Foreign countries have allured Indians since forever, with them wanting to visit and probably settle in one of them forever. For some people, this dream converts into reality and they plan on becoming NRIs (Non-Residential Indians) while for other people, it is all about liking their friends’ foreign trip pictures on Facebook. However, jokes apart, it is a personal choice whether one wants to be an NRI or not, because becoming an NRI has its’ own pros and cons.

An important point to remember is that one’s status as a non-resident Indian (NRI) is different under the Foreign Exchange Management Act (FEMA) and the Income Tax Act. According to FEMA, you become a non-resident when you plan to move overseas professionally or for an indefinite period.

If you are planning on becoming an NRI, we are here to help you and make your work easier! Glance through our checklist to make sure you don’t miss out on any crucial aspects!

1. Revise your bank accounts.

If you are an NRI and still have income sources in India, for an instance if you have income from ancestral property or from a rented-out property, you can keep the money in India by opening an NRO bank account. You need not stress over opening a new account in such a short time.  Get your existing resident bank accounts redesignated to non-resident ordinary (NRO) bank accounts. Moreover, if you have multiple accounts, consolidate them and then take the NRO step.

Dhananjay Singh who has stayed for 5 years in the US says “It’s the most important step in order to take care of money. It’s best to visit your trusted banker for handling your banking needs. In my case, I sat down with my banker and explained my financial situation. His advice really helped me.”

Also, for sending in foreign money to India and depositing it in Indian currency, you would have to open an NRE account. This account is used to remit money from overseas for dependent care or investments, without giving up the flexibility of repatriating the money if needed.

The NRE account is non-taxable. The NRO account, however, is subject to tax as per the applicable slab rate.

2. Say goodbye to your bank lockers.

Closing the lockers is a sensible approach, which could otherwise burden you with annual costs every year. However, if you wish to store valuables or documents and are ready to bear the expenses, you could go for it!

3. Redesignate your DEMAT accounts.

It’s not just your bank accounts that need you to make changes. Considering your situation, you might not have the time and ability to give to your equity portfolio. NO, do not freak out, there are other doors open for you. You can consider Liquidating it or seeking ongoing professional advice on it. Moreover, you could consider setting up a PIS (Portfolio Investment Scheme) account, so you continue to have exposure to equities even after becoming an NRI.

4. Decide who to give your power of attorney.

Before you head out to the foreign lands, find someone you can blindly trust on. What for? To manage financial transactions in bank accounts, buying and selling real estate, renting out property and signing up tax forms.

The power of attorney could be of two types – a) general, where the authority entrusted holds good for banking as well as real estate transactions or b) specific, where the authority is restrictive to only certain transactions. Consulting a lawyer and submitting attested copies to the concerned people like banks and equity diversified proves helpful.

5. Buy Health Insurance Cover.

They say, “No one can take care of you like your family.” Hence, NRIs often prefer to get a treatment done in India to deal with a health issue, as there is family back home to look after them. In such situations, a health policy in India is always helpful. Moreover, you can claim tax benefits on the premiums paid under Section 80D and reduce the tax liability for income accrued from India.

However, do check the geographic coverage your policy has to offer, as you might end up needing treatment in the country you reside in. Also, such a cover may be more useful in India and less abroad due to variations in healthcare costs and exchange rates.

Ajitesh who is going for his MBA to the US mentioned, “While Indian health insurance is helpful, my university has made it mandatory to join their Health Insurance program, which also gives me access to University’s medical assistance. It’s a good idea to check with your university or employer before registering for a health insurance.”

What you need to keep in mind that it is critical to ensure that the premiums are paid in time, as these policies can’t be revived once they lapse.

6. Mutual Funds will not be same anymore

It’s crucial to update your “know your customer” (KYC) when you become an NRI to correctly reflect your new residential status. Also, get your folios changed to non-resident and have your NRO bank account linked to the folio to avoid mismatches. Just like your direct equity portfolio, decide if you need the help of a financial advisor to manage your folios for you, as it won’t be an easy task for you after you move oceans.

Moreover, some countries might increase the tax burden on you owing to the folios.  For an example, if you are moving to the US, overseas mutual funds are not the most efficient instrument to hold owing to tax considerations. A solution to this problem could be divesting them and using other alternative financial instruments.

Not only this, if you are an NRI living in the USA and Canada looking to invest in mutual funds, watch out for restrictions, as only a few mutual fund companies accept investments coming from these nations.

7. Keep your life insurance policies watered.

If the new country you’re moving to is more efficient from a premium perspective, you might not feel the need to continue your policies in India. However, you need to understand that you may not be able to get it immediately after you move there, so keep the efficient policies going for now. Ensure your premiums for life insurance policies are provided for or set up electronic instructions for their payments.

Nonetheless, this is a very good time to decide which of your policies should be kept or surrendered. Moreover, you could also convert some of them to paid-up, where you stop paying fresh premiums, but keep the policy.

8. Get a thorough knowledge of NRI taxation.

As an NRI, you need to comply with the tax laws of both countries: where you reside and in India. The tax deduction benefits in India are more or less similar for both NRIs and the residents.

Before you pack your bags for the final time, ensure that your taxes have been paid for and your tax advisor has a good understanding of NRI tax matters. If you find the task tedious, there are cross-border specialists or tax advisors who work closely with your Indian tax adviser in some countries, making your job easy!

9. Get a Forex Card

These are a type of Prepaid cards, used for making payments while you are travelling abroad. These are pre-loaded and enable you to access money in the required regional currency. You can also top it up depending on your requirement. The card allows you to withdraw cash in foreign currency, check your balance and shop.

Sanjeev Sharma who recently travelled to Spain says, “You can time this really well. I loaded my forex card in March before Fed interest rate hike, as the dollar would have strengthened after this decision. With forex card, you don’t have currency risk and substantially reduce the risk of fraud.”

A Forex card is way better than carrying actual cash because it is safe to carry, widely accepted, it is cheaper than buying a credit or a debit card, and it is cheaper than buying currency

10. Watch out for Currency Rate Fluctuations

You should be careful about the currency fluctuations when making an investment or taking a loan in India. A slight change in the value of Indian Rupee against the foreign currency can significantly impact your effective returns.

You are about to enter into an exhilarating phase of your lives, and we’re sure you won’t want to ruin the experience with a little carelessness or silliness. So, check if you have complied with all the points above, pack your bags, say your goodbyes and run to the airport. A new life awaits you!