Before you Leave...

An individual decides to leave his home country and go abroad, for a better future for his family, better work and career opportunities or even to gain better exposure to facilities to exploit one’s skills. It can be simply aimed at higher earnings in a better currency. If you are also thinking to do so in near future, there are a few financial nitty-gritty’s you must take care before you fly away.

Change your bank accounts:

Before you pack your bags, it is mandatory to convert your resident bank accounts to non-resident ones. A Non Resident Indian (NRI) has three options-non-resident (ordinary) account (NRO), non-resident (external) rupee account (NRE) and foreign currency non-resident account (FCNR). Read more about these accounts in our blog link at http://saarthifp.com/blogs/index.php/faqs-about-nri-non-resident-indian-accounts/

 

Update your KYC details:

It is preferred that after changing the status of the bank account to update your know-your customer (KYC) details in all your share, mutual fund and insurance accounts.KYC compliance is a must to continue investing, buying insurance and opening/maintaining bank accounts.

Arrange Power of Attorney (PoA) to a person you trust:

It is also advised to provide somebody legal authority to make decisions in your absence. It can be related to your legal, financial or any other work in your home country.

This authority or PoA, as it is rightfully called can be of two types-special power of attorney, for a specific task, and general power of attorney, which authorises its holder to do all that is necessary (simply put it just act like you).

Open a Portfolio Investment Scheme:

If you intend to continue investing in Indian shares even after settling abroad, the only way you can to do so is by opening a portfolio investment scheme (PIS) account with a bank. You can have only one PIS account. There are various limitations on the NRI investors on share trading which would be made available by the broker.  Every PIS transaction is monitored/reported by/to the RBI.

Clear loans and other outstanding bills

If you are leaving behind assets like real estate in India, please ensure that you give ECS mandates to pay off the electricity, gas bills. Also, if there is loan component on the property, EMI should also be rerouted on this way.

Don’t forget to add your premiums for life policies or mutual fund systematic investment instructions. Please make special note especially to transfer these instructions to your non residential accounts.

Insurance Policies

It is better to surender your general insurance polices like your motor and health insurance and buy a fresh one in your new country of residence. It is advised to continue your existing life cover till you get a fresh one from the local insuring company in your new residence. Please ensure you verify that your insurer covers the life term in your new country of residence.

NRIs are not allowed to invest in small saving schemes like Public Provident Fund and National Savings Certificate but they can hold them till maturity. Even the banking products like Fixed Deposits are required to be closed on maturity. You can book a new FD at varied NRI rates.

Taxation clarification 

Even if an individual moves to another country, he is liable to pay tax on any income that is generated in India. India has signed treaty of Double Taxation avoidance Treaty with approximately 84 countries. This means the individual doesn’t have to pay taxes twice. The non resident benefits from lower TDS rate, exemption limits and tax credits. For example, if an individual submits proof of his residency in a particular country with which India has signed a DTAA then the income generated in India will be taxed at the rate mentioned in the treaty.

Beyond this there are many small things you should ensure that you deal with like bank lockers closure – if you are going to come back for few years or you have not assigned anyone in India to operate it. Also, take of all your physical documents, secure your will or list out your assets in nomination for any untold event. Be prepared with a minimal fund to survive in case of unplanned comeback. Plan these things in as detail as you have planned your journey. Be relaxed on your home front responsibilities and enjoy your life at a new place.

Thanks and Regards
Team
Saarthi Financial Planners
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