We are close to that time of the year again, when a large number of Non Resident Indians (NRIs) based in different geographies plan their annual visits to India to catch up with friends and family. In the midst of all the lunches and dinners, it is also the time to take stock of all the personal finance related house-keeping aspects, so that they find it easier to manage their monies once they go back to their professional and personal routines after this well-deserved break.
This is also the time for them to reflect on the bigger picture relating to financial goals, and decide on whether they need to develop a comprehensive financial plan as a result. Some aspects to consider would be, how and where they plan to retire, how much would they need to support their retirement, how well are they planned for the education of their children, should they be paying down some of their loans rather than investing those monies, should they be evaluating becoming entrepreneurs and, if so, how will they support that.
Thus, they need to reach out to a professional who could guide them through a strategic life plan, which can help them understand how they need to go about financially supporting this life plan.
Apart from the possible need to create a comprehensive financial plan, there may also be the need for them to evaluate other aspects whilst they are in India. These could include the following.
Independent medical insurance cover
Whilst most NRIs have comprehensive health covers in their country of current residence, it is important to remember that if and when they choose to move back to India with their families, they may not be insurable in India easily due to pre-existing illnesses. Thus, whilst it is tempting to defer the purchase of this cover to when it is actually needed, one runs the risk of not getting this coverage when one wants. Evaluate the alternatives carefully, and do not buy the first one that you come across just because it was offered at your bank or by a known person. Buy it whilst you are in India, as it may not be possible to do so once you return abroad.
Consolidate and update the status of all your bank accounts
There are invariably accounts that would continue to be tagged as resident in the family, even though one may have been non-resident for many years now. Consolidate bank accounts, so that they are easier to manage, and ideally have one Non Resident Ordinary ( NRO) account for all India generated income and one Non Resident External ( NRE) account for all investments that one may wish to repatriate back easily if needed.
Investment account consolidation
Just as with bank accounts, there may be investments done as a resident which may need to be updated and consolidated. For example, demat accounts may need to be converted to NRO status, PIS accounts may need to opened to enable future investments in equities efficiently, platform accounts may need to be opened/updated to enable online investments and redemptions, and there may be a need to consolidate the overall investments in a structured manner rather than having them scattered at multiple places.
PPF accounts update
Considering that NRIs are not permitted to have PPF accounts beyond their original term of 15 years, it is recommended that you close PPF accounts on completion of their original term, and not extend them during the India visit.
Addresses and Know Your Customer (KYC) status
In order to ensure that the non-resident status and bank accounts are updated across investment portfolios, a fresh KYC may need to be done with a non-resident status. Also, ensure that mobile numbers, PAN and email ids are correctly updated across all investments. Keeping a live India mobile number that can be tagged to all investments is a good idea to enable one-time passwords (OTPs) that may be needed to access accounts seamlessly.
Tax returns to be filed correctly
It is critical to have tax returns correctly filed as a NRI to report all income and taxes payable, as well as claim any refunds due to any excess TDS that may have been deducted. It is a good idea to meet with a trusted tax professional if taxes are not in order.
Whilst there will be multiple things to be accomplished on the India visit, do not miss out on the personal finance checklist and your strategic financial plan in the process. (The writer is a certified financial planner and founder of Plan Ahead Wealth Advisors)