Moving back to India after decades abroad? 6 money moves to make before you return

Planning to move back to India after spending decades overseas can feel less like relocating and more like returning home.

However, from a financial perspective, it remains a significant transition that requires careful planning.

You may have retirement accounts abroad, foreign investments, property in more than one country, and bank accounts opened while you were an NRI. Your healthcare requirements may also have changed considerably since you originally left India. Ideally, these financial and tax matters should be reviewed well before you book a one-way ticket.

Calculating the True Cost of Retiring in India

Do not assume that retiring in India will automatically be inexpensive. While housing costs may be lower than in some overseas cities, private healthcare, domestic help, travel, and the lifestyle you choose can still require a sizeable monthly income.

• Build a realistic budget: Factor in housing, groceries, utilities, insurance, healthcare, travel, and household help.
• Maintain emergency reserves: Keep a separate liquid reserve for major medical bills and family-related expenses instead of depending entirely on your regular monthly budget.

Reassessing Health Insurance and Portability Rules

Healthcare should be among the first financial issues to examine, particularly if you are returning to India in your 60s or later.

• Check existing coverage: Verify whether your overseas health insurance policy will continue to provide coverage in India and whether you need to purchase an Indian health insurance policy.
• Evaluate policy terms: When comparing policies in India, carefully examine waiting periods, co-payment requirements, exclusions, and the network of hospitals offering cashless treatment.
• Leverage policy portability: The Insurance Regulatory and Development Authority of India (IRDAI) permits portability of eligible health insurance policies between Indian insurers at renewal. Credits relating to pre-existing diseases and specific waiting periods can generally be carried forward, subject to applicable rules.

Updating NRI Bank Accounts and Fixed Deposits

A permanent return to India and a corresponding change in residential status under FEMA may require bank accounts maintained as an NRI to be redesignated.

Do not continue using NRE or NRO accounts indefinitely simply because they are convenient. Speak to your bank about when your residential status needs to be updated and which resident or permitted foreign-currency accounts (such as RFC accounts) would be suitable after your return. You should also review fixed deposits and other investments that were opened or structured based on your NRI status.

Determining Tax Residency Under the Income Tax Act

Returning to India does not necessarily mean that you become fully resident for income-tax purposes on the day you arrive.

Your tax residency is determined by factors such as the number of days you spend in India and your residence history. Depending on individual circumstances, someone returning after several years abroad may also qualify as a "Not Ordinarily Resident" (RNOR) for a certain period.

The Income Tax Department states that the basic residency tests continue under the Income Tax Act, 2025, including the 182-day test and the alternative test based on stays during the relevant and preceding years. This should be checked before moving because your residential status can significantly affect how your overseas income is taxed in India.

Reporting and Retaining Overseas Assets

You may choose to retain an overseas pension, brokerage account, property, or bank account even after moving permanently to India. There is nothing inherently unusual about doing so, but you should understand the Indian tax and reporting requirements that may apply after your residential status changes.

• Mandatory disclosures: Resident taxpayers may be required to disclose specified foreign assets and overseas income in their Indian income-tax returns. The Income Tax Department includes foreign bank accounts, financial interests, property, and other overseas assets among items that require disclosure.
• Double taxation relief: If tax has already been paid in another country, relief may be available under the relevant Double Taxation Avoidance Agreement (DTAA) and foreign-tax-credit provisions.

Structuring Multi-Currency Retirement Income

Your retirement income could come from several sources, including an overseas pension, Indian investments, rental income, and retirement savings held in different accounts.

Determine which income sources will fund your regular expenses in India and how much wealth should continue to remain overseas. Currency fluctuations also need to be considered. If most of your retirement assets are denominated in dollars or pounds while your expenses are in rupees, converting the entire amount at one time may not always be the most suitable strategy. A phased approach to currency conversion, aligned with your spending needs and broader financial plan, may provide greater flexibility after the move.