Financial Checklist for NRIs Returning to India

In the swirl of emotions and myriad logistical issues that come with the decision to move back to India, it’s easy to overlook some crucial financial aspects.

However, meticulous financial planning is as crucial as the move itself.

After all, who wants to land back in the homeland only to be caught in a labyrinth of financial hurdles? No one, right?

So, let’s dive in, step-by-step, into the comprehensive financial checklist every NRI should consider before planning the big move back to India.

1. NRE/NRO/FCNR Accounts

Your NRE (Non-Residential External), NRO (Non-Residential Ordinary), and FCNR (Foreign Currency Non-Residential) accounts need your attention. The moment your status changes from NRI to resident, these accounts must be converted into resident accounts.

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Remember, failing to do so might lead you to be non-compliant with FEMA (Foreign Exchange Management Act) guidelines. So, ensure you inform your bank about your returning status and complete the necessary formalities.

In case you have overseas earnings even after returning, you can opt for an RFC (Residential Foreign Currency) account.

2. Overseas Bank Accounts

While it’s not mandatory to close your overseas bank accounts, it’s essential to inform these banks about your change in residential status.

Certain privileges offered to NRIs may not be available to residents, and your bank should be aware to adjust the benefits accordingly.

3. Taxation Laws

Tax implications are one area where you don’t want any nasty surprises. As an NRI returning to India, it’s crucial to understand your tax liabilities.

India follows a residency-based taxation system. So, the global income of a resident is taxable in India. Therefore, getting familiar with the Income Tax Act and understanding the double taxation avoidance agreement (DTAA) between India and your current country of residence becomes essential.

4. Investments

Your investment portfolio may need a serious look before you plan your move.

Equity Investments: If you’ve invested in stocks and mutual funds in India as an NRI, these investments need to be updated to resident status after your return.

Real Estate Investments: If you’ve invested in real estate properties abroad, it’s vital to understand the tax implications of these investments in India.

Retirement Accounts: If you’ve contributed to retirement accounts like 401(k) or individual retirement accounts (IRAs) in the US, withdrawing the entire corpus before moving can lead to considerable tax liability. It’s advisable to consult with a financial advisor before making any decision.

5. Health and Life Insurance

Before moving back, take a careful look at your insurance policies. Understand the transferability and validity of these policies in India.

Most health insurance providers in foreign countries don’t provide coverage in India. So, you might need to buy a new health insurance policy. Similarly, for life insurance, verify if your current plan covers global death benefits.

6. Credit History

Remember that your credit history doesn’t travel across borders. Hence, before moving back, it would be wise to get a credit card from an international bank that has a presence in India.

Using it regularly will help you maintain and build a credit history in India.

7. Will and Power of Attorney

If you have a will or power of attorney set up in your foreign country of residence, consider having it reviewed by a legal expert to understand its enforceability in India.

You might need to draft a new will in India to include assets acquired in India.

8. Loans

If you have outstanding loans or mortgages abroad, analyze the cost-benefit of continuing them versus closing them before moving.

Also, if you plan to take a loan in India for buying property or a vehicle, know the regulations and prepare accordingly.

9. Repatriation of Funds

Understand the rules of repatriation of your funds to India. Also, if you have dependents abroad, understand the guidelines to send money to them.

Remember, moving back to India is a significant transition, not just personally and socially, but also financially. It requires a comprehensive understanding of various financial nuances.

In all these endeavors, the consultation of a financial advisor who has expertise in NRI services can be invaluable.

The road may seem daunting, but with careful planning and informed decisions, you can navigate through these financial crossroads smoothly.

Here’s to a hassle-free move and a stress-free financial life in your homeland.

Welcome back to India, dear NRIs!


Q1: How does the residential status affect my tax liability in India?

A: Your residential status determines your tax liability. If you’re a resident, your global income is taxable in India. But, if you’re an NRI, only the income earned or accrued in India is taxable.

Q2: What happens to my NRE/NRO/FCNR accounts when I move back?

A: When you change your status to a resident, your NRE/NRO/FCNR accounts should be converted to resident accounts or RFC accounts.

Q3: Can I hold investments made abroad after I move back to India?

A: Yes, you can continue to hold your foreign investments. However, any income from them will be taxable in India if you’re a resident.

Q4: What are the tax implications of selling property located abroad?

A: If you sell a property located abroad while being a resident of India, the capital gains from the sale will be taxable in India. However, you may claim relief under the Double Tax Avoidance Agreement (DTAA), if applicable.

Q5: Do I need to close my overseas bank accounts when I move back to India?

A: No, it’s not mandatory to close your overseas bank accounts. However, you need to update your status with the bank and understand how it impacts your account privileges.

Q6: Can I transfer my health/life insurance to India?

A: Most foreign health insurance policies don’t provide coverage in India, so you may need to buy a new policy. For life insurance, check whether your plan offers global death benefits.

Q7: What happens to my credit history when I move back to India?

A: Credit history doesn’t transfer across borders. You can maintain/build your credit history in India by using a credit card from an international bank operating in India.

Q8: What happens to my retirement accounts in my current country of residence?

A: If you’ve contributed to retirement accounts like 401(k) or IRAs in the U.S., you may continue holding them. But, withdrawing the entire corpus before moving can lead to considerable tax liability.

Q9: What happens to my will or power of attorney set up abroad?

A: A will or power of attorney set up abroad may not be enforceable in India. It’s advisable to consult a legal expert and consider drafting a new will in India.

Q10: Can I repatriate my funds to India?

A: Yes, you can repatriate your funds to India. However, understand the rules of repatriation, as there may be tax implications. Also, if you have dependents abroad, understand the guidelines for sending money to them.

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