Your first year abroad

Moving abroad does not change your money in one go. It brings a run of small jobs, in India and in your new country, and most of them work best in a particular order. Done in time, they are quick. Left until a bank notices or a tax return is due, they usually mean forms, penalties or tax withheld that you then have to claim back. This guide sets them out in the order they usually arise in the first year. Your NRI plan turns the same jobs into a list you can tick off.

When you become an NRI

India decides your tax status for each tax year, which runs from 1 April to 31 March, by counting your days in India. You are usually resident if you spend 182 days or more in India in the year. There is a second test, 60 days in the year plus 365 days over the four years before, but for an Indian citizen who leaves India to work abroad the 60 days is read as 182. So the year you leave can still count as a resident year if you left late in it.

That matters, because a resident is taxed in India on income from anywhere, while an NRI is taxed only on income from India. Count your days from the start: the NRI day tracker logs your trips and shows your status for each year, with the rules of the country you live in alongside.

Your bank accounts follow a different rule. Under India’s exchange control law, FEMA, you usually count as a person resident outside India once you leave to work or live abroad, whatever your day count. That is why banks ask you to change your accounts soon after you go.

Your Indian bank accounts

A resident savings account usually has to become an NRO account once you are non-resident. Tell your bank in writing, with your overseas address and proof that you live abroad. The NRO account keeps receiving your Indian income, such as rent, interest and dividends.

Money you earn abroad and send home usually goes into an NRE account instead. Interest on an NRE account is not taxed in India, and the money can be moved back abroad freely, but the country you live in may tax that interest, as the UK does. An FCNR deposit holds money in a foreign currency such as dollars or pounds. Our NRI banking guide explains the three accounts side by side.

Update your status and overseas address everywhere else too: demat and broking accounts, mutual fund houses, insurance policies and the income tax portal. Investments made as a resident usually need your new status recorded, and some fund houses do not accept investors living in the US or Canada.

Savings schemes and your phone number

Some Indian schemes are for residents only. An NRI can usually keep a PPF account until it matures but cannot extend it, and rules on paying in after you become an NRI differ between sources, so ask your bank or post office before you add money. Small savings schemes such as the Senior Citizens’ Savings Scheme are usually closed to NRIs for new deposits.

Keep your Indian mobile number active. Banks, the income tax portal, Aadhaar and investment platforms send one-time passwords to the number they hold, and logging in from abroad without it is hard. Check that your PAN is linked to Aadhaar if you have one, and note your passport and visa dates in the renewals tracker so none of them catches you out.

Your first transfer home

The first time you send money to India, compare what providers actually charge. The exchange rate a provider gives you usually costs more than its fee, and the gap between providers can be large on a big sum. Our money transfer comparison shows the amount that arrives in India for the same sum sent.

Send money you earned abroad to an NRE account if you may want to move it back out later. Money in an NRO account can usually be sent abroad only up to a yearly limit and with tax forms.

Tax in your new country

Most countries tax a resident on income from everywhere, so once you are resident there, your Indian rent, interest and gains usually go on that country’s return too. Each country has its own test of residence. In the UK it is the statutory residence test, which our UK residence test works through, and the UK can split the year you arrive into a non-resident part and a resident part. The US taxes its citizens and green-card holders wherever they live.

The tax treaty between India and your new country usually stops the same income being taxed in full twice: tax paid in India is credited against the tax due where you live. The DTAA estimator shows roughly how that credit works for your income. Gulf countries usually have no personal income tax, which brings a different question: India can treat some Indian citizens there as resident if their Indian income is high enough.

Your first tax returns

In India, you file a return if your Indian income is above the basic exemption, if you want back tax withheld at source, or if another rule requires one. Tenants of an NRI usually deduct tax at a high rate, so many NRIs with a rented flat file to claim some of it back. The return for a year is usually due by 31 July after it ends.

In your new country, the first return is often the first time you meet its forms and deadlines. Register early if you need to: in the UK, for example, a new Self Assessment filer registers by 5 October after the end of the tax year. Our NRI tax calendar lists India’s dates and your country’s in one place.

What to keep

Keep a simple file for the first year: the date you left India, your travel dates, the letters converting your accounts, statements showing interest and rent in India, and the tax withheld from them. Next year’s returns in both countries are built from these, and so is any claim for treaty relief.

This guide explains what usually happens. Your own position depends on your dates, your income and the country you moved to, so for a decision that matters, check with a tax adviser who knows both countries.