Indian professionals who are moving back from Australia often lack clarity about how they can manage their overseas holdings like stocks, ETFs, Superannuation account, and RSUs after moving back.
This article explains how you can manage your overseas holdings after moving back to India and navigate ATO's "deemed disposal" exit tax.
We also cover your new Indian tax and reporting requirements, your changing tax residency status, and RNOR rules and opportunities.
Table of contents
- What happens to my stocks when I move back to India?
- What's the best way to stay invested globally after moving back?
- What happens to my Superannuation when I move back to India?
- Tax and reporting implications of moving back
- RNOR status and how it affects you
What happens to my stocks when I move back to India?
When you move back to India, the first major hurdle you face is the Australian exit tax, known as "Deemed Disposal."
Deemed disposal is a unique facet of the Australian tax system that treats your assets as disposed of at their current market value when you become a non-resident for tax purposes, whether you have actually sold them or not.
It occurs on the day you cease to be an Australian resident for tax purposes and triggers a tax event that may result in a capital gain or loss.
Practically, this means you either have to sell a portion of your portfolio to pay the resulting tax bill, or you have to pay the taxes on these "paper profits" out of your own pocket to keep your positions open.
Does deemed disposal apply to all my assets?
Deemed disposal applies to all CGT assets, with the exception of "taxable Australian property" (like physical real estate in Australia, which remains taxable there until you actually sell it).
In case of assets bought before your Australian residency (for example, US stocks or ETFs acquired before you moved to Australia), the ATO only taxes the gains that occurred while you were a resident.
What happens to the assets I choose to keep?
Under Indian FEMA regulations, you are legally allowed to indefinitely hold any foreign stocks, ETFs, or properties you acquired while living abroad. You do not have to sell them just because you moved.
However, while Indian law allows you to keep them, Australian platforms and specific investment products might not:
- Retail Brokers (Stake, Pearler, Superhero): These platforms generally cater strictly to Australian residents. When you become an Indian resident, they may restrict your account or force you to liquidate your positions immediately.
- Traditional Brokers (CommSec, Nabtrade): These are more flexible and may allow you to maintain a non-resident account with some restrictions. However, you will have to manage your Indian tax reporting manually.
- Managed Funds: Certain unlisted Australian managed funds explicitly prohibit non-resident unitholders. If you hold these, you will need to redeem your units when you leave the country.
What's the best way to stay invested globally after moving back to India?
The best way to stay invested globally is to transfer your investments into a platform specifically built for global investing from India.
These platforms allow you to maintain your positions and trade normally, while providing India-specific compliance support and tax documents tailored for your mandatory Schedule FA reporting.
What happens to my Superannuation when I move back to India?
What happens to your Superannuation when you leave Australia depends on your visa status:
- Temporary Visa Holders: If you were on a temporary working visa (like a 482), you can claim your Super after you leave Australia and your visa expires. This is called a Departing Australia Superannuation Payment (DASP). Note that this payout is taxed (typically between 35% and 65% depending on the components).
- Permanent Residents and Citizens: You cannot withdraw your Superannuation just because you are leaving. Your money stays locked in Australia until you reach your preservation age and retire (usually 60).
If your Super stays in Australia, the fund continues to be taxed locally (15% on earnings).
Once you become an Indian resident, you must also report this fund in India.
To avoid paying tax twice on the same income, you will need to claim a Foreign Tax Credit in your Indian tax return under the India-Australia Double Taxation Avoidance Agreement (DTAA).
Tax and reporting implications of moving back to India
When you permanently return to India, your tax status eventually shifts from being a Non-Resident Indian (NRI) to a Resident.
This brings two major changes: your global income becomes taxable in India, and your reporting requirements increase significantly.
To learn more about how your global income is taxed in India and the reporting requirements, read:
- How Global Stocks and ETFs Are Taxed for Indian Investors
- Tax on Repatriation of Foreign Income to India
- Foreign Asset Disclosure (Schedule FA) Requirements for Indians
When do you become an Indian Tax Resident?
Under the Income Tax Act, you are considered a tax resident of India if:
- You are physically present in India for a period of 182 days or more in the tax year (182-day rule), or
- You are physically present in India for a period of 60 days or more during the relevant tax year and 365 days or more in aggregate in the four preceding tax years (60-day rule).
Once you meet this criterion, you are legally required to pay tax in India on income earned anywhere in the world, including Australian interest, dividends, and capital gains.
What is RNOR status and how does it affect me?
RNOR (Resident but Not Ordinarily Resident) is a transitional tax residency status for returning NRIs. It functions as a bridge between being a Non-Resident and becoming a full Ordinary Resident.
You typically qualify for this status if you meet one of the following criteria:
- You have been an NRI for 9 out of the last 10 financial years.
- You have lived in India for 729 days or less in the preceding 7 financial years.
This status grants you a 1 to 3-year window where your global income is treated differently from that of a standard Indian resident.
What benefits can I get from this status?
As long as you hold RNOR status, your foreign income is NOT taxable in India, provided it is received outside India first. This allows you to manage your Australian assets without immediate tax liability in India.
- Global Stocks & ETFs: If you sell them while you are RNOR, the capital gains are tax-free in India. (Note: You still need to account for your Australian tax obligations based on the exit tax).
- Australian Bank Interest: The interest earned in your Australian accounts is tax-free in India.
- Dividends: Tax-free in India during this period.
- Superannuation Protection: Any growth or income generated within your Super fund is not taxed by India during your RNOR window.
To utilize these exemptions, you must receive the funds in a overseas bank account first. If you wire sale proceeds or dividends directly to an Indian bank account, the income is considered "received in India" and becomes fully taxable.
Common Questions NRIs Have About Moving Back from Australia
Can I send money from India and buy more overseas stocks?
Yes. You can remit up to $250,000 USD equivalent per financial year under the Liberalised Remittance Scheme (LRS) to invest in foreign stocks. However, be aware that transfers exceeding ₹10 Lakhs in a year attract a 20% TCS (Tax Collected at Source), which you can claim back as a refund or tax adjustment when filing your income tax return in India.
When do I become subject to FEMA upon moving back?
You become a resident under FEMA immediately upon landing in India if your intention is to stay for an uncertain period or for employment and business.
Unlike income tax residency (which counts days), FEMA residency applies the moment you return to settle.
Can I continue operating my Australian bank account?
Yes. Section 6(4) of FEMA allows you to continue holding and operating foreign bank accounts, stocks, and properties if they were acquired when you were a resident outside India. You are not legally required to close them.
Can I keep my NRO account?
No. Once your status changes to Resident, you are legally required to inform your bank and convert your NRO account to a standard Resident Savings Account. Continuing to hold an NRO account as a resident is a violation of FEMA regulations.
About Paasa
Paasa is a global investing platform built specifically for Indian residents and returning NRIs. We provide direct access to over 10 global exchanges and support 9 global currencies, allowing you to build a truly international portfolio.
- Seamless "In-Kind" Transfers: You can move your entire global stock portfolio directly to Paasa. This allows you to consolidate your assets in one place without triggering a tax event.
- The Compliance Advantage: Paasa provides the exact reports you need for your Indian tax returns and foreign asset disclosures, eliminating the need for manual calculations.
- Estate Tax Protection: Paasa offers access to Ireland-domiciled (UCITS) ETFs, allowing you to legally shield your investments from the US Estate Tax if your portfolio includes US equities.
