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Financial experts advise NRIs returning to India to convert bank accounts, review investments, and ensure tax and insurance compliance for a smooth transition
As more Non-Resident Indians (NRIs) permanently return home, financial planners recommend taking timely steps to reorganise money matters in line with Indian regulations. These include converting NRE and NRO accounts to resident status, updating KYC details with banks, and reviewing investment portfolios to meet RBI and income tax norms, reported timesofindia.indiatimes.com.
Converting bank accounts, updating documents, and managing taxes and insurance early can prevent compliance issues and simplify the transition for returning NRIs.
When an NRI moves back to India, existing FCNR deposits can be maintained until maturity, after which they must be converted to either a Resident Rupee or Resident Foreign Currency (RFC) account. Likewise, NRE and NRO accounts must be converted into resident savings or RFC accounts to comply with RBI regulations.
Opening a resident savings account also helps returning NRIs manage daily banking needs easily, especially with digital banking options now widely available
Investment realignment and tax planning are key priorities for returning NRIs.
Upon return, income from foreign assets becomes taxable in India. Financial experts recommend diversifying investments into mutual funds, gold ETFs, and bonds while updating investor status with fund houses and brokers. NRIs must close their NRI Portfolio Investment Scheme (PIS) accounts and open resident Demat accounts to remain compliant.
Returning individuals must also understand their tax classification—either Resident and Ordinarily Resident (ROR) or Resident but Not Ordinarily Resident (RNOR)—as it determines which income sources are taxable:
- ROR: Global income is taxable in India, and all foreign assets must be declared in the income tax return.
- RNOR: Only Indian income is taxable; foreign income remains exempt unless received in India.
Health and life insurance are equally critical, as overseas policies generally lose validity upon return.
NRIs should secure comprehensive health insurance that covers treatment in India and purchase term life insurance with adequate coverage to safeguard their family’s financial future.
Finally, experts stress the importance of planning early. Updating PAN and Aadhaar details, converting accounts, and reassessing insurance and investments ensures compliance and stability, helping returning NRIs settle seamlessly into life back home.
