I am 32 years old and planning to move abroad in a few months. What changes should I make to my financial products before leaving the country ?
The big advantage for an Indian citizen is that when they are planning to move their residence base out of India, they can continue to remain invested in India and it is only their residential status that changes to a non-resident. Going forward, they will be required to convert the residential details in all their investments including their bank status changed from a resident to a non-resident.
But some investments may require tweaking, i.e., you cannot continue to deposit money in PPF (Public Provident Fund) as this investment is available only for resident Indians. However, the account will earn interest at the rate of post office savings account rate (from the date of becoming an NRI) and at maturity, the account will need to be redeemed as its tenor cannot be extended for the next block. Likewise, you many need to change a few investments depending on your new country of residence. For example, if you have investments in mutual funds and you are migrating to the US or Canada, then there are certain restriction on investments in some of the mutual funds.
It is also good to check whether the country of migration has a DTAA (Double Tax Avoidance Agreement) with India. There are many countries with which India has a tie-up to ensure there is no double taxation on income earned in one country and taxes are paid in both countries. This is to ensure that taxes are not paid twice. You are also allowed to remit money abroad under the LRS (Liberalised Remittance Scheme) for permitted current and capital account transactions. The limit of such transfer for residential individuals is ₹2,50,000 per financial year.
Surya Bhatia is managing partner of Asset Managers.