Tips To Manage Your Finances If You Are Settling Abroad

By Adhil Shetty | July 18, 2017

Tips To Manage Your Finances If You Are Settling Abroad

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, you will be considered a non-resident India. 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. 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.

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

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. It is also important to note that as an NRI, you cannot invest in government schemes like PPF, NSC, NPS. However, if you already have these account, you can continue to stay invested.

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.

(The writer is CEO, BankBazaar.com)

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About Adhil Shetty

Adhil Shetty is the Founder and serves as the Chief Executive Officer of BankBazaar.com. Adhil has a Master’s degree in International Relations with a specialization in International Finance and Business from Columbia University in the City of New York, and a Bachelor’s degree in Engineering from the College of Engineering Guindy, Anna University. Adhil is an expert in Personal Finance (Car loan/Home loan and personal loan) and he majorly consults on investment and spends rationalization for the Indian loan borrowers. His guidance is number based with real time interest rate calculations and hence useful for consumer’s real time query.

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