It’s quite common these days to
see people move abroad to settle down. Settling abroad is an exciting, but a
complex task, especially when it comes to your finances. Taking care of a few
financial things, among others, will ensure a smooth transition. Here are some
financial steps you must take before you leave the country.

Close or re-designate bank accounts.

From the day you leave the
country to settle abroad 180 days later,, you will be considered a NNon-Resident
Indiann. Your Savings Bank Account, Fixed Deposits, and Recurring Deposits
either need to be closed or converted into non-resident (ordinary) rupee
accounts (NRO).

Any income generated in India
including rental income, interest, dividends etc. will be deposited to your NRO
account thereafter.. If you plan to send money back to India after moving
overseas, you need to do it through a non-resident rupee (NRE) account. Both
NRE and NRO are rupee accounts and you would need to submit relevant documents
to ensure your accounts are know-your-customer (KYC) rules compliant.

Clear existing loans and debts.

If you have any existing debt or
Credit Card bills, it is important to put provisions in place to clear all dues
before you leave India.

Do not discontinue all insurance abruptly

Many individuals end their Life
and Health Insurance plans abruptly before moving abroad. This leaves them
unprotected until new plans are bought overseas. You can continue paying
premiums by giving an ECS mandate to your bank for timely payment. In fact, it
is advisable to continue Health Insurance in India if you have plans to come
back. You can also check with your insurer if the plan is valid in the country
you are relocating to.

Close PPF Accounts.

In case you have PPF accounts,
NRIs are not allowed to add to the same. Its best these accounts are closed and
money withdrawan before the status changes to NRI.

Give power of attorney to a trustworthy person

While you might decide to close
most of your accounts, there can be some financial connections which you might
want to maintain. You can maintain such financial accounts smoothly by giving
the power of attorney (PoA) to a trustworthy person, who can then overlook any
legal or financial work in India on behalf of you.

Open a portfolio investment scheme account(PIS)

You can invest in the Indian
stock market by opening a portfolio investment scheme (PIS) account with a
bank. However, an individual can open only one account for buying and selling
stocks. Also, remember that NRIs are not permitted to carry out day trading or
short selling. For Mutual Fund investments, check if the respective fund houses
allow investment from an NRO account. Your DEMAT account needs to be closed
after becoming an NRI. Don’t ignore taxation

Taxation will depend on the
number of days spent in India in the financial year. Check with a tax
consultant to understand your tax liabilities for the year to ensure a smooth
transition from being an Indian resident to an NRI.

Before you move out of the
country, be aware of the effect the shift will have on your money and make a
checklist to ensure your transition is smooth.

Update your bank account

Your savings bank account is
meant for resident Indians. When you move abroad, your residency status will
change from resident Indian to non-resident Indian. In such a scenario, you
need to either update the existing savings account to non-resident (ordinary)
account or open a new account as a non-resident while closing the existing one.

There are three types of
non-resident accounts that you can operate in India: non-resident ordinary
(NRO) account, non-resident ‘external’ rupee account (NRE), and foreign
currency non-resident (FCNR) account.

An NRO account allows you to hold
the income accrued from India. The upper ceiling for repatriation to an NRO account
is up to $250,000 per year. An NRO account pays an interest rate similar to a
normal savings account, which is 4 per cent presently. This account can be
opened by submitting a copy of your passport, a photograph, and a copy of your
visa or work permit.

An NRE account, on the other
hand, allows you to repatriate a higher amount without the limitations applied
to an NRO account. The deposit in this account is held in rupees, therefore the
corpus kept in such account is subject to currency risk. An NRE account allows
an interest around 7-8 per cent. You can deposit both the income accrued from
India as well as abroad in an NRE account.

An FCNR account is similar to an NRE account with the difference that
it also allows deposits in foreign currencies. The interest income from NRE and
FCNR accounts are not taxed in India.

Manage your investments

Take stock of all your
investments before moving out of India. Make a decision about which investments
you want to hold and which ones you want to liquidate.

If you have a DEMAT account with
a resident status, you need to close it once you become an NRI. You have the
option to open an account called Portfolio Investment Scheme (PIS) and transfer
all your holdings to it before you get an NRI status.

If you have a property in India,
you can continue to hold it or liquidate it before shifting. There is no
restriction on holding a property when your residency status changes. You are
also allowed to sell the property once your residency status changes to
non-resident but subject to restrictions that agricultural land or a farm house
cannot be sold to a person other than a resident citizen in India.

If you have somebody in India
whom you can trust completely, give them the power of attorney (PoA) to act on
your behalf to execute your transactions related to property, investments, and

Update your KYC status

It is very important to update
the KYC status for every financial product you hold, such as mutual funds,
insurance policies, bank accounts, etc. Once you leave the country, your
address and residency status, both, change, and therefore it’s important to
update your KYC.

Evaluate the insurance cover

Before your status changes to
non-resident, ensure what all is covered in your health insurance policy
outside the country limits. Normally, health insurance companies allow
treatment within the country. But there are policies that also cover medical
treatments in foreign lands. It is also important to evaluate your cover size.
If it not adequate, increase it before your residency status changes. You can
also decide to continue with your current policy if you want to retain a health
cover when you return to the country.

In case of a term insurance
policy, companies usually cover death risk at all locations in the world, but
it is important to read the terms and conditions of the insurance policy to
better understand if any locations may be excluded.

Do not forget to update your KYC
details with your existing insurance company before you move to another

Debt and tax management

Try to close loans before you
shift to another country. In case you have outstanding loan balances after
shifting, try to ensure timely repayments since any instances of default would
stay on your credit record for several years. You can provide a trusted person
the PoA to manage your debt, and this would help you immensely after you leave
the country.

You might have income-generating
assets and properties in India. Any income accrued from India after you move to
another country will continue to be taxed in India. Therefore, if you have a
PoA looking after your responsibilities here, they can be asked to fulfil your
obligations every year. While leaving India, you may be asked to provide
clearances from the tax department in a specified format.

Before you shift out of the
country, enlist the tasks you need to complete before you leave. Once left
undone, those things may remain pending for a long time after you shift. Also,
if you hold a credit card with geographical limitations, get it converted to an
international credit card or surrender it. Keep in touch with your Indian care
takers regularly once you get shifted to the foreign country.

Many Indians who have decided or
are planning to move abroad have worked in the country at some point in time.
Additionally, they would have made investments and would be unsure as to what
would happen to them when they change their residence to another country.

While the interest earnings won’t
be taxable in India, you will have to find out your tax implications in the
country you chose to settle down based on their rules regarding foreign


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