Are you thinking to move outside India anytime soon? If yes, it is time to settle a lot of things back in here before you board that flight! Moving to a different country seems quite exciting, but in that entire hullabaloo you must not forget to take note of some of the important concerns related to tax issues, legal matters and procedural affairs. Let us help you get acquainted with the top things to do before becoming an NRI officially.
Convert your savings account into an NRO account
An NRO account, a type of NRI Savings Account, is a must when you consider shifting base to a different country. It acts as your regular savings account, but allows you to deposit funds earned in abroad, as well as your rupee earnings in a freely convertible foreign currency. You can also issue cheques for all domestic payments, EMIs or investments through this account.
You can also reap benefits of repatriation from your NRO account. You can repatriate all your current income such as rent, interest, etc. that you earned in India and also repatriate the sale proceeds in case of a sale of your property in your NRO account. However, that is permitted to an amount of $1 million per calendar year. Once your chartered accountant declares that all taxes on these funds have been paid, you are free to withdraw these funds.
Close your existing demat account; open a new NRO demat account, and a new demat under PINS
As an NRI you shall face certain restrictions related to your investment in equities. For example, an NRI cannot invest more than 5% in the paid up capital of an Indian capital of an Indian company. So, to keep a check on these restrictions, RBI has mandated NRIs to use an NRO demat account for trading purposes. You need to transfer your shares of the existing demat account to a new NRO demat account. If you choose to sell the shares, the proceeds shall be credited to your NRO account, followed by which you need to cater to the repatriation processes. If you continue buying shares as an NRI, you would need a new demat account opened under PINS (Portfolio Investment Scheme). In this type of account, you can buy shares with funds in your NRE account and the sale proceeds shall be creditedto your NRE account for repatriation. If you choose to buy the shares on non-repatriable basis, then, the proceeds will be credited to the NRO account.
Give the power of attorney to someone staying in India
Ensure making a trustworthy person to be the power of attorney who shall be thereafter responsible for managing all your financial matters in your absence.
Open an NRE account for repatriation
An NRE account can offer certain benefits over the NRO account for those who might have repatriation requirements. You can repatriate any amount of any kind from the NRE accounts. There is no restriction, ceiling or chartered accountant certificate needed. While you cannot deposit local earnings in this account you can still continue to make local payments from this type of account.
Alongside taking necessary steps to fulfill the above mentioned mandates, you must also not forget informing your mutual funds provider and insurance company about your new citizenship in a foreign country.