This was also the case with Madhav, a software engineer. He has been staying overseas for quite some time and is all set to attain an NRI status soon. In this situation, he is confused about what needs to be done with respect to his existing holdings. In case you have encountered this predicament, we enumerate the steps you need to take for safeguarding your holdings.
- Close normal bank accounts and open NRE/NRO bank account: Since your existing status has changed to that of an NRI, you can no longer operate normal bank accounts. As an NRI you can open either an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) bank account. Moreover, you can either close your previous account or simply transfer your existing resident account to an NRO account.
- Open/Convert new demat and trading accounts: You need to close/convert your previous resident demat and trading accounts to NRO demat and trading account. Next, you need to open new NRE demat and trading accounts for making investment from repatriation funds.
- Change mutual funds’ KYC details: You need to notify your AMC and produce new Know Your Customer (KYC) documents to update your current KYC details.
- Obtain PIS letter: To invest in India’s stock market, you need to obtain a Portfolio Investment Scheme (PIS) permission letter from the Reserve Bank of India.
- Update PAN records: KYC details also need to be updated for your PAN card by sending an application to the Income Tax (IT) department.
- Obtain TRC: To avoid double taxation on the income earned in India, you would require a Tax Residency Certificate (TRC) to claim benefits under the Double Taxation Avoidance Agreement (DTAA). For obtaining a TRC, you can approach the tax/government authorities of your current country of residence to get the TRC certified after downloading form 10F.
- Apply for DTAA: If you are residing in a country which has a DTAA with India, you need to apply for DTAA by submitting Form 10F and obtaining a TRC.
Execute power of attorney: As a resident Indian, you were not required to declare the power of attorney (POA) for your bank accounts, demat account, and trading accounts. But after you reside go overseas, you have an option to declare the POA in favor of the person who would manage these on your behalf in India.
Ensure that the person whom you are assigning as POA is trustworthy enough to handle your financial matters.
Like Madhav, you too can adhere to this checklist while changing your status from resident Indian to NRI to ensure compliance with the country’s financial institutions.