Returning to India after living overseas can be an exciting but challenging period, especially managing your finances. Even though you have likely built some financial ground where you’ve stayed, it’s essential to begin with a stable foundation in India. This guide will walk you through practical tips to set a stable financial footing once you return home.
- Re-Assess Your Financial Goals Returning to India offers you an opportunity to re-analyze your financial goals in view of altered circumstances. If you are saving for retirement, education of your child, or home purchase, you must re-cast your short-term and long-term goals. Use this opportunity to revisit your financial priorities and make adjustments as required.
- Set Up or Verify Your Emergency Fund Establishing an emergency fund is highly essential in order to gear up for surprise expenses, especially during the adjustment period. Well-managed emergency fund should suffice at least for six months’ worth of general living expenses such as rent, utilities, education expenses, and medical emergencies. Pro Tip: Because of the cost of living in Indian cities, the amount you might need can vary. For example, an emergency fund in Mumbai will be higher than one in Jaipur because the cost of living is not the same there.
- Maximize Your Savings and Investments Being an NRI returning for the second time, you should review your current investment and savings portfolio. That includes examining your NRE, NRO, and FCNR accounts. You should make decisions regarding how to deploy your resources so as to optimize returns subject to your risk profile.
- Diversify Your Investments: Invest in a combination of fixed income securities, mutual funds, and equities. Indian mutual funds, tax-saving schemes, and even foreign investments can provide a diversified portfolio.
- Tax-efficient Investing: Take care of tax implications while investing in India, as some tax benefits are available to NRIs in certain investments.
- Know Indian Taxation Policies Handling the Indian taxation regime after returning from overseas can be challenging. After you become a resident for tax purposes, you are required to pay taxes on your global income. You must be familiar with the taxation laws regulating both your domestic and foreign sources of income. You may want to take professional guidance from a tax advisor who specializes in NRI taxation to avoid any undesirable liabilities.
- Administer Foreign Assets and Income You may have rental income in foreign properties, foreign stocks, or pensions, all of which have to be included in your Indian tax returns. You need to plan how such assets will be handled after you return.
- Plan Right Health and Life Insurance Health cover is necessary in India since the cost of healthcare is increasing. Look for a comprehensive policy covering hospitalization, critical illness, and outpatient treatment. You also have to decide on life insurance needs for your family’s financial protection.
- Review Your Retirement Plans If you plan to retire in India, match your retirement strategy with the cost of living and inflation rates in India. Investment in government-sponsored schemes such as the National Pension Scheme (NPS) or PPF can be a secure way to accumulate retirement funds.
- Establish Credit and Banking in India If you have been abroad for several years, you may have to re-establish your creditworthiness in India. Start by creating a good credit rating, maybe by taking a credit card or a small loan and repaying it in time. Also, ensure that you have the proper bank accounts in place, like savings, investment, and demat accounts.
Conclusion
Reorienting your life back in India financially after gaining overseas experience is scary, but proper planning and a clear strategy will help you settle well financially. The secret is to set smart goals, manage your savings and investments with prudence, have knowledge about taxes, and enjoy proper insurance cover. These actions will make sure that you do well financially in your second life.
FAQs
- What is the initial step in building a solid financial foundation after resettling in India?
Ans- The first step is to redefine your financial goals according to your present life and future needs, e.g., retirement, your child’s education, or buying a house. - How much should I invest in my emergency fund after resettling in India?
Ans- We advise saving sufficient amount to cover at least six months of cost of living, taking into account the cost of living in your city. - How do I manage my foreign assets once I am back in India?
Ans- You are required to report foreign assets and income while submitting tax returns in India. We advise professional guidance from a financial planner for managing your foreign assets to best advantage. - What tax implications must I consider upon my return to India?
Ans- Once you become a tax resident in India, you will be liable to pay tax on your global income. Seek assistance from a tax consultant to be compliant and pay less tax. - What are the best investments for NRI returnees?
Ans- You can invest in different instruments, including mutual funds, fixed deposits, government schemes, and equities. Invest in products depending on your risk tolerance and investment horizon. - Do I have to close my NRE or NRO accounts when I come back to India?
Ans- It will be based on your residence status and investment goals. You may continue to hold these accounts if you continue to be an NRI, or switch to resident accounts if you are now a resident. - What health insurance must I avail of when I come back to India?
Ans- Start by applying for a credit card or a small loan and regular payments. This will enable you to build or rebuild your credit score. - Can I continue investing in foreign markets after returning to India?
Ans- Yes, though you are an Indian resident, you can invest your funds in foreign shores through platforms or mutual funds overseas, but take tax implications into consideration. - What retirement schemes should I choose after coming back to India?
Ans- Choose investment in National Pension Scheme (NPS), Public Provident Fund (PPF), or other pension schemes specifically tailored to meet long-term retirement requirements.
Disclaimer: The information provided here is for educational and informational purposes only and should not be construed as financial, legal, or tax advice. Consult with a qualified professional before making any investment decisions. We do not accept any liability for errors or omissions in this information nor any direct, indirect, or consequential losses arising from its use.
