Naveen Kukreja
With rising aspirations and increased global employment opportunities, moving abroad has become quite common. Most of us will have friends and family who have shifted their base and have become permanent residents of another country. If you too have similar plans, ensure you take the following steps to ensure your financial plans stay in order:
Re-evaluate your investments- While planning to move abroad, make sure you re-evaluate your current investments such as mutual funds, PPF, bonds etc to decide whether to redeem or hold on to them. Those investing in mutual funds through SIPs need to open NRO/NRE account to continue SIPs after moving abroad. But before this, make sure your fund house allows investments when you move abroad, since your status changes to NRI. Some fund houses do not allow investments from NRIs and therefore, you may have to redeem your investments before moving abroad. If you have investments with different fund houses, check which ones allow you to invest even after moving abroad.
Do the math for your existing loans- Individuals can either opt for foreclosure of their existing loans by prepaying the outstanding amount, or they can continue to repay them even after moving abroad, by opening the NRE/NRO account with the concerned bank. This would enable them to repay their current loans through these accounts. In case of credit cards, it is advisable to surrender these to the concerned lenders. If you use them after moving abroad, the costs attached to overseas expenses are quite high and credit card bills can only be repaid by opening an NRO account.
Revisit your health and term insurance- Many individuals commit this mistake of not re-looking at the various insurance policies that they hold before moving abroad. While planning to move abroad, it’s important to ensure that your existing insurance policies provide adequate cover and whether they cover expenses incurred overseas or not. Usually, term insurance policies do cover the death risks overseas as well, however, for health insurance policies, find out whether it covers costs incurred in a foreign land or not. For those who had taken a home insurance for property in India, it’s advisable to continue with it. Term and health insurance policies need to be revisited to know whether they cover the individual after leaving for abroad as well. If they do, then make sure you update your KYC details. And if not, then opt for another policy in the country to which you are moving.
Beware of the taxation system abroad-Shifting to a new country exposes the individual to a new tax regime involving different taxation rules. Ignoring these before you move abroad can impact you financially. Your investments are directly linked to the country’s tax regime and your portfolio may also need to be tweaked as per the new country’s available options. Taxation rules differ for residents and NRIs. You may also need a tax expert’s advice before moving abroad, to avoid any complications or confusion. For Indians planning to move abroad, it’s important to know that you would be considered a tax resident of India if you either spend more than 182 days during a financial year in India or at least 60 days during the financial year and 365 days or more during past 4 financial years.
Also, before you leave India, tax authorities’ clearance through an NOC may be required, depending on whether you are domiciled in India or not. This NOC proves that that the individual has paid all the taxes payable by him/her. And in case you already have assets abroad, you would need to file an income tax return to show various assets’ details. This can be filed online itself though income tax website.
Update your contact details- Firstly, in case you have multiple bank accounts, you should consolidate them and switch to one NRO (Non-resident ordinary) savings account. Doing so would enable you to conveniently manage the income earned through rent, pension, dividends etc. in the current country (India). Or else, you can opt for an NRE (Non-resident external) savings account maintained in current currency (rupees), which allows investment of foreign income earned outside India into various financial products available in India.
Make sure you update your KYC (Know your customer) details for each financial products held, such as saving account, insurance policies or mutual funds. Since your address, residential status and other contact details change when you leave for another country, it becomes very important to update your details to avoid any complications due to lack of communication.
The author is CEO & Co-founder, Paisabazaar.com
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