One of the challenges Non-Resident Indians (NRI) face once they move out of India is figuring out how to manage their finances. While keeping it safe and secure back home in their absence is the primary requirement, there is also the need to ascertain the most appropriate ways of transferring funds from your international location to back home to India. There are various factors to be considered and just as many different ways to send money back to India as a NRI.
Given that an Indian citizen becomes a NRI after residing in India for less than one hundred & eighty two days during the course of the preceding financial year, he has to take into consideration various ways to handle his finances as a NRI which is crucial. Be it employing the services of a financial planner or utilizing comparative sites like CompareRemit to evaluate the best remittance rates out there, it’s a decision that may vary with each individual situation, but the commonality still remains with managing finances remotely.
What Should A NRI Consider When Managing His Finances Remotely from Abroad?
- Taxation – Local and international
Any cross-border money moves require you to have a thorough knowledge of taxation norms applicable to you both in your foreign country as well as what will be taxed as a NRI. Access to such information is a critical part of ensuring the safety of your income, and savings thereof, especially when moving money between two countries.
- NRE and NRO Accounts
Opening of NRE and NRO accounts should be the primary move for any NRI. These rupee-denominational bank accounts can be in the form of savings, checking or recurring accounts that allow the NRI to not only repatriate their overseas earning back to India but also deposit any form of income originating in India itself into the account. This could be from rents, local salaries or other investment returns.
- Norms of Fund Transfer
One of the biggest financial moves a NRI makes is sending money back home. Instead of making impulsive moves and temporary fund transfers, it is prudent to evaluate the exchange rate trend that changes frequently, find the best possible exchange rate, make comparisons between various money transfer services, and then remit funds. This ensures both safety and advantages of making planned transfers.
Are you considering transfer of funds to your home country?
Here are money-transfer tips for new immigrants
- NRIs and Portfolio Investment Schemes (PIS)
NRIs are permitted to purchase and sell shares of Indian companies through the Portfolio Investment Schemes (PIS). The NRE account facilitates repatriating money abroad if shares are bought through them.
- PPF Accounts for NRIs
While a new ruling prevents NRIs from opening new Public Provident Funds accounts for NRIs, they can continue to subscribe to ones opened before they left India and maintain it until its maturity in 15 years. Given that it’s a security with sovereign guarantee, PPF not only gives the same interest as given to resident Indians but also is an excellent long-term investment instrument for NRIs.
- Minimize Risks in Overseas Transactions
Understand risks and define all-purpose objectives for every one of your financial moves. Balancing investment allocation while taking advantage of all financial opportunities in both locations, India and abroad is the key to ensuring safe returns.
In conclusion, for a NRI, organizing and managing one’s financials especially remotely involves being equipped with the right information coupled with the most effective tools to be safe and efficient.