People planning to take up a job abroad or moving to a different country for some other reason will need to take some steps in order to manage their finances in a foreign country. These steps will help in making the transition smoother, while also ensuring that the person does not lose any of the savings. Here are the 5 money management tips that the NRIs can follow to handle their finances.
1. Convert your savings account to NRE/NRO accounts
India does not allow non-residents to maintain a standard savings account. For such people, NRE and NRO accounts are available, which act as savings accounts. You can convert foreign currencies into INR and save them into the accounts. NRE accounts are non-taxable; the interest earned on your savings in India will not be liable for TDS deductions. However, government taxes such as income tax, gift tax, wealth tax and others are applicable to the interest earned on NRO accounts.
2. Invest through FCNR accounts
An FCNR account is a fixed deposit account specially for NRIs. It is a safer option for people looking to invest in India without having to face the risk of volatility in the market. This will not only help you maintain your finances but may also allow you to grow your wealth.
3. Clearing outstanding loans
Before leaving the country, you need to clear off any loan that you may have taken. A good way of doing so is by taking a loan from the foreign country, if the interest rates there are lower than that in India. Use the money from this second loan to clear off the debt from the first one. In this manner, you will have to pay off a much lower debt at the end of the day.
4. Understand the way that taxes work
Maintaining and remitting money from India to a foreign nation can result in major taxation. For instance, maintaining an NRO savings account means that the interest you earn on the savings will have tax deductions. On the other hand, maintaining an NRE savings account would result in tax-free interest in India. However, apart from the taxation in India’s NRI bank accounts, your money may even be eligible for tax deductions in the country where you currently reside. So, make sure you know all pertinent details about taxes and then go ahead with the option that aligns with your needs and goals.
5. Determine how to proceed
The last thing that you need to consider is whether you want to settle abroad forever or want to return to India sometime in the future. If you plan on returning, you should extensively invest in the Indian market through NRI accounts. This will leave you with a secure future when you do come back to the nation.
There are a number of nri accounts that will allow you to carry on with all your financial requirements in India even after you have moved to a different country. All the accounts have different features that you must go through carefully and opt for the one that suits your financial requirements the best.
1. Convert your savings account to NRE/NRO accounts
India does not allow non-residents to maintain a standard savings account. For such people, NRE and NRO accounts are available, which act as savings accounts. You can convert foreign currencies into INR and save them into the accounts. NRE accounts are non-taxable; the interest earned on your savings in India will not be liable for TDS deductions. However, government taxes such as income tax, gift tax, wealth tax and others are applicable to the interest earned on NRO accounts.
2. Invest through FCNR accounts
An FCNR account is a fixed deposit account specially for NRIs. It is a safer option for people looking to invest in India without having to face the risk of volatility in the market. This will not only help you maintain your finances but may also allow you to grow your wealth.
3. Clearing outstanding loans
Before leaving the country, you need to clear off any loan that you may have taken. A good way of doing so is by taking a loan from the foreign country, if the interest rates there are lower than that in India. Use the money from this second loan to clear off the debt from the first one. In this manner, you will have to pay off a much lower debt at the end of the day.
4. Understand the way that taxes work
Maintaining and remitting money from India to a foreign nation can result in major taxation. For instance, maintaining an NRO savings account means that the interest you earn on the savings will have tax deductions. On the other hand, maintaining an NRE savings account would result in tax-free interest in India. However, apart from the taxation in India’s NRI bank accounts, your money may even be eligible for tax deductions in the country where you currently reside. So, make sure you know all pertinent details about taxes and then go ahead with the option that aligns with your needs and goals.
5. Determine how to proceed
The last thing that you need to consider is whether you want to settle abroad forever or want to return to India sometime in the future. If you plan on returning, you should extensively invest in the Indian market through NRI accounts. This will leave you with a secure future when you do come back to the nation.
There are a number of nri accounts that will allow you to carry on with all your financial requirements in India even after you have moved to a different country. All the accounts have different features that you must go through carefully and opt for the one that suits your financial requirements the best.
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