Last month, I spoke with Vikram, an IT consultant in San Francisco. He'd been investing in India for seven years, thinking everything was fine. When we reviewed his portfolio together, his face went pale.
He was still using his old resident savings account. His rental property in Bangalore was barely giving him 2% returns after expenses. He hadn't claimed any DTAA benefits and had been paying 30% TDS on everything. His total penalties and lost returns? Over ₹4 lakh.
The worst part? Every single mistake was completely avoidable.
If you're an NRI managing money in India, you're probably making at least 3-4 of these mistakes right now. The good news is that once you know what to fix, it's actually pretty simple. This guide covers 15 costly mistakes I see NRIs make repeatedly, and exactly how to avoid them.
Key Takeaway
- Converting your resident account to NRE/NRO within 30 days of becoming an NRI is mandatory under FEMA, failing which can result in penalties up to ₹2 lakh
- NRIs typically lose 20-30% of their returns to avoidable tax mistakes by not claiming DTAA benefits and proper TDS relief
- Over-investing in Indian real estate gives you just 2-3% rental yields while alternatives like diversified mutual funds historically deliver 10-12% returns
- Bank relationship managers often push high-commission products like ULIPs that can charge 30-40% in the first three years
- Filing ITR and submitting Form 10F can reduce your TDS from 30% down to 10-12%, potentially saving lakhs annually
- Proper documentation and FEMA compliance protects you from account freezing, transaction rejections, and legal complications
1: Are You Still Using Your Old Resident Savings Account?
This is hands down the most common and expensive mistake I see. You moved abroad six months ago, a year ago, maybe even five years ago. But your Indian savings account? Still the same one you opened in college.
Here's the problem. Once you become an NRI (typically when you've been abroad for more than 183 days), RBI regulations under FEMA clearly state you cannot operate a resident savings account anymore. Every single transaction you make through that account technically violates the law.
The consequences aren't just theoretical. Penalties can go up to ₹2 lakh. Your mutual fund investments can get frozen. Banks report non-compliance to RBI. Your Demat account gets flagged. It's a mess you really don't want.
What you need to do immediately is convert your savings account to either an NRE account (for depositing foreign income) or an NRO account (for managing income earned in India). Your Demat account also needs to become an NRO Demat account. And you'll need to update your KYC documents with your foreign address, PAN card, passport copies, and visa details.
The good news? Most banks like HDFC, ICICI, and SBI now allow online conversion. You don't need to fly to India just for this. The whole process can take 7-10 days if you have your documents ready.
Understanding who qualifies as an NRI under Indian law is the first step. Your residential status determines everything from which accounts you can hold to how your income gets taxed. Get this wrong, and everything else falls apart.
Want to dive deeper into the differences? Check out our detailed guide on NRE vs NRO vs FCNR accounts to understand which one suits your needs best
2: Why Is Everyone Telling You to Buy Property in India?
Between 2000 and 2010, Indian real estate was booming. Every NRI I knew was buying apartments, thinking they'd found the perfect investment. Fast forward to today, and many of those same people are stuck with illiquid assets that barely beat inflation.
Let's talk real numbers. Rental yields in major Indian cities average around 2-3% annually. Your property might be worth more on paper, but after accounting for property tax (up to 20% of rental income), monthly maintenance (₹5,000 to ₹15,000 in cities), tenant headaches, and the time when your property sits empty, your actual returns are often negative.
And we haven't even talked about selling. Try selling a property in India quickly. It can take 6-12 months, sometimes longer. When you need cash urgently, your ₹1 crore property isn't helping you at all.
Then there's the capital gains tax situation. When you eventually sell, you're looking at 20% tax with indexation or 12.5% without it. Add the 1% TDS that gets deducted at the time of sale, and your returns shrink even more.
Compare this to other options. Diversified mutual funds have historically given 10-12% returns. The Indian equity markets have been among the best performing globally. Even simple fixed deposits are giving 6-7% with much better liquidity.
I'm not saying never buy property in India. If you're planning to return and live in it, that's different. If you have family managing it effectively, maybe it works. But buying property just because "real estate is safe" or "everyone is doing it" is a mistake.
If you're thinking about property investment, our guide on how NRIs can buy and sell property in India covers the legal aspects, tax implications, and documentation you need to know.
3: How Much Money Are You Losing to Tax Mistakes?
Priya, an NRI in Dubai, invested ₹50 lakh in Indian fixed deposits. When she got her first interest credit, she was shocked to see 30% TDS deducted. She had no idea she could have reduced this to just 12.5%.
Here's what most NRIs don't know. India has Double Taxation Avoidance Agreements (DTAA) with most countries. These treaties exist specifically to prevent you from paying full tax in both countries. But DTAA doesn't work automatically. You need to claim it.
The process involves submitting Form 15CA and Form 15CB to your bank before any payment is made to you. For ongoing income like FD interest, you need to file Form 10F once, which tells the bank to apply lower TDS rates as per the DTAA between India and your country of residence.
Let's say you're in the UAE and earn ₹5 lakh interest annually on your FDs. Without DTAA claim, you lose ₹1.5 lakh to TDS. With DTAA, you only pay ₹62,500. That's a saving of ₹87,500 every single year.
But here's the thing many NRIs miss. Even after TDS is deducted, you should file an Income Tax Return in India. Why? Because you might be eligible for refunds. Most NRIs think "I don't live in India, why file?" and end up losing thousands in legitimate refunds.
Our comprehensive guide on understanding DTAA benefits explains exactly how these treaties work and which countries have the most favorable terms with India.
And if you've never filed an ITR as an NRI, don't worry. We've got you covered with a step-by-step guide on how to file NRI tax returns.
4: Should You Trust Your Bank's Investment Advice?
Your bank's relationship manager calls you during your India visit. They're friendly, they remember your name, they seem genuinely interested in helping you. Then they recommend a ULIP or a pension plan with a premium of ₹2 lakh per year.
Should you buy it?
Probably not.
Here's what most NRIs don't realize. Relationship managers are essentially salespeople. They have targets. They earn commissions on products they sell. The products that give them the highest commissions are often the worst products for you.
Take ULIPs (Unit Linked Insurance Plans). They sound great in theory, combining insurance and investment. But the charges are brutal. In the first year, you might pay 30-40% of your premium in charges. That means if you invest ₹2 lakh, only ₹1.2 lakh actually gets invested.
Pension plans are even easier to sell because they don't require medical tests. You're on a short visit to India, who has time for medical tests? So they push these products hard. But the returns are mediocre at best, the charges are high, and your money gets locked in for years.
The solution isn't to never trust anyone. It's to work with the right kind of advisor. Look for SEBI-registered investment advisors (RIAs). These are professionals who are legally required to act in your best interest. They charge fees for advice, not commissions on products they sell.
Before investing in anything, ask these questions:
- What are all the charges, clearly broken down?
- What's the lock-in period and penalty for early exit?
- What have been the actual returns (not projected)?
- How does this fit into my overall financial goals?
- Are there better alternatives for what I'm trying to achieve?
Your cousin recommends something. Your friend swears by a particular mutual fund. Your uncle says gold is the way to go. Everyone means well, but they don't know your complete financial situation, your tax status, or your long-term goals.
If you're looking for diverse NRI investment options in India, make sure you understand each option thoroughly before committing your money.
5: Do You Know Your Current Residential Status?
This one confuses almost every NRI I talk to. You think you're an NRI, so you're an NRI, right? Not quite.
Indian tax law recognizes three categories: Resident, Resident but Not Ordinarily Resident (RNOR), and Non-Resident Indian (NRI). Your status depends on how many days you spent in India during the financial year.
Here's the basic framework:
- If you're in India for 182 days or more in a year, you're typically a Resident
- If you're in India for 120-181 days and meet certain other conditions, you might be RNOR
- If you're in India for less than 120 days, you're typically an NRI
Why does this matter so much? Because it determines whether you pay tax in India on your global income or just your India-sourced income. It affects your TDS rates. It determines your investment eligibility. It impacts your repatriation rights.
I've seen NRIs who assumed they were non-resident for tax purposes, only to discover during scrutiny that they were actually residents because they'd spent too many days in India visiting family. The back taxes and penalties were painful.
Your residential status isn't static either. It resets every financial year based on your physical presence in India. So you need to calculate this every single year before filing your tax return or making investment decisions.
Getting this wrong doesn't just affect your taxes. It can make your NRE account invalid. It can affect whether your property sale proceeds are repatriable. It's foundational to everything else.
Most NRIs planning to return to India eventually don't realize how complex the transition can be. Our guide on return to India planning for NRIs covers the financial aspects, tax implications, and timing strategies to make your move smoother.
6: What FEMA Rules Apply to Your Investments?
FEMA stands for Foreign Exchange Management Act, and it governs everything you do financially in India as an NRI. Break these rules, even unknowingly, and you're looking at serious penalties.
Here are the violations I see most often:
Agricultural land purchases. NRIs cannot buy agricultural land, farmhouses, or plantation properties in India. Period. I don't care if your friend's cousin did it. It's illegal. You can inherit agricultural land, but you cannot purchase it.
Trading without a PIS account. If you want to buy stocks in India, you need a Portfolio Investment Scheme (PIS) account. You cannot use a regular trading account. Only delivery-based trades are allowed, no intraday. There are also limits on how much of any single company you can own (5% of paid-up capital individually).
Exceeding repatriation limits. You can repatriate any amount from your NRE account. But from your NRO account, you're limited to $1 million per financial year. Many NRIs sell property, try to send ₹2 crore abroad, and then discover they can only send half of it this year.
Currency or commodity derivatives trading. These are completely prohibited for NRIs. Don't try to trade in futures and options in currency markets or commodity exchanges.
Recent updates in 2025 have made some things easier. NRIs can now hold INR accounts overseas through SRVA and SNRR accounts, which helps with transactions. But the core FEMA restrictions remain the same.
What IS allowed:
- Residential and commercial property (with exceptions)
- Stocks, mutual funds, bonds through proper channels
- Government securities and bonds
- Most equity investments with documentation
Setting up your NRI Demat account correctly is essential if you want to invest in Indian stocks. It's not as simple as opening a regular account, and there are specific rules you must follow.
7: Is Currency Risk Eating Your Investment Returns?
Amit in London invested £50,000 (equivalent to ₹50 lakh at the time) in Indian equity in 2015. By 2020, his portfolio had grown to ₹70 lakh. He thought he'd made a killing, a 40% gain.
When he converted it back to pounds, reality hit. He got £52,000. After five years, his actual return in his home currency was just 4%. What happened? The rupee had depreciated about 18% against the pound during that period.
This is currency risk, and it's something most NRIs completely ignore when investing in India.
The Indian rupee has historically depreciated 3-4% annually against major currencies like USD, GBP, and EUR. So even if your investment is growing in rupee terms, you might be losing in dollar or pound terms.
How do you protect yourself?
Use natural hedging. If your future expenses will be in India (like retirement or children's education in India), then keeping investments in INR makes sense. The currency risk doesn't hurt you because you'll be spending in rupees anyway.
Consider USD-denominated investments. Some instruments like FCNR deposits or certain bonds let you invest in foreign currency, eliminating rupee risk entirely.
Diversify across currencies. Don't put everything in India. If you're earning in dollars, keep some investments in dollar-denominated assets too.
For NRIs in the USA specifically, balancing investments between India and the US requires careful planning. Our financial planning guide for NRIs in the USA helps you think through these currency and tax considerations.
8: Are Fixed Deposits Making You Wealthy or Just Preserving Money?
I review portfolios for NRIs regularly. The most common pattern I see? 70-80% of everything is in fixed deposits.
Fixed deposits feel safe. The returns are guaranteed. You know exactly what you're getting. I get why people like them. But here's the uncomfortable truth: FDs are preservation tools, not wealth-building tools.
Current NRE FD rates are around 6-7% annually. Inflation in India is averaging 2-4% (though it spikes higher sometimes). So your real return, after accounting for inflation, is barely 3-4%. You're not building wealth, you're just keeping pace with rising prices.
And if you're measuring returns in your home currency, currency depreciation eats into even that small real return.
Think about it differently. You're an NRI, probably earning well, with 20-30 years before retirement. You have time on your side. Equity investments, despite their volatility, have historically given 12-15% returns over long periods.
I'm not saying put everything in stock markets tomorrow. But allocating 40-50% to equity mutual funds, 30% to FDs for stability, and the rest to a mix of other instruments makes more sense than 80% in FDs.
For most NRIs, investing in Indian mutual funds offers better growth potential than pure FD strategies. The process is straightforward once you understand the documentation requirements.
And if you're in the USA thinking about retirement, you should definitely understand how HSAs work for NRIs returning to India. Many NRIs don't realize they can use these tax-advantaged accounts strategically.
9: Can You Actually Bring Your Money Back When You Need It?
Suresh sold his property in Mumbai for ₹1.5 crore. He tried to repatriate the money to his US bank account. That's when he discovered he could only send $1 million per year from his NRO account.
Repatriation rules are complicated, and most NRIs learn about them only when it's too late.
Here's the basic framework:
NRE account: Fully repatriable. Both principal and interest can be sent abroad without limits. This is why you should use NRE funds for any investments you might want to repatriate later.
NRO account: Limited to $1 million per financial year. This includes everything, sale of property, investments, everything. If you have ₹2 crore to send, you'll need to do it across two financial years.
Property sale proceeds: Here's where it gets tricky. You can only repatriate proceeds from sale of two residential properties in your lifetime. And only if the original purchase was made with foreign funds or NRE account funds. If you bought with NRO or rupee funds, you're stuck with the $1 million annual limit.
For every repatriation, you need to file Form 15CA and Form 15CB. Banks won't process your transfer without these. Form 15CB requires a CA certificate in many cases, which means additional cost and time.
The key learning? Plan your repatriation from day one. If you're buying property and think you might sell it later and take money abroad, use NRE funds for the purchase. Document everything meticulously. Keep proof of the source of funds.
The complete rules around NRI repatriation of funds are detailed but crucial to understand before you make any major investments in India.
10: What Documents Do You Need (And Don't Have)?
Incomplete documentation is the number one reason NRI applications get rejected or delayed.
Let me tell you about Neha. She wanted to open an NRI account. She had her passport, PAN card, and that's about it. Her application got rejected three times over four months because she kept missing documents.
Here's what you actually need as an NRI:
For account opening:
- Passport with all pages (including empty ones)
- Visa or work permit from your country of residence
- Overseas address proof (utility bill, tenancy contract, bank statement)
- PAN card with updated foreign address
- Recent passport-sized photographs
- Employment letter or proof of income
- Entry/exit stamps from passport (sometimes requested)
For investments:
- All of the above, plus
- Form 60/61 depending on the investment
- Power of Attorney if managing investments remotely
- Bank statements from last 3-6 months
- KYC documents for mutual funds, demat account
- For mutual funds specifically, foreign tax residency certificate
One document many NRIs neglect is their Aadhaar card. While you can't get a new Aadhaar as an NRI, if you already have one, it's incredibly useful for various financial transactions. Keep it updated with your Indian address where you can receive OTPs.
Power of Attorney deserves special mention. If you're not going to be in India to manage investments, property, or banking, you need a reliable POA. Choose someone you trust completely because they'll have significant control over your assets.
Create a digital folder with all these documents. Scan everything at high resolution. Some banks still want physical copies, so maintain a folder of originals that your POA can access.
And one more thing, especially for NRIs who travel frequently. If you're carrying gold between USA and India, there are specific limits and rules. Our guide on gold carry limits between USA and India can save you from customs trouble.
11: Have You Opened a PIS Account Yet?
Want to invest directly in Indian stocks as an NRI? You can't just use any trading account. You need a Portfolio Investment Scheme (PIS) account.
Most NRIs I talk to have never heard of PIS. Then they try to buy shares, and their transactions get rejected. Here's how it works:
You open a special designated PIS account with any one bank (you can only have one PIS banker). This account gets linked to your NRI Demat account. All your stock purchases and sales must route through this PIS account.
There are specific restrictions:
- Only delivery-based trades allowed, no intraday trading
- You can buy only through NSE/BSE, not F&O segment
- Maximum 5% of paid-up capital of any company individually
- Maximum 10% collectively for all NRIs in any company
- RBI tracks all your transactions through this account
Opening a PIS account requires:
- Existing NRO or NRE account with the bank
- PAN card, passport, visa copies
- Overseas address proof
- Declaration forms
Once set up, you can invest in most listed Indian companies. But you cannot trade in currency derivatives, commodity derivatives, or any prohibited sectors like atomic energy.
One common mistake: NRIs try to buy stocks through their father's or brother's account. Don't do this. It's illegal and can get both accounts frozen. Always use your own properly set up accounts.
For NRIs serious about retirement planning in India, understanding tax-advantaged options like NPS for NRIs is important. The National Pension System offers good returns and tax benefits, though with lock-in periods.
12: Are You Making Mistakes with Gifts and Inheritance?
Ravi's father passed away and left him agricultural land in Punjab. Ravi, an NRI in Canada, was confused. Could he keep it? Could he sell it? What about taxes?
Gift and inheritance rules for NRIs are specific and often misunderstood.
Gifts received: If you receive money as a gift, it's tax-free if it's from specified relatives (parents, siblings, spouse, children). The limit is ₹50,000 for gifts from non-relatives. Anything above that becomes taxable.
When you receive gifts from relatives abroad, they can transfer it directly to your NRO account. But the resident giving the gift in India needs to ensure they're within LRS limits ($250,000 per year).
Property inheritance: Here's the interesting part. NRIs cannot buy agricultural land. But they can inherit it. If your parents leave you farmland, you can keep it. You can even earn rental income from it. What you cannot do is buy more agricultural land.
When you inherit any property, you must report it to RBI within 90 days. The rental income from inherited property is taxable in India. When you eventually sell inherited property, you'll pay capital gains tax.
One crucial point: if you sell inherited property, the repatriation rules still apply. You can only send $1 million per year from NRO account, even if the property is worth more.
Understanding tax on capital gains for NRIs helps you plan better when selling property or investments. The rates differ based on holding period and asset type.
13: What Is Your Annual Information Statement Telling the Tax Department?
The Income Tax Department now issues an Annual Information Statement (AIS) for everyone. This document shows every single financial transaction you've made. Bank interest. Dividend income. Property transactions. TDS deducted. Foreign remittances. Everything.
Here's what many NRIs don't realize. The tax department has all this information about you already. When you file your ITR (or don't file), they're matching it against your AIS. Any mismatch triggers a notice.
I've seen NRIs who thought "I don't live in India, I don't need to file ITR" get notices about unreported FD interest or rental income. The penalties for late filing range from ₹5,000 to ₹10,000, plus interest on unpaid taxes.
Even if your total income is below the taxable threshold, filing ITR makes sense because:
- You can claim refunds of excess TDS deducted
- It serves as income proof for visa applications
- It keeps you compliant and avoids future notices
- It's required if your transactions exceed certain limits
You can access your AIS through the income tax portal. Download it, review every entry, and make sure your ITR matches it. If there are errors in AIS (it happens), you can file a correction request.
For NRIs with rental income in India, there's an additional layer of complexity. Your tenant is supposed to deduct TDS before paying rent. Many don't know this, leading to complications later. The rules around tax on remittances for NRIs cover both money you're sending to India and money you're taking back.
14: Are You Paying More Bank Charges Than Necessary?
Most NRIs stick with one bank because it's familiar. They don't compare rates, fees, or services. This comfort costs them thousands.
Let me show you what I mean. NRE FD rates vary significantly across banks. The difference between the lowest and highest rate can be 0.5% to 1%. On a ₹50 lakh deposit, that's ₹25,000 to ₹50,000 per year in lost interest.
Then there are the hidden charges:
- Annual debit card fees: ₹500-2,000
- Forex conversion margins: 1-2% on every transfer
- Account maintenance charges: ₹500-1,500 quarterly
- Cheque book charges: ₹100-500 per book
- Premature FD withdrawal penalties: 0.5-1% of principal
Comparison shopping matters. Before opening accounts or making fixed deposits, check at least 3-4 banks. Look at:
- Interest rates (both for FDs and savings)
- Minimum balance requirements
- Online banking capabilities (can you access from your country?)
- Customer service availability (do they have support in your timezone?)
- Branch network in India (if you need in-person service during visits)
Some banks offer higher rates but terrible customer service. Others have great apps but lower returns. Find the balance that works for you.
For sending money from abroad to India, don't just use your bank's wire transfer. Services like Wise, Remitly, or others often offer better exchange rates and lower fees. Our guide on sending money from USA to India compares different options.
And speaking of modern conveniences, if you haven't set up UPI as an NRI, you're missing out on easy bill payments and transfers during your India visits. The rules changed recently to allow NRIs to use UPI through international mobile numbers.
15: Do You Have Clear Financial Goals for Your Investments?
Here's how most NRI investment conversations go:
"What should I invest in?" "What are your financial goals?" "Um... to make money?"
That's not a goal. That's vague hoping.
Goal-based investing means knowing exactly what you're investing for, when you need the money, and how much you need. Without this clarity, you end up with a random collection of investments that don't actually serve any purpose.
Let me give you real examples:
Emergency fund goal: You need 6 months of expenses accessible immediately. This money should NOT be in stocks or long-term FDs. Keep it in a liquid fund or short-term FD where you can access it within 24-48 hours.
Child's education goal: Your daughter is 5 years old. You want ₹50 lakh for her college in 13 years. With 12% expected returns, you need to invest about ₹15,000 per month in equity mutual funds. This money can handle market volatility because you have time.
Retirement goal: You're 35, planning to retire at 60 in India. You calculate you'll need ₹3 crore in today's value. After accounting for inflation and returns, you need to invest about ₹25,000 monthly in a mix of equity and debt. Our NRI retirement planning guide has detailed calculators for this.
House purchase goal: You want to buy a house in India in 5 years for ₹80 lakh. This timeline is too short for aggressive equity exposure. You should be primarily in debt mutual funds and FDs with maybe 20% in equity.
See the difference? Each goal has a different timeline, different risk profile, and different allocation strategy.
Without clear goals, you end up putting everything in FDs (too conservative) or everything in stocks (too risky for short-term goals). You also end up selling investments at the wrong time because you don't know what they're actually for.
Another benefit of goal-based planning: it prevents you from making emotional decisions. Markets crash 20%? If your retirement goal is 20 years away, you don't panic sell because you know you have time to recover.
If you're looking for a modern approach to financial planning, considering AI financial advisors can provide personalized recommendations at lower costs than traditional advisors.
How to Fix These Mistakes Starting Today
Alright, you've read about 15 major mistakes. You're probably feeling a bit overwhelmed. You're also probably recognizing yourself in at least 5-6 of these. Don't panic. Let's break down exactly what to do.
Immediate Actions (This Week)
First priority: Check your accounts.
Log into your Indian bank account right now. Is it still a resident savings account even though you're an NRI? If yes, start the conversion process today. Contact your bank's NRI services cell. Most banks have online forms. Fill them out, submit your documents, and get this done within the next week.
Second: Download your AIS.
Go to the income tax portal, log in with your PAN, and download your Annual Information Statement. Review every entry. See what income has been reported, what TDS has been deducted.
Third: Calculate your residential status.
Count how many days you've spent in India this financial year. Figure out if you're NRI, RNOR, or Resident for tax purposes. This determines everything else.
Fourth: Update your KYC everywhere
Your mutual funds, Demat account, insurance policies - all need your foreign address. Make a list of every financial institution you deal with and update them.
Short-Term Actions (This Month)
File pending ITRs. If you haven't filed tax returns for previous years and you had income in India, file them now. Yes, there will be late filing fees (₹5,000-10,000), but it's better than ignoring it and getting a notice later.
Submit Form 10F to your banks. This form allows your bank to apply lower TDS rates under DTAA. You submit it once, and it applies to all future interest payments. The form is simple, available on the income tax website.
Open a PIS account if you want to trade stocks. Contact your bank's NRI desk, tell them you want to open a PIS-designated account. Link it to your Demat account. Get the whole setup ready even if you're not investing immediately.
Consolidate your accounts. If you have savings accounts with five different banks, you're probably paying maintenance charges on all of them. Keep 2-3 maximum. Close the rest. This also makes management easier.
Set up nominations. Every single account, investment, Demat, mutual fund - add nominee details. If something happens to you, your family shouldn't struggle to access your money.
Long-Term Actions (This Quarter)
Get professional advice. Find a SEBI-registered investment advisor (RIA). Not your bank's relationship manager. An actual fiduciary advisor who's legally required to work in your best interest. Review your entire portfolio with them.
Rebalance your portfolio. If you're 80% in FDs and 20% in equity, and you're 35 years old with a 25-year horizon, that's way too conservative. Work with your advisor to create a proper asset allocation based on your actual goals and timeline.
Consider tax-efficient investing. Look into ELSS funds for tax savings under Section 80C. Explore NPS if you're comfortable with the lock-in. Look at tax-free bonds if you're in high tax brackets.
Set up SIPs. If you're going to invest in mutual funds, set up automatic monthly SIPs (Systematic Investment Plans). Don't try to time the market. Invest a fixed amount every month regardless of market conditions.
Create estate planning documents. Will, power of attorney, nominee updates - get all of this documented properly. As an NRI, this is even more critical because your family might be in a different country.
For Property Owners Specifically
Review your rental income taxation. Is your tenant deducting TDS before paying rent? Are you declaring this income and paying tax on it? If not, fix it now before the tax department sends a notice.
Calculate if holding makes sense. If your property is giving you 2% rental yield and you could get 10% in diversified mutual funds, maybe it's time to sell. Run the numbers on post-tax proceeds and alternative investments.
Understand Section 54 benefits. If you sell residential property and buy another residential property within specified timelines, you can save on capital gains tax. But the rules are specific. Consult a CA before making decisions.
One often-overlooked aspect for US-based NRIs: make sure your term life insurance covers you properly. If you're the main earner and something happens, your family needs protection in their country of residence. Our guide on buying term life insurance as an NRI covers what to look for.
And if you're comparing different financial platforms and services, understanding what each offers is important. You can compare Investmates with other platforms to see which features matter most for your situation.
Looking Forward
Managing money across two countries is genuinely complicated. Different tax systems, currency risk, regulatory requirements, time zones, documentation hassles - it's a lot.
But here's the thing: millions of NRIs are doing this successfully. Once you set up the right structure, once you understand the rules, once you have the proper accounts and advisors in place, it becomes manageable.
The biggest mistake is assuming that because you're making good money abroad, you can afford to be sloppy with your India investments. That ₹4 lakh Vikram lost to penalties and poor planning? That's someone's annual salary. It matters.
Take it step by step. Fix the urgent stuff this week (account conversion, status check). Handle the important stuff this month (ITR filing, KYC updates). Work on the strategic stuff this quarter (portfolio rebalancing, proper planning).
You've worked hard to earn this money. Make sure it's working equally hard for you. And make sure it's doing so legally, efficiently, and in line with your actual life goals.
Frequently Asked Questions
What happens if I don't convert my resident account to NRO/NRE?
You're technically violating FEMA regulations the moment you become an NRI (usually after 183 days abroad). RBI can impose penalties up to ₹2 lakh. Your bank might freeze your account once they discover your NRI status. All transactions through a resident account become illegal, which means your mutual fund purchases, FD investments, or any payments are non-compliant. If the violation is discovered during a tax audit, you'll face additional scrutiny. The solution is simple: convert your account as soon as you know you're going to be abroad for more than six months.
How can I reduce TDS from 30% to 10-12% on my FD interest?
The process involves claiming benefits under Double Taxation Avoidance Agreement (DTAA) between India and your country of residence. First, you need to submit Form 10F to your bank along with a Tax Residency Certificate from your country. This is a one-time submission. The bank will then apply the lower TDS rate as per the DTAA for all future interest payments. For example, if you're in the UAE, the DTAA rate is 12.5% instead of 30%. You can also file ITR in India to claim refund if excess TDS was deducted before you submitted Form 10F.
Is investing in Indian real estate still a good idea for NRIs?
Real estate in India currently gives rental yields of just 2-3%, which often doesn't even beat inflation. After accounting for property tax (up to 20% of rental income), maintenance costs (₹5,000-15,000 monthly), vacancy periods, and eventual capital gains tax (20% with indexation or 12.5% without), your actual returns are quite low. The main issues are: illiquidity (takes months to sell), management hassles from abroad, and currency depreciation risk. Real estate makes sense only if you're planning to return and live in it, or if you have reliable family to manage it. For pure investment returns, diversified mutual funds historically offer better risk-adjusted returns.
What's the difference between NRE and NRO fixed deposits?
NRE (Non-Resident External) FDs are for depositing foreign income earned abroad. The interest is completely tax-free, and both principal and interest are fully repatriable (can be sent back abroad). NRO (Non-Resident Ordinary) FDs are for income earned in India like rent or dividends. Interest is taxable at 30% (TDS deducted), and repatriation is limited to $1 million per financial year. If you're sending your salary from abroad to India, use NRE. If you're putting rental income from an Indian property, use NRO. Many NRIs maintain both types of accounts for different purposes.
Do I need to file ITR in India if I have no salary income?
Yes, if you have any income sourced from India - FD interest, rental income, capital gains, dividend income - you need to file Income Tax Return. Even if your total income is below the taxable limit of ₹2.5 lakh, filing ITR helps you claim refunds of TDS deducted by banks. It also serves as income proof for visa applications and keeps you compliant with tax authorities. The Income Tax Department now has your Annual Information Statement showing all your financial transactions. Not filing when you have reportable income will eventually trigger notices. The late filing penalty is ₹5,000 if annual income exceeds ₹5 lakh.
Can I repatriate all my money from India to my current country?
It depends on which account your money is in. From NRE accounts, you can repatriate unlimited amounts - both principal and interest. From NRO accounts, you're limited to $1 million per financial year. This is a hard limit that includes everything: investment proceeds, property sale, accumulated income, everything. If you sell property bought with NRE funds, you can potentially repatriate more, but only for two residential properties in your lifetime. For every repatriation, you need to file Form 15CA and 15CB. Plan your repatriation strategy before making investments, especially large ones like property purchases.
What is a PIS account and do I need one?
PIS stands for Portfolio Investment Scheme. It's a special designated bank account required for NRIs who want to invest directly in Indian stocks. You cannot use a regular trading or savings account for stock purchases. You can only have one PIS account with one bank, which gets linked to your NRO Demat account. All your stock buy and sell transactions must route through this account. You're allowed only delivery-based trades (no intraday), and there are limits on how much of any single company you can own (5% individually). If you only invest in mutual funds and not direct stocks, you don't need a PIS account.
What investments are NRIs not allowed to make in India?
NRIs cannot buy agricultural land, farmhouses, or plantation properties (though they can inherit these). Currency derivatives and commodity derivatives trading are completely prohibited. You cannot invest in chit funds, bearer securities, or certain strategic sectors like atomic energy and railways. Without a PIS account, you cannot buy stocks directly. Small savings schemes like PPF, NSC, and KVP are closed once you become an NRI. You also face caps on how much of any single company's stock you can own (5% individually, 10% collectively for all NRIs). Most regular investments like mutual funds, stocks (through PIS), bonds, real estate (residential/commercial), and government securities are allowed with proper documentation.
About the Author
By Prakash
CEO & Founder of InvestMates
Prakash is the CEO & Founder of InvestMates, a digital wealth management platform built for the global Indian community. With leadership experience at Microsoft, HCL, and Accenture across multiple countries, he witnessed firsthand challenges of managing cross-border wealth. Drawing from his expertise in engineering, product management, and business leadership, Prakash founded InvestMates to democratize financial planning and make professional wealth management accessible, affordable, and transparent for every global Indian.
