With United States President Donald Trump ordering a review of the H-1B visa programme in the US, there are widespread fears among Indians working in the information technology sector there that they may have to return home.
Whatever the reasons for returning, non-resident Indians (NRIs) need to plan the shift meticulously. Besides finding a job that does justice to their skills and getting their children admitted into the right schools and colleges, they also need to handle the financial aspects of the transition well.
Tax residency status
Upon his return, an NRI first needs to determine his residency status for the purpose of income tax. This depends on the number of days he has been present in India.
“India follows a physical presence test as the sole criterion for determining an individual’s residential status for income tax purpose,” says Suresh Surana, founder, RSM Astute Consulting.
An individual can fall in any of these three categories: resident and ordinarily resident (ROR), resident but not ordinarily resident (RNOR, an intermediate stage for returning NRIs), and non-resident (NR).
Re-designate bank accounts
Upon his return, an NRI must inform his bank about the change in his residential status. He will need to get his NRI accounts re-designated into resident accounts.
“An NRI should re-designate his non-resident ordinary (NRO) savings account into a resident savings account. The balances in non-resident external (NRE) accounts should be re-designated to resident rupee accounts or to resident foreign currency (RFC) account. The foreign currency non-resident (FCNR) deposits may be allowed to continue till maturity at the contracted rate of interest,” says Pralay Mondal, senior group president, retail and business banking, YES Bank.
Buy insurance cover
The policies that a returning NRI needs to buy depends on what he is able to bring back with him.
“The life insurance policy he had bought abroad may cover him even after he moves to India as their coverage is worldwide. But the health policy may not work in India since it operates only within a certain geography,” says Arvind Laddha, deputy chief executive officer, JLT Independent Insurance Brokers.
Don’t rush to buy real estate
Give a lot of thought to whether you should buy a house immediately upon return or wait for some time.
“If someone has been coming back to India regularly and likes a particular city, has friends in it, or had lived in it prior to moving abroad, he may find it easier to decide on the city. If not, an NRI should first settle into a rented house, find his bearings, and then buy after some time,” says Lovaii Navlakhi, founder and CEO, International Money Matters.