Personal Finance Checklist Before Becoming an NRI
Many Indians decide to move abroad to explore career opportunities, for higher studies or are stationed abroad after a promotion with their employer. Once an Indian citizen starts residing outside India for a period of time, they can be termed as Non-Resident Indians.
Before we look at the changes required for NRIs, let us understand who can be termed as an NRI.
Who can be termed as an NRI?
A Non-Resident Indian is an Indian citizen who is residing outside India. An individual can be termed as an NRI in following cases:
- A person can be deemed as a resident Indian if they’re residing in India for less than 182 days during the course of the preceding financial year
- Any person who stays outside India for the purpose of employment or carrying on business or vocation
- Any person who stays outside India for any other purpose for an uncertain period
Now let us go through a personal finances checklist that can help you smoothen your transition into becoming an NRI.
- Convert your existing savings account into an NRO account
The Reserve Bank of India does not allow NRIs to hold a savings bank account in India. Therefore, you must convert all your savings account into an NRO (Non-Resident Ordinary) account before you leave India and attain NRI status. Your Indian income like rent and investment returns can be deposited in this account.
- Open NRE Account
If you’d like to transfer the income that you earn abroad to India so that your family can use it, then you would also need an NRE account. Your funds will be in Rupees and all funds will be fully repatriable.
- Purchase Insurance Before You Leave India
If you’re looking to purchase life insurance or health insurance, do it well before you leave India since it can be a difficult and lengthy process once you achieve NRI status. Life insurance is usually applicable globally whereas health insurance will only be covered within India. So you will have to visit India for treatment in case you wish to claim your health insurance.
- Assign Power of Attorney (POA)
When you’re abroad, you would need someone to manage your accounts and take care of your finances back home. Hence you must assign a power of attorney who’ll have the authority to operate your bank accounts, rent out property, issue cheques etc.
- Open a Portfolio Investment Scheme (PIS)
The RBI mandates that an NRI can only invest in the stock market in India via a secondary market from a designated account called the Portfolio Investment Scheme or PIS. If you already have shares in your Demat account in India, you must transfer them to a PIS account in order to continue your transactions abroad via the PIS route.
- Update KYC Details
Before you head abroad, you must update your KYC details with the concerned banks, mutual fund houses and other financial institutions. Your tax status has to be updated to NRI status since different rules would now be applicable to you.
- Convert your Debit or Credit Card to an International Card
It is always a good idea to convert your existing cards to international cards since usage of your native card overseas will attract many different charges like international withdrawal fee and foreign currency conversion charge etc.
Make sure you go through the above checklist and act accordingly well in advance of your departure from India. Whether you’re going abroad for higher studies, moving permanently on account of a new job or for a long term assignment, ensure your financials are modified suitably for your new NRI status.
Jeff Morgan is currently associated with NetworksGrid as a technical content writer. Through his long years of experience in the IT industry, he has mastered the art of writing quality, engaging and unique content related to IT solutions used by businesses. Topics like network security, managed firewall services, managed IT services and cloud computing like Best QuickBooks desktop hosting are his favorite.