Things NRIs Need to Consider before Moving

Moving to another country changes almost every aspect of life. There are many financial matters that must be addressed when an NRI plans to leave the country. Issues about bank accounts, interest, taxation, shares, and power of attorney must be dealt with. This article is about the things NRIs need to consider before moving. 

Things NRIs Need to Consider before Moving.
Things NRIs Need to Consider before Moving. Image from goodreturns.in.

Change your Savings Bank Account into an NRO account

The Reserve Bank of India requires this. Similar to a typical bank savings account, an NRO account has some limitations. You can deposit rupee profits from India, such as rent, interest, dividends, etc., in this account. Additionally, you are able to deposit money that is coming from overseas in the form of freely convertible foreign currency. Through this account, you can write checks for any local payments, EMIs, or investments.

All current income that you received in India, such as rent, interest, dividends, etc., may be repatriated (that is, transferred to a bank account outside of India). In addition, you may repatriate up to $1 million every calendar year if you conducted any capital account transactions, such as the sale of real estate or investments, and received the sale proceeds in an NRO account. A certificate from your chartered accountant stating that all taxes on the cash have been paid, however, would be required. The banker won’t approve the repatriation till then.

Rates of Interest and Taxation

The interest rate will be about 3%, which is comparable to the interest on a typical savings account. Tax will be due on the interest and will be withheld at the source at a rate of 30.9%.

Visit your local bank location and complete the necessary paperwork. Two photos, a copy of your passport, and a copy of your visa would all need to be submitted.

If you have already gone overseas without finishing this procedure, you can give the branch copies of all your documents that have been attested by the Indian Embassy or Notary.

Close your Current Demat Account, Create a New Demat under PINS (portfolio investment scheme), and Open an NRO Demat Account

Sandeep Shanbhag, the Director of Wonderland Investments says “An NRI has certain restrictions when it comes to investing in Indian equities. For instance, an NRI cannot invest more than 5% in the paid-up capital of an Indian company. In order to keep track of these restrictions, the RBI requires you to make these changes in your Demat accounts.”

You cannot maintain your ordinary Demat account as an NRI. You will need to close your current Demat account and transfer the shares you purchased into an NRO Demat account. These shares were purchased while you were an Indian resident.

You have the option of keeping or selling these shares. There are limitations on repatriation and the sale revenues are credited to the NRO savings account. This means that you are permitted to repatriate up to USD 1 million per calendar year (including all other capital account transfers), but you must obtain the previously indicated certificate from your chartered accountant.

For NRI Share Purchases

You must register a Demat account under the Portfolio Investment Scheme if you want to acquire shares as an NRI (PINS). With money from your NRE account, you can purchase shares through this Demat, and selling proceeds can be credited to your NRE account for repatriation. In the event that you decide to purchase the shares on a non-repatriable basis, the money will be credited to your NRO account.

For repatriable and non-repatriable shares, you must keep separate Demat accounts. An NRE must currently have a separate account linked to the PINS Demat account, according to recent RBI regulations. It cannot be the NRO or NRE account used for other commonplace transactions. The PINS account must be closed whenever you return to being a resident.

Your Demat service provider can assist you with all of the aforementioned tasks. To do the same, you would have to provide paperwork like your passport and visa.

Give Someone in India Power of Attorney

Simply said, having someone you can trust to manage your bank accounts and other financial operations is more practical.

Almost all financial affairs can be managed with the help of a power of attorney, including managing bank accounts, purchasing and selling real estate, renting out your home, signing tax documents, issuing checks from your account, and more.

You cannot open bank accounts on behalf of a POA holder. Once bank accounts are opened, he can only use them. Additionally, a resident POA holder is prohibited from repatriating funds outside of India according to the RBI. He is only permitted to repatriate money to the account holder’s foreign bank account.

To ask any questions related to the rights of NRIs, PIOs, and OCIs, you can download SBNRI App from the Google Play Store or App Store. You can also use the SBNRI app for investment in stock market/ mutual funds, NRI account opening, tax filing, etc. To ask any questions, click on the button below. Also, visit our blog for more details.

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FAQs

What should NRIs do with their savings account before leaving the country?

They should change it to an NRO account.

What is an NRO account?

Many Non-Resident Indians (NRIs) use a Non-Resident Ordinary (NRO) Account to manage their savings or income received in India, such as dividends, pensions, rent, etc. With this account, you can receive money in both Indian and international currencies. NRO Accounts are maintained in Indian currency and cannot be freely repatriated into any other foreign currency, hence withdrawals are only permitted in Indian rupees.

What does PINS stand for?

It stands for portfolio investment scheme.

What is a Demat account?

Shares are now kept in a Demat Account in electronic form. This is why a Demat Account is your best option for holding shares and assets quickly, safely, and without having to worry about the associated paperwork.

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