Source – SiliconIndia, Wednesday, February 6, 2013
Bangalore: “Pardesh Jaake Humme Bhul Na Jaana”, before your friends and family say this and you catch a flight to travel abroad, don’t forget to complete a few tasks in India which will help you save time and lots of paperwork once you become an NRI (Non Resident Indian).
Who is an NRI?
A Non Resident Indian (NRI) as per India’s Foreign Exchange Management Act 1999 (FEMA), is an Indian citizen or Foreign National of Indian Origin, resident outside India for purposes of employment, carrying on business or vocation in circumstances as would indicate an intention to stay outside India for an indefinite period. An individual will also be considered NRI if his stay in India is less than 182 days during the preceding financial year.
If you are planning to leave India and become an NRI soon, here is a list of 10 things you must do, reports Manish Chauhan for Jagoinvestor.com.
1. Take a Term Insurance
Never leave India without being insured. After you become an NRI it would get very difficult for you to buy a term plan from an Indian insurance company. Hence it is better and advisable to first take a term plan and then leave Hindustan. If not, later for applying for a term plan you would be called back to India to complete some formalities and paperwork, which would again be more expensive and time consuming. Also remember that even getting an online term plan will not be that easy. So better complete this step before you become an NRI. Even the premiums you will pay will be lower.
2. Take Health Insurance
Today when cost of health care is sky rocketing, not having a health insurance will push you towards the road of financial catastrophe in case of medical urgency. So before you become an NRI, take a health insurance plan, otherwise you will have to undergo the same problem prevalent as in case of term plan. As in you will have to visit India for health checkups and it would also involve more documentation and hassles in the process. Health Insurance is something you must take, so why wait? Just take it today.
3. Open PPF Account
Putting money in PPF (Public Provident Fund) is a good practice to save money. Since after becoming an NRI one cannot open a fresh PPF account, so before you become an NRI and leave India, open a PPF account. For opening a PPF account you can either choose to visit a bank or the Post office. And then you can continue to invest money in this PPF account regardless of being an NRI and living outside India.
4. Convert your Savings bank account into NRO account
Many people leave India without realizing the need to open an NRO account in the country. Instead of doing it later, it is more preferable to convert your existing saving bank account into NRO (Non Resident Ordinary) account just before leaving India. An NRI can deposit all of his/her Indian income into the NRO account and also make payments like EMI payments, and other kind of investments through the NRO account. To open a NRO account all that you require is your 2 photographs, and a copy of your passport and visa.
5. Connect your Loan Account with your banking account for online payment
If you have a home loan running and all you are worried about is its repayment after you become an NRI and leave India, then here is the solution. The best you can do is just connect your home Loan Account with your banking account for online payment so that you can pay the EMI’s of your home loan using National Electronic Fund Transfer (NEFT ) schemes. It’s a good idea to do this before your leave India as it might happen that you would be required to visit the bank to complete this process.
6. Prepare a Power of Attorney
When you have already decided to move overseas for half a year or indefinite time, you can never be completely sure that during this time gap when and why your presence would be required in India. For instance if you want to buy any real estate property or want to operate your bank account, or other related work, you might want to prepare a power of attorney. Power of attorney is a legal way of assigning power to someone to act on your behalf. Just choose some trusted family person or a friend. You can also make a power of attorney which expires at some stipulated time.
7. Make your mutual funds accounts online
In most cases, people still want to transact in mutual funds after they become NRI, but they face various issues at the time. One should be smart enough to open an online account for mutual fund investing while he or she is dwelling in India. The process is quite simple, for this you can open an online account with the respective mutual fund AMC’s (Asset Management Company) or the best option is to open account with Funds India. They support both investments from Indians and NRI investors.
8. Open an NRE account
NRIs who want to invest their money in India and wish to get it back in the foreign country (repatriation), would require to open an NRE (Non Resident External) account. Since you are not allowed to deposit local money like interest from FD, rental income etc into the NRO account, so for all these requirements, better open a NRE account. Well, you would be delighted to know that the Fixed Deposits rates on NRE accounts are quite attractive in Indian Banks.
9. Sell your shares and open a new NRI demat account
Warning! After you become an NRI, you will not be permitted to sell off your existing demat account shares which you had purchased before becoming a NRI. In order to continue trading in share, you will have to open & operate a NRI demat account. So before you become an NRI, the two best things you can do is to either sell off the existing shares and take back the money or you can also choose to open an NRI demat account and transfer your existing stocks to this new account.
10. Update your KYC
The processes involved for executing various kinds of financial products to residents and NRIs is different for each. For instance, after you become an NRI you will not be able to do anything with banks, mutual funds, life insurance policies (traditional or ULIPs), unless you update your KYC (know Your Customer) document. Also don’t forget while you update your KYC, to get it signed by at least one witness, whose name and other essential details should be provided in the form. So to be on a safer side it would be better to first update your KYC, before you become an NRI.