5 Things NRIs Must Do in 2021: New FY Resolutions

Due to the unprecedented Covid-19 outbreak, everything seems to have turned upside down over the last year. The pandemic is not only a health crisis but also an economic shock. From personal hygiene to spending habits, everything has changed. Therefore, your first step is to identify and prioritize things that you need to work on to face potential challenges and meet your requirements such as NRI investment and taxation. Here are the 5 things NRIs must do in 2021. 

Five Things NRIs Must Do in 2021
5 Things NRIs Must Do in 2021

5 things NRIs must do in 2021 

NRI tax filing 

Due to the nuances in tax laws for NRIs and mismatch in taxation period, they often file taxes in one country but neglect in the other country. Indian citizens living abroad must understand these nuances in NRI tax laws, which will help them reduce the total tax payable, or get refunds of taxes already paid. In the Union Budget 2021-22, Finance Minister Nirmala Sitharaman proposed the abolition of double taxation on income accrued by NRIs in their foreign retirement accounts outside India. NRIs who are facing the hardship of double taxation will benefit from this abolition.

NRIs can avoid double taxation under the Double Tax Avoidance Agreement (DTAA). It is for the Non-Resident Indians (NRIs) who earn income in India and pay tax twice i.e. in the country of their residence and India, on the same income. The DTAA is a treaty signed by two countries to enable NRIs to get relief from having to pay taxes multiple times. India has signed the DTAA with more than 85 countries including the USA, UK and UAE. NRIs can claim tax relief under DTAA in two ways – exemption method and tax credit method.    

Retirement Planning for NRI

It is one of the five things NRIs must do in 2021. Most NRIs plan a corpus of funds for their retirement in the later stage of their lives when returning to India. However, if they wish to enjoy similar dignity even after retirement, it is important for NRIs to build their retirement corpus meaningfully in advance. There are a number of financial instruments to choose from, so they must invest their hard-earned money in one of the best pension plans for NRIs in India that will help them meet their post retirement goals. 

Various insurance firms like SBI, Bajaj Allianz and LIC offer pension plans for NRIs. Most of the insurance providers offer comprehensive pension plans to solve the purpose of retirement planning.    

Health Insurance for NRI

To face the financial uncertainties that may either disrupt one’s financial budget in the future, or potentially eat big chunks of the savings they have accumulated for other financial goals like retirement or higher education of children, NRIs can choose from a range of NRI insurance policies. Similar to insurance policies for residents, various companies are offering NRI health insurance, NRI life insurance and many other NRI insurance policies.

With many players in the market and insurance costs coming down, it may be a good idea for you to consult an insurance advisor to help buy the products that are appropriate and ascertain the premiums that are being paid are in line with the benefits that are offered. Connect with our expert directly on WhatsApp using the button below.

Choosing the best investment options

No matter where one lives, investing money in the Indian market is an ideal option for NRIs. Due to the rapid industrial development over the last two decades, India has been receiving large foreign direct investment. Hence India is a viable destination for NRIs when it comes to investing. There are various financial instruments such as NRI fixed deposits, NRI gold schemes, NRI bonds, etc.

Top 10 NRI Investment Options

Here are some of the best investment options for NRIs in 2021 considering the returns. 

Rebalancing asset allocation

The Covid-19 crisis has brought about widespread instability across global financial markets. Some components of the Indian portfolio have outperformed the international portfolio, or vice versa. Hence NRIs are required to revisit their asset allocation and rebalance them. They may be tempted to top-up in the better performing asset, but rebalancing typically moves money from the better performing asset to the one that has not done equally well. It will help them to keep their risk levels in check and minimize the risk.

As compared to other assets, equities have delivered superior returns in the long run, say 10-15 years. However, in the short run, the returns can be very volatile. So, to prevent the downside, you should invest in assets such as deposits, gold and even bonds and fixed-income securities.

How many services you need in India as an NRI?

Also Read: Moving Abroad? How to strategize your NRI Investment Plan!?

Things NRIs must do in 2021: Get Expert Assistance

In order to meet all or any of the above-mentioned financial goals successfully, you will need to seek help from financial and legal experts. At SBNRI, we understand this struggle. You can connect with our financial experts directly on WhatsApp using the button below for end-to-end assistance. Also visit our blog and YouTube Channel for more details. 

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Things NRIs must do in 2021: FAQs

Are OCIs and NRIs the same? 

While both an NRI (Non-Resident Indian) and an OCI (Overseas Citizen of India) have roots in India, an NRI refers to a person who holds Indian citizenship and an OCI refers to a foreign citizen of Indian origin.  

Do NRIs also need to link Aadhaar with PAN card?

As per the Government’s notification (No. 37/2017, F. No. 370133/6/2017-TPL), Non-Resident Indians (NRIs) as defined by the Income Tax Act, 1961 are not required to link their Aadhaar with PAN card. 

Is a PAN card different for NRIs?

A PAN card for NRI is the same as for the resident Indians. 

Is the basic exemption limit applicable to NRIs?

Yes, the basic exemption limit of Rs. 2.5 lakhs is applicable to NRIs as well.

Which type of ITR Form do NRIs need to file for Financial Year 2020 – 21?

Non-Resident Indians (NRIs) earning income in the form of salary and interest are required to furnish the return of income in ITR-2 form.  

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