Here are a few financial tips on how NRIs can make informed decisions and seamlessly integrate into the Indian financial system.
What to consider upon returning to India as an NRI?
When you journey back to India, a few important financial steps await your attention –
Once you are back, a smart move is to restructure your bank accounts. You can redesign your existing accounts as resident accounts.FCNR accounts can continue until their maturity date. Getting your financial house in order also involves opening a resident Demat account. This account is ideal for transferring your shares from your NRI Demat account. Plus, remember to close down the NRI Demat account.
- Updating mutual fund investments
For those who have invested in mutual funds as an NRI, bringing these investments in line with your new residential status is essential. This means updating your resident bank details and changing the status of your mutual fund investments from NRI to the resident.Financial tips NRIs must know for a smooth return to India
Let’s take a quick look at seven financial tips for foreign-return NRIs to keep in mind:
As a foreign return NRI, consider opening resident savings and demat accounts in India. This shift will simplify transactions and enable you to manage your finances effectively.
- Closing bank accounts in foreign countries
To streamline your financial affairs, close or re-designate your NRE and NRO accounts as resident accounts within a reasonable timeframe. Ensure compliance with RBI guidelines.
- Understanding tax implications on NRE and NRO accounts
Interest accrued in the NRO account is subject to taxation in India. A Tax Deducted at Source (TDS) is imposed on this interest at a rate of 30.9%, which comprises a 30% tax rate along with applicable education cess and surcharge, if any. The bank is responsible for deducting the TDS on NRO interest and subsequently depositing the remaining sum into the NRO account.
On the other hand, interest earned in the NRE account is exempt from taxation for Non-Resident Indians (NRIs) in India. However, if an NRI transitions into a resident of India within a financial year, the entire interest becomes taxable unless the taxpayer secures prior permission from the RBI.
- Familiarising oneself with new tax updates
Stay informed about the latest income tax updates as an NRI and potential benefits available to returning NRIs.
For example, let’s say Anand, who had been living in the USA as an NRI for the past five years, has recently returned to India. By staying updated on the latest income tax changes and being aware of the potential advantages tailored to returning NRIs, Anand can proactively manage his tax obligations and strategically plan his investments.
This has led Anand to make more informed financial decisions, potentially saving him a significant amount in taxes and optimising his investment portfolio for the future.
Evaluate your fixed deposits (FDs) and decide whether to continue, liquidate, or reinvest them. This decision should align with your financial tips and liquidity needs.
Bottom line
As you transition from an NRI to a resident, your financial landscape transforms, too. Following these essential financial tips upon returning from foreign will facilitate seamless integration into the local financial system.
For hassle-free inward remittances and efficient fund transfers, consider leveraging IDFC FIRST Bank. Transferred funds to your IDFC FIRST Bank NRI Account are immediately usable upon crediting. Also, no fees for incoming wire transfers by IDFC FIRST Bank.
Here’s to a financially secure and prosperous future on home soil!
Disclaimer: The above content is non-editorial, and TIL (Times Internet Limited) hereby disclaims any and all warranties, express or implied, relating to the same. TIL does not provide investment advisory services in any manner and the publication of this content does not mean TIL’s or Economic Times endorsement. TIL strongly recommends the users to take all steps necessary to ascertain that any information and content provided is correct, updated and verified and/or speak with a qualified investment professional before making any investment decisions.