As Coronavirus continues to spread globally and the consequent unemployment in the US crosses 40 million, several non-resident Indians residing in the US have been severely impacted. Many are boarding special evacuation flights and repatriating to India.
Are you eligible to board these special evacuation flights to India?
Find out here
Relocating lock, stock and barrel in times when unemployment and uncertainty have forced your hand is not an easy task. Besides having to adjust and settle your family back in India, there are a few pertinent formalities to complete before leaving the US for India.
Here we discuss what NRIs should do on returning to India
- Clear loans, credit card debts
Besides outstanding loans for personal property like home and car, it is important to ensure that you payout all expenses on your US credit cards and clear debts. The interest on outstanding credit card bills can quickly accumulate over time and affect your global credit score. Once cleared, close out or discontinue these credit cards.
- Notify all financial institutions
Let your bank and/or credit union know about your change of domicile address and close all inoperable bank accounts. You can remit your savings home to India
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- Banking in India
Once in India, and your long-term plans to stay have been finalized, it is important to convert your NRE and FCNR accounts to NRO and resident savings accounts. This is important to avoid penalties under the Foreign Exchange Management Act.
However, before doing so, it is important to repatriate all your foreign income/savings to NRE and FCNR accounts.
- Taxation in India
Knowing the NRI taxation rules is important during this transition.
On returning to India, it is important to clarify residential status for taxation purposes.
Did you know that the NRI status has been redefined?
Here’s what makes you an NRI now
For a resident but not ordinarily resident (RNOR), income earned outside of India is not liable to be taxed. However, once you repatriate to India on a long-term basis, taxation of your income will depend on your residential status.
It is important to note that all Foreign Currency Non-Resident (FCNR) deposits (fixed deposit in foreign currency) continue to remain tax-exempt. This is, again subject to RNOR status.
- Medical Insurance
Health insurance is a requirement whether you are in the US or moving back to India. Since medical insurance bought in the US may not cover you and your family in India, it is important to buy a policy immediately on arrival in India. This is especially true in the current Covid pandemic times.
Related Article: If you are unemployed in the US and your health insurance is tied to your employer, you should get temporary medical insurance to protect yourself and your family members.
It should be noted that the life insurance premium you pay in India is not taxable according to Section 80C of the Income Tax Act.
For more information about exiting USA
Check out this exit plan