Got a job in a foreign country? Important personal finance matters that you must deal with | Simply Save

Have you received a job offer outside India? If yes, you must be excited to take up this opportunity. But before you do that, there are important matters that you must deal with. And these relate not just to getting your visa, booking your tickets and finding accommodation but also your personal finance matters.

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So, where do you begin? If you are going to be overseas for some time, you would like to be able to access the money in your Indian bank accounts. So, how should you go about doing that? Then, what about having life and health insurance during your foreign stay. And finally, given that you are going to have income not only from India but also from another country, you’ll have tackle personal tax matters, too.

Moneycontrol spoke to Sonali Pradhan, Head of Wealth Planning, Julius Baer on how to go about dealing with all this. Pradhan offers tips on banking, investment and taxation matters for someone moving overseas.

Here are a few important points that she highlighted:

-What to do with your Indian bank account – if you are not sure for how long you are going to be overseas, you can convert your resident bank account into an NRO (Non-Resident Ordinary) account. This will help you take care of your initial expenses till you start earning.

-Conversion of resident bank account to NRO account – your bank in India will ask you for a valid visa and proof of an overseas address. The account conversion will allow you to freely take money (up to USD 1 million) out of India. Otherwise, you will be taking money out of India as a resident Indian and will be subject to the LRS (Liberalized Remittance Scheme) restrictions.

-Dealing with income tax – Broadly speaking, if you spend 180 days or more in any country, you become a tax resident of that country. In some countries, this threshold has been brought down to 90 or even 60 days. So, it may happen that in your first year of migration, you will become a tax resident of both the countries.

-Paying income tax in India – if you are a tax resident of India, you will have to pay taxes on your Indian income. Also, you will have to offer your global income for taxation in India.

-Paying income tax in a foreign country – you will have to offer your salary to tax in the country where you have been recruited. Apart from that, based on that country’s tax rules, you may also have to pay tax on your global income. But India has a double taxation avoidance agreement (DTAA) with most developed countries. So, if you have paid tax in one country, you can get tax credit for that in the other country.

-Updating investments to reflect your non-resident status –ideally if you have been offered a permanent job, you must update your bank accounts, mutual fund investments and demat accounts to reflect your non-resident status. Doing this, has advantages and disadvantages.

-The advantage is that if you have been hired in a country such as Singapore or Dubai with whom India has DTAAs, then your investments in India as a tax resident of these countries, may be subject to lower or even zero taxes in certain cases. For example, if you are a tax resident of Dubai or Singapore, then apart from capital gains on equity (shares) and house property, all other capital gains made in India will be tax free.

-The disadvantage is that even though your tax liability does not change with a change in your tax residency status, administratively there will be one additional aspect to take care of. A mutual fund house, depository or bank in India paying money (could be in the form of dividends, interest, capital gains etc.) to a non-resident India has the obligation to deduct withholding tax. This does not apply to resident Indians.

-Life insurance – whether you have one or multiple policies domestically or internationally, the insurance company will have to pay the money (sum assured) to the policyholder’s family on his/ her demise.

-Health insurance – you can opt for an international health policy that has been issued from India. Such a policy will cover your healthcare expenses incurred not only in India but also overseas.