CHANGING RESIDENTIAL STATUS? A financial checklist before you go abroad
If YOU PLAN to move abroad either for a job or for higher education, careful financial planning is essential to ensure a smooth transition. Foremost, you must inform your bank about the change in residential status and savings/current accounts should be converted into Non-Resident Ordinary (NRO) to manage any future income you earn from investments in India.
The NRO account can receive any income like rent, interest or dividends from stock investments earned in India and will be handy to make local payments when you visit home. You can also open an Non-Resident External (NRE) account after you move abroad to park foreign earnings. In such an account, neither the balance, nor the interest earned is taxable and the money in this account is also freely repatriable.
For equity and mutual fund portfolio, if you plan to continue with the investments in India, you need to update the KYC details, and link the demat account and mutual fund portfolio to the NRO account.
You must also address any outstanding debts or liabilities in India before you move out. You should also opt for adequate insurance cover and decide what to do with the property, vehicles, and other assets in India and do the tax planning. Review any existing retirement accounts, such as Employees’ Provident Fund or Public Provident Fund and understand how moving abroad may affect them.
Adhil Shetty, CEO, Bankbazaar.com, says it is important to inform the Indian bank about the individual’s plans to move abroad and understanding the formalities for running or closing the account. One should also check on the formalities for transferring funds. “Opening a new bank account in your new country is also crucial for managing your local finances. Be sure to clarify with
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