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Moving abroad for work? Here are 7 things you must do
Moving abroad? How to organise assets
When a household moves abroad, they manage two identities—citizenship of one country and residency at another. They manage two currencies in which their incomes and wealth are held.
They do not know if their move is temporary or permanent, and how well they would settle into the new country. There is usually a good amount of procedural aspects to take care of, and there is the task of managing and investing the new income in the new regime.
For example, they cannot make fresh contributions into government and post office schemes such as the PPF. Some of these investments need closing. Some do not have online monitoring facilities.
It is a good idea to close these investments and move the money to other assets.
Check insurance policies
If their medical expenses are covered by the new employer, and if the terms of their medical insurance do not allow them to use the facility for illnesses at overseas location, keeping it alive does not make sense.
They may have burglary, fire and other general insurances. They should review and close policies no longer needed. They can also pay their life and other insurance premia as a lump sum to avoid drawing from bank accounts that may no longer hold adequate balance.
Collect employment benefits
These terms can vary depending on whether the fund is managed by the company’s own PF trust or by the central EPFO.
If they have an NPS account, they should understand the terms of holding their Tier 1 and Tier 2 accounts. They should avoid letting these accounts become dormant.
The updating of the status of these accounts from resident to non-resident can happen only after they have moved, and are able to produce proof of their overseas address. The fees of non-resident broking accounts is higher, and it is important to consolidate before conversion.
For example, equity holdings in the trading account with the brokerages will now be subject to the regulations applicable to Portfolio Investment Scheme (PIS). The brokerage has to report the holdings by nonresidents periodically to the RBI. The holdings acquired in India, and funded by IndianRupees will be classified as non-PIS and held along with a NRO bank account. The holdings acquired while living abroad, and funded by foreign currency will be classified as PIS and held along with an NRE bank account. These apply for every combination of holding in a demat account. They should be consolidated and reorganised, so that direct equity holdings can be easily managed.
Regulations and restrictions
In order to avoid the operationally intensive reporting requirements, many mutual funds do not accept investments from NRIs based out of the US. Some have specific process requirements before accepting investments. All investors have to make a FATCA declaration before they can make fresh investments in mutual funds.
Redeem all defunct holdings, and consolidate and clean up mutual fund holdings before leaving India. NRIs have to provide overseas address and link their holdings to an NRO or NRE bank account. The TDS applicable to them on redemption of mutual fund units is also different. Nominations in favour of non-resident nominees need more process. Cleaning up folios before leaving, and updating the KYC forms later after acquiring NRI status is a better idea.
Managing physical assets
However, tax provisions in their resident overseas location may differ depending on whether they have engaged a property manager. After looking up such regulations, arrangement to rent the property in India should be completed before leaving.
Power of attorney authorising someone trustworthy to manage the paperwork relating to renting the property can also be created. However, such PoAs have to be drawn up after becoming a non-resident.
Managing wealth across multiple countries is easy for the very wealthy. For ordinary investors, it needs a good amount of ground work before planning a move abroad.
(The author is Chairperson, Centre for Investment Education and Learning)