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How Does NRI Status Impact Your Investments

When your residential status changes to that of an NRI, it has an impact on your investments. Indicated below are a few points on what you should be doing, with regards to your investments.

Have you received a confirmed job offer with an upcoming IT company in the Silicon Valley which will take you away from India for the next few years? Congratulations on landing your dream job! Amongst all the preparations that you need to undertake to live and work in a new country, you need to look at your existing investments and NRI investment options in India. Why? Well, your overseas job may change your status from ‘Resident Indian’ to ‘Non-Resident Indian’ (NRI). This means that your existing investments must be in compliance with all rules and regulations governing NRIs. To help you in this context, here are a few things that you need to do to make your NRI investments in India compatible with all the relevant rules and regulations:

  • Bank accounts – Resident accounts are to be converted to one of different types of bank accounts for NRI. This entails converting your existing bank accounts into NRE/NRO accounts. You can deposit all your earnings in India and transfer money overseas from these accounts. As per RBI guidelines, you can remit or repatriate an amount up to USD 1 million per financial year from the NRO account.
  •  Demat accounts – NRI investment in India, particularly in equities, faces certain investment restrictions. So, the shares that you hold in your  existing demat account needs to be transferred into a NRO demat account. 
  • Mutual fund investments – You need to intimate the Asset Manage Companies (AMCs) of the schemes that you hold about the change in your status, address and bank through a ‘Know Your Customer’ (KYC) change form.
  • Insurance – You can continue enjoying all your insurance policies and pay premiums on it. However, it is important to inform your insurer about your new status.
  • Real estate – You can continue to hold residential and commercial properties in India. You can also lease them and repatriate the rental income received after paying the due taxes, if any.

Once your existing investments comply with all the rules and regulations pertaining to NRIs, you can consider NRI investment options. Remember, all your investments will now be taxed as per the income tax rules and regulations pertaining to NRIs. Check with your chartered accountant, to know more on the same…

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