Working abroad can be an exciting opportunity, but before leaving your home country, there are important things to consider. If you are an Indian citizen working overseas for more than 181 days, you will be classified as a Non-Resident Indian (NRI). This classification has implications for your financial accounts and investments back in India. In this article, we will discuss what Non-Resident Indian (NRI) need to keep in mind and the steps they can take to manage their accounts and investments.
a) Accounts in Your Name
When you become a Non-Resident Indian (NRI), all the resident accounts in your name must be converted to Non-Resident Ordinary (NRO) accounts. Any interest you earn on NRO accounts will be taxed at a maximum marginal rate of 31.2%.
b) Joint Accounts
If you have a resident account held jointly with your wife or any other resident Indian, and you are the first holder, then that account must be converted to an NRO account when you update your status to Non-Resident Indian (NRI). The same holds if your wife or any other resident Indian is the first holder of an account, and you are a joint holder.
c) Bank Deposits
All your resident deposits must also be designated as Non-Resident Ordinary (NRO) deposits. The contracted rate of interest on these deposits will not change until maturity, but the withholding tax applicable will change to 31.2% once your status is updated to Non-Resident Indian (NRI).
d) PPF Account
As a Non-Resident Indian (NRI), you can continue to invest in your existing Public Provident Fund (PPF) account. You can use funds in your NRE account or NRO account to make these investments.
e) Demat and Stock Holdings
If you have existing shares or want to invest in shares and stocks, then you will need to open a Portfolio Investment Services (PIS) account. You will also need to notify your bank to transfer any existing shares under the holding to the PIS account. ca in gurgaon Once you have a PIS account, you can only invest or trade in shares and stocks through the secondary market.
f) Foreign currency Non-Resident (FCNR) account
Your FCNR deposits can run until maturity, but your earnings in your NRE savings account will have to be transferred to a resident savings account or a Resident Foreign Currency (RFC) account.
g) Open an NRE account and add a mandate holder
Before going overseas, open an NRE account and add a mandate holder who can operate the account on your behalf in India. This will help you stay on top of banking activities, even when you are not in India.
h) Status of non-residents on temporary visits/stay in India
If you are visiting India for a short period, you will still be classified as a non-resident. This means that your non-resident accounts, investments, and other financial activities will continue without any changes. You will also not be required to surrender any foreign exchange that you might have with you.
i) Persons of Indian Origin (PIO) Cards
If you are a person of Indian origin living abroad, you can apply for a PIO card. This card offers several benefits, including visa-free entry to India and exemption from registration with the Foreigners Regional Registration Office for continuous stays of up to 180 days. It also offers some special economic, educational, financial, and cultural benefits that are similar to what Non-Resident Indian (NRI) enjoy.
if you are an Indian citizen going abroad for work and will be classified as an Non-Resident Indian (NRI), there are several financial implications to consider. You will need to convert your resident accounts to NRO accounts, transfer your shares to a PIS account, and manage your investments carefully. By planning ahead and keeping these things in mind, you can ensure that your finances stay in order even when you are away from India.
If you are an NRI seeking a tax consultant CA in Gurgaon, we can provide our services. Our team of qualified Chartered Accountants specializes in NRI taxation and can assist you in filing your tax returns, complying with tax laws, and minimizing your tax liabilities. We have a proven track record of helping our clients achieve their financial goals while ensuring compliance with all applicable laws and regulations. Our services are tailored to meet the unique needs of NRIs, and we a CA in Gurgaon strive to provide personalized attention to each of our clients.
Contact us today to discuss your tax-related needs and learn how we can assist you.