I am a non resident Indian (NRI). I am working in Canada since FY 2015-16. In India, I have a NRE account, a NRO account and a resident savings bank account (which I had opened while I was in India but didnt get the chance to convert it into a NRO account).
I transfer funds regularly to both my resident savings bank account and the NRE account. I filed the tax return in India as NRI for FY 2016-17 as I wanted to claim the TDS amount deducted on my fixed deposits which were again opened and maintained in the Resident Saving account. I filed the Income tax return on 31st December, 2017. In the income tax return form, I had mentioned the interest income from Resident saving account and Fixed deposit as Income from other sources. I had no tax liability to Indian government, and so I claimed tax refund here.
All that being said, I am worried whether I will get a legal notice from Income tax Department for keeping the Regular saving account in India while maintaining NRI status for FY 2016-17.
Please note I have already started the process of converting my Regular saving account into NRO account.
Jan. 25, 2018
Foreign Exchange Management Act strictly restricts a Non-Resident Indian to hold a resident savings account.
So the first advice I give you is to stop using the savings account altogether until the process of converting into a NRO account is complete. Although it is late, you have voluntary initiated the conversion process, there may not be any penal implications as such from FEMA.
Now let's move on to the Income tax. If you offer the income arising in India for Income tax, (you being a non Resident, are liable to pay tax on income arising in India only) may that be from whatever account (it should be legal though), there shall be no problems from the department.