Last Updated:
Let’s take a look at important financial matters the NRIs must evaluate before planning their return to India.
NRIs need to assess their tax liabilities while planning to return to India.
It could be emotionally overwhelming for any non-resident Indian (NRI) to return to India after spending many years in a foreign country. While planning a return to India, for the NRIs, usually the focus remains on the logistics and how to safely return to their native place.
However, financial planning is just as critical an element in the whole exercise. Here is an essential checklist and a step-by-step guide you should not avoid before planning your homecoming and ensure your stay is as memorable as you envisioned it.
NRE/NRO/FCNR Accounts
NRE (Non-Residential External), NRO (Non-Residential Ordinary) and FCNR (Foreign Currency Non-Residential) accounts deserve your attention before you shift to India. Since your status is about to change from an NRI to a resident Indian, it is important to convert these accounts into resident accounts. Failing to do so may make you non-compliant with FEMA (Foreign Exchange Management Act) guidelines.
Overseas Bank Accounts
You don’t have to close your overseas bank accounts, but informing these institutions about the change in resident status is essential since banks offer different benefits to NRIs and resident customers.
Taxation Laws
As an NRI, on homecoming, it is important to gain clarity on your tax liabilities. As India follows a residency-based taxation system, the global income of a resident is taxable here. NRIs are also mandated to pay tax on the income generated from assets and investments in India. However, the NRIs from certain countries can enjoy tax benefits under the DTAA.
Educating yourself about the Income Tax Act, 1961, and the double taxation avoidance agreement (DTAA) between India and other countries could help you save more on your total tax outgo.
Investments
It’s advisable to assess your investments thoroughly before shifting to India. If you’ve invested in stocks and mutual funds in India while living in a foreign country, these investments will have to be updated to resident status upon return. If you have real estate investments made abroad, it is suggested to understand the tax implications of the same on Indian shores. Those who have secured money in individual retirement accounts overseas could be liable for heavy tax if they wish to withdraw their entire corpus before moving. Consult your financial advisor about these investments.
Health and Life Insurance
Revisit your health and life insurance coverage plans. Consider whether it is easy to transfer these policies to India or if you may need a new insurance plan. Most health insurance providers in foreign countries don’t provide services in India.
Credit History
Before you travel, it’s advisable to get a beneficial credit card from an international bank that has a strong presence in India. Using that card will help you build and maintain a good credit history in India. Your credit history in a foreign country may not be valid in India.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
view comments
- Location :
Delhi, India, India
- First Published:
