6 Tips for NRIs To Manage Their Finance

Foreign countries have attracted Indians since forever, with them wanting to visit and probably settle in one of them permanently. For some people, this dream converts into reality, and they plan on becoming NRIs. It is a personal choice whether one wants to be an NRI or not.

The status of an individual as an NRI is different under the Foreign Exchange Management Act and the Income Tax Act. According to FEMA, they become a non-resident when they plan to move overseas professionally or for an indefinite period. They need to revise their bank accounts and convert them into an NRI account for easy transfer and access to money. Here are some tips to help manage your finance:

1. Revision of bank accounts: NRIs who still have income sources in India, for instance, income from ancestral property or a rented-out property, can keep the money in India by opening an NRO bank account.  Get all existing resident bank accounts redesignated to NRO accounts. Moreover, if there are multiple accounts, consolidate them and then convert them into NRO accounts.
   
   
2. Currency rate fluctuations: Those who wish to invest using their NRI bank account should make a note of the currency rate fluctuations which can affect the returns on the investment. A slight change in the value of Indian Rupee against foreign currency can have a significant impact on the rate of returns.
   
   
3. Redesignate Demat accounts: Before thinking of NRI account opening, consider liquidating the equity and investment portfolio or seek professional advice. There are many methods of doing so, including setting up a PIS account to continue gaining exposure even after becoming an NRI.
   
   
4. Mutual fund investments: The NRE account is non-taxable as compared to the NRO account, which is subject to tax as per the applicable rate. Update the KYC status after becoming an NRI and update the portfolio to avoid mismatches. The NRO account include taxes upon repatriation of mutual funds along with other restrictions.
   
   
5. Get a thorough knowledge of the taxation process: While opening an NRI savings account, all applicants should have a thorough understanding of the taxation procedure of both the countries. As an NRI, they need to abide by the tax laws of both countries: where they reside and in India. The tax deduction benefits in India are similar for both NRIs and the residents.
   
   
6. Get a Forex card: These are prepaid cards that individuals can use while making payments abroad. They have funds pre-loaded in them in the required regional currency. It enables users to withdraw cash in foreign currency, check the account balance, and shop. Also, check the NRI account interest rates on term deposits.