First-Time NRI? 7-Step Financial Checklist Before Moving Abroad

1. Convert Your Bank Accounts to NRE/NRO

Converting regular savings accounts to Non-Resident External (NRE) or Non-Resident Ordinary (NRO) accounts should be your top priority when you become an NRI. FEMA regulations state that operating regular savings accounts after becoming an NRI can lead to penalties up to three times your account balance or a fine of ₹2 lakh.

NRE/NRO account purpose and benefits

You need to understand the basic differences between these accounts to manage your finances well:

NRE Account Purpose: NRE accounts let you deposit your foreign earnings in India. These accounts help you manage income from abroad, such as salary or business income, while staying connected to India financially. Your foreign currency gets converted to Indian Rupees when deposited.

NRO Account Purpose: NRO accounts help you manage your India-generated income - like rent, dividends, pensions, and domestic business earnings. You can handle your Indian financial obligations from overseas with these accounts.

These accounts offer financial flexibility that regular savings accounts can't provide for NRIs. Many expatriates maintain both account types - using NRE accounts for salary and NRO accounts for rental income.

How to convert existing savings accounts

You can convert your resident account to an NRO account through these steps:

1. Notify your bank: Let your bank know about your residency status change through their online platform or by visiting a branch.
2. Submit required documents: You'll need these documents:

• Application form for converting to an NRO account
• Identity proof (passport/Aadhaar/driving license/voter ID)
• Address proof (both Indian and overseas)
• FATCA declaration as applicable
• PAN card (mandatory for current account conversion)
• Passport-sized photographs

1. Undergo verification: The bank will check everything to ensure compliance with Indian banking regulations.
2. Complete the conversion: Your savings account becomes an NRO account with new banking details after verification.

Note that you can't convert your resident savings account directly to an NRE account—only to an NRO account. When your status changes to NRI, you must also convert your fixed and recurring deposits to NRO deposits.

NRE/NRO account taxation rules

Each account type has different tax implications:

NRE Account Taxation:

• India doesn't tax your interest earnings
• Principal and interest don't attract wealth tax
• You can repatriate principal and interest without tax implications

NRO Account Taxation:

• India taxes interest at 30% plus applicable surcharge and cess
• Tax Deducted at Source (TDS) applies to interest earned
• Double Taxation Avoidance Agreement (DTAA) benefits may apply

DTAA benefits can reduce your tax burden if you submit:

• A self-attested PAN copy
• Tax Residency Certificate from your current country
• Self-declaration Form 10F

DTAA can lower your tax rate from 30% to between 10-15% for most countries.

Not converting your accounts on time can cost you. The penalties include a daily fine of ₹5,000 from the first day until payment.

Make this conversion process your priority when moving abroad to stay compliant and avoid future complications.

2. Review and Update Insurance Policies

You need to check your insurance policies as a most important step before moving abroad. Your residency status change means you must take a fresh look at your insurance coverage to protect you and your family.

Term insurance for NRIs

Most life insurance companies let you keep your existing policies even after you become an NRI. Your policy stays valid with the same premium payments if you bought it before becoming an NRI. But you must tell your insurer about your residency status change because not doing so could create problems during claims.

As an NRI, you have two main ways to buy new term insurance:

1. During your visit to India: You can finish all paperwork during your stay, which lets you get the same treatment as resident Indians for insurance.
2. From your country of residence: This "Mail Order Business" process lets you get coverage while abroad. The maximum sum assured is limited to ₹3 crore.

Term insurance gives NRIs a most important advantage - global coverage. Your nominees will get the death benefit if something happens to you anywhere in the world. The premiums you pay qualify for tax deductions under Section 80C of the Income Tax Act, 1961, with an overall limit of ₹1.5 lakh.

Health insurance continuation or cancelation

Health insurance needs special attention because most health policies work only within India, unlike term insurance. You'll need to decide whether to keep or cancel your existing health coverage before moving.

Here's what to think about when making your decision:

• Family in India: You should keep health coverage if your family members stay in India. You can buy or continue health insurance for your parents or other family members living in India.
• Return plans: Keeping your health insurance makes sense if you plan to return to India within a few years. The waiting periods for pre-existing conditions will be over by then.
• Coverage overlap: Check if you already have complete health coverage in your host country to avoid paying twice for protection.

NRIs who keep their health insurance in India can pay premiums through NRE accounts. You might get an 18% GST refund on health insurance premiums if you meet certain conditions. These include paying premiums yearly using an NRE account and staying abroad for more than 182 days.

Insurance KYC and address update

Updating your Know Your Customer (KYC) details with insurance providers after moving is crucial. This helps keep your policies valid and makes claim settlements smooth.

Follow these steps to update your insurance KYC as an NRI:

1. Tell all insurers about your residency status change and give them your new contact information.
2. Submit required documents including:

• Valid identity proof (passport/Aadhaar)
• Current overseas address proof
• Recent photographs
• Updated contact details

1. Update nominee details if needed, especially if your nominee stays in India.

KYC updates help insurance companies verify your identity, profession, address, and financial details. Current information ensures your insurance documentation matches your present personal and financial status.

Set up reliable payment methods for premiums to avoid policy lapses. Many insurers accept international debit/credit cards and offer auto-debit options. This way, your premiums get paid on time automatically, and you keep your coverage whatever your global location.

Check your insurance before leaving as part of your NRI financial checklist. This saves time and prevents future problems with coverage or claims.

3. Reassess Your Investments

Your NRI financial checklist should prioritize reassessing your investment portfolio after updating bank accounts and insurance policies. A change in residential status means you'll need to update documentation for several investments or think about new investment options.

Mutual fund KYC and FATCA update

SEBI regulations mandate that NRIs must complete a fresh Know Your Customer (KYC) process to invest in Indian mutual funds. This step confirms your identity, address, residency, and tax status.

You have two main options to complete your NRI KYC:

1. Online method: Submit documents through CAMS or KFintech platforms
2. Offline method: Send notarized physical documents via courier

You'll need these essential documents:

• Passport (photo and address pages)
• Valid visa or OCI card
• PAN card
• Overseas address proof
• Recent passport-sized photograph

Your KYC process isn't complete without FATCA (Foreign Account Tax Compliance Act) and CRS (Common Reporting Standard) declarations. These frameworks ensure tax transparency between India and your country of residence. FATCA applies mainly to U.S. citizens and residents, while CRS covers NRIs from all other countries.

The KYC verification process takes 7-15 business days. You must then link your NRE/NRO account to invest in mutual funds. NRIs can choose between SIP (Systematic Investment Plan) or lump sum investments based on their financial goals.

SEBI has announced that NRIs can complete re-KYC and KYC modifications digitally from outside India, which eliminates the need to be physically present in India.

PPF and SGB eligibility for NRIs

Your investment options in government schemes face certain restrictions once you become an NRI:

Public Provident Fund (PPF):

• NRIs cannot open new PPF accounts
• You can continue existing PPF accounts opened as a resident Indian until maturity (15 years)
• NRIs cannot extend beyond the initial 15-year period
• Make contributions through NRE, NRO, or FCNR accounts with a minimum deposit of ₹500 per financial year
• PPF interest rate stands at 7.1% per annum (as of 2025)
• The entire amount goes to your NRO account at maturity

Sovereign Gold Bonds (SGB):

• The Foreign Exchange Management Act (FEMA) of 1999 prohibits NRI investments in Sovereign Gold Bonds

NRIs should look at alternatives like NRE/FCNR fixed deposits, equity and debt mutual funds, or the National Pension Scheme (NPS).

Direct equity and PIS account setup

FEMA 2000, Schedule 3 requires NRIs to set up a Portfolio Investment Scheme (PIS) account for Indian stock market investments.

The PIS lets NRIs invest in equity, debt, and other stock exchange instruments through recognized Indian stock exchanges. Here's how to set up your investment framework:

1. Open an NRE or NRO account with an RBI-approved bank
2. Apply for designating the account under PIS
3. Set up a Demat account and trading account with a registered stockbroker
4. Link these accounts together

You can also invest in stocks through mutual funds. This gives you proper diversification managed by financial professionals without direct stock ownership complexities.

U.S. and Canadian NRIs face additional considerations due to FATCA compliance. Some Asset Management Companies (AMCs) might restrict these investors from Indian mutual funds.

Make these investment updates a top priority right after your residential status changes. This helps avoid compliance issues and potential investment restrictions. Update your KYC whenever your address, bank details, or residency status changes to maintain smooth access to your investment portfolio.

4. Plan for Real Estate Management

Managing property from thousands of miles away is one of the biggest challenges in your NRI financial checklist. Your property in India needs careful planning to stay compliant with rules and keep generating value.

Power of Attorney for property handling

A Power of Attorney (POA) is a vital legal tool for NRIs who own property in India. This document lets a trusted person handle your property matters when you can't be there physically.

Special Power of Attorney gives better protection to NRIs because it limits the authority given. This reduces chances of misuse. The authority ends once the specific task is done.

You'll need to follow these steps to create a valid POA as an NRI:

1. Draft a clear, detailed document specifying exact powers granted
2. Get it notarized in your country of residence
3. Have it attested by the Indian Consulate or Apostilled under the Hague Convention
4. Register it with the Sub-Registrar's office in India after paying appropriate stamp duty

Picking your attorney-in-fact needs careful thought. A family member, trusted friend, or legal professional with no competing interests would be ideal.

Remember, you can cancel a POA anytime through a formal process, especially after completing the intended transaction. This way you retain control.

Rental income and NRO account linkage

Your rental income from Indian properties must go to a Non-Resident Ordinary (NRO) account if you're an NRI. FEMA rules say this account is the right channel to receive India-sourced income.

Here's what you should know about rental income:

• Tenants must deduct Tax at Source (TDS) before paying rent
• Your tenant is responsible for TDS deduction and deposit
• You should check if TDS shows up correctly in Form 26AS
• You'll need to pay advance tax on rental income if your tenant skips TDS

The rental income you earn in a financial year counts as "current income". You can send it abroad that same year if you've paid your taxes. Keep checking your Form 26AS, Annual Information Statement (AIS), and Taxpayer Information Summary (TIS) on the income tax portal.

If another NRI rents your property, they can pay rent to your NRE account. This works only when the rent comes from another NRE account - never from a resident's regular savings account.

Property management services are a great way to get help with rental operations. They handle everything from finding tenants and collecting rent to maintenance and paperwork.

Real estate compliance for NRIs

Your Indian real estate investments need careful documentation to stay within the rules.

Keep these documents ready for FEMA compliance:

• Identity proof (passport, PAN card)
• Address proof (both Indian and overseas)
• Property documents (title deed, sale deed)
• Bank statements related to property transactions
• Tax returns showing property income

Current income like rent can be sent abroad freely. But capital income from property sales has a USD 1 million limit per financial year. Property sale money must first go to your NRO account before you can send it abroad.

Good documentation makes everything easier. Store your property papers, tax returns, and maintenance records in digital lockers so you can access them from anywhere.

India will tax your rental income from properties there. So you'll need to file Income Tax Returns if your total income (including rent) crosses the minimum exemption limit or if you have any tax due or refund after TDS.

Following these property management steps in your moving abroad checklist will help keep your investments legal and profitable while you're overseas.

Conclusion

Your transition to becoming an NRI needs careful financial planning and quick action. This financial checklist will help you stay compliant with Indian regulations as you build your life abroad. Taking care of these money matters before leaving will save you from penalties and give you a strong start to your life overseas.

Converting your bank accounts should be your first priority. Regular savings accounts can lead to heavy penalties after becoming an NRI. You'll need to review your insurance policies to protect yourself and family members staying in India. Your investment portfolio needs a fresh look too since NRI status affects what you can invest in.

Property management needs extra attention as real estate makes up much of your Indian assets. You'll need a reliable system to handle rental income and stay FEMA compliant. EMI payments for existing loans must go through NRE or NRO accounts to avoid issues.

Your tax situation changes completely as an NRI. You should know which income gets taxed in India and how to use DTAA benefits. This will help you pay less tax while staying compliant. Keep all your documents organized so you can manage your finances smoothly from anywhere.

The checklist might look overwhelming now. Breaking it into smaller steps makes everything easier to handle. Start with the urgent tasks like changing your accounts and updating insurance. Then move on to other things step by step. Getting help from financial advisors who know NRI finances can give you specific guidance for your situation.

Good preparation before you leave will let you focus on your new life abroad without worry. Staying financially compliant helps you keep your Indian connections strong while building your international career. This complete financial plan will help you become an NRI without facing unexpected rules or penalties along the way.