RBI Website dated 30 Dec 2016
  • NRIs and Indians returning from abroad will have to physically show the junked 500 and 1,000 rupee notes to Customs officials at the airport and get a declaration form stamped before they can deposit the demonetised currency in RBI during the grace period.
  • Notes will be restricted to a maximum of ₹ 25,000 per individual depending on when the notes were taken out of India as per relevant FEMA rules.
  • Notes should be submitted along with a Form as per Annex 2.
  • A Copy of Passport with immigration stamp as proof of the individual’s absence from the country during the period November 9, 2016 to December 30, 2016 should be submitted. Passport in original should be presented at the RBI counter for verification.
  • Copies of statements of all bank accounts in India evidencing that no SBNs were deposited during November 10, 2016 to December 30, 2016.
  • Requisite document as per provisions of Section 114B of IT Rules, 1962 are required to be submitted.
  • An acknowledgment of receipt will be issued to the tenderers pending credit of admissible amount.
  • On ascertaining that the NRI was abroad during the period from November 9, 2016 and December 30, 2016, the account is KYC compliant, fulfillment of other conditions and the genuineness of the notes tendered, the admissible amount will be credited to the account under advice to the tenderer.

A wrong declaration would invite fine of Rs 50,000 or five times the seized amount, whichever is higher as per the ordinance.

Not more than 10 notes of demonetised currency can be held after December 30, which will invite a fine of Rs 10,000 or five times the amount sized.

RBI offices for depositing old Notes from Jan 2, 2017

The facility of depositing old notes from Jan 2, 2017 is made available through five of the offices of the Reserve Bank viz. the Reserve Bank offices at Mumbai, New Delhi, Chennai, Kolkata, and Nagpur.

  • Chennai
    Reserve Bank of India,
    Fort Glacis, Rajaji Salai,
    P.B. No.40,
    Chennai-600 001.
    Office Timings: Monday to Friday : 9:45 am to 4:45 pm , Saturday : 9:45 am to 1:15 pm,
    Contact: 044-25399110 044- 25387207
  • Mumbai
    Reserve Bank of India,
    Main Building, P.O.Box 901,
    Shahid Bhagat Singh Road,
    Mumbai-400 001.
    Office Timings: Monday to Friday : 10:15 am to 5:15 pm,Saturday : 10:15 am to 1:45 pm
    Contacts: 022-22603179
  • Kolkata
    Reserve Bank of India,
    15, Netaji Subhas Road,
    P.B. No.552,
    Kolkata-700 001
    Office Timings:  Monday to Friday : 9:35 am to 5:05 pm, Saturday : 9:35 am to 1:20 pm
    Contact: 033 22312121
  • Delhi
    Reserve Bank of India,
    6, Sansad Marg,P.B.No.696,
    New Delhi -110 001.
    Office Timings: Monday to Friday : 9:45 am to 4:45 pm, Saturday : 9:45 am to 1:15 pm
    Contact : 011 23710538 to 42
  • Nagpur
    Reserve Bank of India, Dr. Raghavendra Rao Road
    Civil Lines
    P.B.No.15
    Nagpur – 440 001
    Contact : 712 2806300

How do NRIs exchange Rs 500 and Rs 1000 notes which are not valid from 8 Nov 2016 till 30 Dec 2016?

NRIs would personally need to exchange the notes in India or authorize someone to do it for them. The foreign branches of Indian banks, both public and private sector, are not accepting cash outside the country.

  • If NRIs are travelling to India between 9 nov 2016 to the 30 December 2016, they can exchange or deposit it in their NRO account.
  • If NRIs are travelling to the country between 02 January and 31 March 2017, they can visit any of the specified offices of the RBI along with the required documentation, passport and visa details, that prove they were out of the country and exchange the notes. Although the list of RBI offices that will accept this is still unclear.
  • If NRIs have the banknotes in India, they  may authorize in writing enabling another person in India to deposit the notes into their bank account. The authorized person has to come to the bank branch with the notes, the authority letter given by you and a valid identity proof to deposit the money on your behalf.
  • If NRIs have the money abroad, they can send the money across to India through someone trustworthy and authorize them to deposit it on their behalf.
  • Passengers(excluding citizens of Pakistan or Bangladesh) may bring or take out of India (other than to Nepal and Bhutan) can bring up to Rs 25,000 and take out Rs 25,000 in Indian currency.
  • Passengers(excluding citizens of Pakistan or Bangladesh) may bring or take out of India (other than to Nepal and Bhutan) can bring in or take out unlimited foreign currency, but has to fill up Currency declaration form if total cash amount is more than USD 5000 or total is more than USD 10,000. Currency Declaration Form from RBI  (pdf)

Government Committee on NRI Exchange of Rs 500 Rs 1000 Notes and Demonetization

The Government has formed a committee with ministers from external affairs and economic affairs to look into concerns expressed by NRIs, tourists from abroad and foreign missions over demonetisation. You may approach the control room of RBI by email to publicquery@rbi.org.in or on Telephone Nos 022 22602201/022 22602944.

  • While foreign missions had sought Ministry of External Affairs (MEA’s) intervention to facilitate smooth collection of consular and visa fee and to allow them access to more funds. Foreign missions wanted to know if they could collect consular and visa fees in old notes. If so collected, they have sought to know how will those be exchanged.
  • If somebody has money abroad, and is not travelling to India immediately, what happens? How does he get new notes for those old notes?
  • The third set of issues is by the money changer associations abroad. This is quite interesting because we don’t have full convertibility…So, they have asked us the same question that what they would do with the stacks they have. How do they convert those?

What should NRI do if their NRE/NRO account is due for Re KYC, Can you still deposit old Rs 500/1000 notes in the account?
The NRI/NRO account first should be updated with KYC with valid documents before deposition of old Rs 500/1000 notes. Though this could be different from bank to bank and you should check with your bank first.

Tax on Deposits in NRO account

You cannot deposit the INR cash in your NRE account even if you have withdrawn from it and even if it is the old notes of Rs 500 and Rs 1000. You can only deposit those notes into your NRO account, which allows you to deposit Indian rupees.

If you don’t have an NRO account then You will need to make a request for opening of a NRO account in the same customer Id through the Internet banking logged in the section or by calling our 24×7 customer care or placing a request at the branch in India with your Bank. For example, if you have NRE account with ICICI then you can request to open an NRO account online by logging into your Internet Banking account. The account will be opened within 2 working days. Post which you or your authorized representative may deposit the cash in the NRO account

The NRIs can deposit their cash in the NRO accounts. All cash deposits of more than Rs 2.5 lakh to a bank account until 30 December 2016 will be reported to the tax department by banks. It will then be matched with the depositor’s income tax returns and suitable action taken. If you can explain the source of cash, then there will be no tax and penalty.

Also, filing an income tax return in India becomes mandatory for an NRI if the sum total of his taxable income from all sources (before claiming any deduction) exceeds the basic exemption limit of Rs. 2.5 lakh.

Difference between NRO And NRE account

Non Resident External accounts (NRE) and Non Resident Ordinary accounts (NRO) are meant for Non Resident Indians (NRIs). These accounts offer a host of benefits such as repatriation, tax benefits, currency flexibility, etc. The following images shows difference between these accounts. Our article Bank Accounts for NRI:NRO,NRE,FCNR discusses these accounts in detail.

Difference between NRE and NRO account for NRI, Exchange Rs 500

Difference between NRE and NRO account for NRI,

NRIs, foreigners can’t leave with Rupee

According to RBI officials, in case NRIs and Foreigners have Indian currency notes in their possession before boarding the flight, Indian customs officials can act against them. A directive was issued on Sep 2013, from the Reserve Bank of India (RBI), which said  that every non-resident Indian (NRI) and foreigner leaving the country will have to compulsorily change Indian rupees in their possession into a foreign currency before they board the flight. Although the rule, which is part of Foreign Exchange Management Act (FEMA), has been in place for quite sometime now. RBI has allowed forex changers to open kiosks beyond the immigration desks at international airports to facilitate NRIs and foreigners opting to exchange rupee for other currencies before they enter the aircraft.

RBI has allowed NRIs to carry up to Rs 10,000 beyond the immigration and customs desks, and to the duty-free shopping and security checking areas in the departure hall in international airports to meet miscellaneous expenses. However, this has been allowed subject to the condition that NRIs will not be allowed to carry any Indian rupee beyond SHA and that they should dispose of Indian currency before boarding the plane.

To facilitate money changing facilities for NRIs and foreigners, foreign exchange counters have been allowed in departure halls in international airports beyond the immigration and customs desks. Such foreign exchange counters will, however, only buy Indian rupees from non-residents and sell foreign currency to them subject to usual terms and conditions.

Reference: NRIs, foreigners can’t leave with rupee

NRI may approach the control room of RBI by email to publicquery@rbi.org.in or on Telephone Nos 022 22602201/022 22602944

What Passengers coming to India have to declare?

From 1 Apr 2016, Passengers coming to India and not carrying dutiable goods will not have to fill up customs declaration form from . Flyers carrying prohibited and dutiable goods will only be filling up such declaration form, which was earlier mandatory for all passengers coming to the country.  Airlines provide Customs Declaration Form to passengers carrying dutiable goods and that they should fill it up on board flights so that they do not have to stand in queue after deboarding.

  • Foreigners’ duty free allowance has also been increased to Rs 15,000 from the existing limit of Rs 8,000, from April 1 2016.
  • The duty free allowance of two litres of alcoholic liquor or wines, 125 cigarettes, 50 cigars and 125 gms tobacco for the passengers will continue.
  • The limit to bring duty-free goods worth Rs 6,000 for passengers of Indian origin and coming from China has been taken away. The duty-free allowance for people coming from Nepal, Bhutan and Myanmar has been increased to Rs 15,000, more than two times the limit of Rs 6,000 at present.
  • The increase in allowance will be applicable for journey by air. Those coming to India from land borders will not be able to get any amount of free allowance, the rules said.
  • The monetary limit for passengers of Indian origin coming from any foreign destination, excluding Nepal, Bhutan and Myanmar, has also been increased. Now such passengers can bring duty free goods worth Rs 50,000 from tomorrow instead of Rs 45,000 at present.
  • To check gold smuggling, the government has put a cap on gold jewellery being brought by Indian passengers who have been residing abroad for over one year. As per the new rules, a male passenger can bring gold jewellery of up to 20 gms with a value cap of Rs 50,000 and a woman can carry 40 gms of gold jewellery with a value cap of Rs one lakh. Under existing rules, there is only a monetary limit of Rs 50,000 and Rs one lakh for men and women passenger, respectively.
  • The Indian Customs Declaration Form has been revised to include drones in the list of prohibited and dutiable goods. It is now mandatory for the passengers to declare it from tomorrow. Drones are generally imported by government agencies for use by the security personnel for maintenance of law and order as well as for ensuring vigil along the country’s boundaries. They are also used for surveillance in Naxal-hit areas.
  • The customs form currently has fields for declaration of dutiable and prohibited goods, gold jewellery and bullion (over free allowance), satellite phone, foreign currency notes exceeding USD 5,000 or equivalent and Indian currency exceeding Rs 25,000.
  • The passengers also need to mention about meat, meat products, fish, dairy and poultry products, seeds, plants, fruits, flowers and other planting material in the existing customs form.
  • Further, they had to report to ‘Red Channel’ for payment of duty if they carry any such items.
  • The new rules will also apply to the members of the crew of a vessel or an aircraft and they will be allowed to bring articles like chocolates, cheese, cosmetics and other petty gift items for their personal or family use which shall not exceed the value of Rs 1,500.

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