Why Financial Planning?

Planning is bringing the future into the present so that you can do something about it NOW.

Are you an NRI who is planning to return back to India for good? Are you a professional who has been working abroad and now is being sent on a long-term assignment to India? If yes, I am sure you have many things to do.

You might be busy winding up your work, winding up your household, arranging the logistics of travel for you and your family, and transport of personal belongings. An important aspect that needs some well-thought plan of action is your financial plan.

This post is aimed at enhancing the knowledge base of NRI’s for ensuring their happy NRI returning to India.

NRI Moving Back To India
NRI Moving Back To India – 5 Things To Take Care

Read – Myths and Facts about Residential Status

NRI Moving Back To India

Here are five key points to remember and take action on when you, an NRI  are going to be a Resident Indian –

Manage Bank Accounts –

As an NRI, you might have NRE, NRO, and FCNR accounts. The NRO savings accounts have to be converted to resident savings accounts. Fixed deposits in FCNR and NRE accounts can remain the same until maturity. They can be changed to Resident Foreign Currency (RFC) accounts after maturity. Savings accounts can also be converted to RFC accounts when you have the RNOR (Resident but not Ordinarily Resident) status. Interest received in these accounts is exempt from tax. They have better conversion rates and can be used for transacting within India and abroad.

Demat Accounts –

You cannot operate the NRI Demat account that you opened when you were an NRI. You will have to open a resident Demat account and transfer all your current investments to it.

Tax Implications –

You need to have a look at taxation rules in India before moving back to India. When you are an NRI and relocating to India, you first become an RNOR (Resident but not Ordinarily Resident). You can be an RNOR for a maximum of three years based on certain conditions of your stay abroad. As an RNOR, you are exempt from tax for the following incomes –

  • Interest on FCNR accounts
  • Interest and dividends received on investments abroad
  • Capital gains on the sale of assets abroad
  • Rental income

Once you become a resident Indian, the income that you earn abroad will also become taxable in India. Of course, the DTAA protects you from getting doubly taxed.

Overseas Assets –

You might have acquired assets such as property, stock, or bonds overseas when you stayed there. If you sell these assets and receive the sale proceeds outside India when you are an NRI or RNOR, you do not have to pay any taxes in India. The amount can be received in an account abroad and remitted to India. You will not be liable to pay tax.

Check – NRE FD after return to India

As an NRI returning to India, you can also continue to hold your foreign earnings, foreign securities, and immovable property outside India if it was acquired when you were a resident outside India. The income from such investments can also be retained outside India.

nri returning to india

Financial Planning –

It is important to tweak your financial plan based on your residential status. The financial plan must cater to your short-term goals, long-term goals, and current financial status.

You might have got a lump sum money after your work stint abroad. It has to be invested wisely. You might have to buy a house for living in India. It has to be managed properly.

You have to take the following steps:

  • Ensure you and your family have health insurance. If you are working in India, your employer might provide for you. If not, you should take care of it as medical expenses are quite high and a serious issue can upset your finances.
  • If you have dependents, you should have a term plan in India so that your family is taken care of from a financial perspective.
  • You should modify the budget to suit your lifestyle in India. The income and expenses will be very different. If you are going to retire in India, it is more important to have a conservative budget and stick to it so that your savings do not vanish quickly.
  • It is not easy to manage taxes, investments, and financial planning on your own when you return to India after a long stint abroad. You have many things apart from your financial plan in your mind. Moreover, things like taxes and investments would be very different from what they were when you were in India long back. It might be better to consult a professional financial planner to manage your financial plan.

NRI Moving back to India is a huge step. You will have to think of different aspects – where you want to live, children’s life and their education, your married life, the status of parents (are they dependent on you, their health), lifestyle, work, and financial goals. You have to think through all of them carefully and plan much ahead before you actually move back. All the best!

If you have any questions or suggestions on NRI returning to India feel free to add them in the comment section.

Published on April 5, 2018

Hemant Beniwal

Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice in 2009 & is among the first generation of financial planners in India. He also authored Bestseller book "Financial Life Planning". 

  • I am H1B moving back to india ..i dont want to sell my stocks in USA..can i keep my stocks and bank account open in USA still …for how long can i keep them ?

  • I lived in hong kong for 18 years and now i am in India since Jan 2020 because of covid travel restrictions. So basically i am not an NRI anymore.

  • I was stranded in India for more than 182 days due to Pandemic in FY 2020-21.Now I am working again abroad.I have been an NRI since 1997.Do I have to pay tax on NRE FD interest in 2020-21.

  • I am confused about what happens to NPS account if NRI moves back to India. Can someone continue NPS account after moving to India ? While moving back to India citizenship is not changing, it’s just resident country which is changing.

    This (https://www.wisenri.com/india-nps-for-nri/) says NRIs can continue if they become resident to NRI or vice-versa whereas this (https://www.wisenri.com/nri-change-residential-status/) says opposite that NRIs have to close account they opened as NRI.

    Are there official rules somewhere which can clear this confusion?

  • Hello,

    Thank you for publishing such knowledge article. Please advice on brlow query-
    I have a client who has Singapore Citizenship and now has returned from Singapore permanently.Her status is Resident but not ordinarily Resident. While in India she has earned some free-lance professional income from Singapore and USA which were remitted in Singapore Bank Account. My concern is that whether such Freelance income is taxable as it is received in Singapore Bank Account.

  • On transfer of residence the NRE Account is to be converted into ordinary saving bank account. Will the balance in NRE account be considered as income?

    • Hi Amar,
      As per my opinion, to avoid paying tax on the same income twice, you can use the provisions of the Double Taxation Avoidance Agreement (DTAA)

  • I am NRI returning to India after 6 years. I have investments in mutual funds in NRE repatriable mode. I wish to keep NRE account because if I decide to move out of India later, I would like to have the ability to repatriate the money easily. How this situation should be handled? If I change NRE to resident savings account then I don’t think I would be able to repatriate without hassle.

  • Will you please advise whether funds which suffered income tax, can be transfered from NRO S b
    Accounts to NRE s b account with out Form 15A and Form 15B in the light OF CBDT NOTIFICATION applicable from April 1,2016 for certain type of payments?

  • After spending twenty years abroad, I am planning to move back to India. I have been reading your blogs often and I find them really useful.
    Thanks for sharing your knowledge

  • Hi HEmant,
    I am sharing this from my personal experience. One may initially feel difficulty while adjusting to the workplace environment in India. Long work hours, bossy managers and unknown colleagues can make you feel stressful.
    I agree with Dipali’s view in this post

  • It would be highly beneficial for NRI to create a PMS (Portfolio Management Account) under the sound wealth managers. The wealth manager would be responsible for handling all the investment as per client’s direction. It will be a Demat account opened with a separate bank. Client can also check the investment made in his PMS account online. However, it is required on client’s part to comply with all the SEBI (Securities Exchange Board of India) legislations for opening a PMS account.

  • Hi Hemanth,
    NRI need to have a look on taxation rules in India before moving back.
    A non-resident Indian on moving back need to pay tax on its salaried income, capital gains realized from property transfer and interest earned from the bank deposits.
    NRI’s are bound to pay tax if their Indian originated income exceeds above the limit of 2.5 lakhs.
    India is having different tax regime for NRI’s so you need to evaluate its different aspects before considering the final decision.

  • Issues can also occur for NRIs in finding a suitable job and salary in India as per your desire and worth. Career growth opportunities are less in India in comparison to the western countries and you can find difficulty in searching the right kind of job.

  • Hi!
    Do proper financial planning before moving back to meet your different financial needs adequately.
    Plan your investment strategies by gaining knowledge of the financial markets in India in advance.
    This can be done through the help of reliable financial advisors having high reputation and experience. Thus, restrict yourself from taking instant decisions having risk of potential financial loss.

  • Hey Hemant,
    NRI’s also needs to know about the rules regarding TDS in India as per Section 195. Non Resident Ordinary Account (NRO) is subjected to have a TDS deduction of 30%. Also, 15% TDS is applied on short term capital gains through selling Mutual Funds.
    One should be well aware of the taxation policies regarding TDS in India before moving to India.

  • Real Estate is a potential good investment option for NRIs to earn higher returns in the future period of time. The increasing population base in India will require residential homes and providing a potential opportunity of realizing capital gains from transferring of real estate property.

  • Dear Hemant,
    You should add Investment on Moving Back in the the article. As an NRI you need to select a proper investment plan on the basis of your days of residence. Emphasis should be placed on diversifying the financial investment for minimizing the risk and securing your money.
    Different financial instruments that NRI’s can invest are bank deposits, insurance and mutual funds as per their financial needs at different life stages.

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