First-Time NRI Handbook: Everything to Know Before You Move Abroad

The decision to move abroad for employment or prolonged stay marks the moment an individual transitions into a Non-Resident Indian (NRI) under the Foreign Exchange Management Act (FEMA). This change in residency status fundamentally alters how finances are managed, from bank accounts and investments to taxation. Failure to complete the mandatory financial steps immediately before and after departure can lead to penalties, delayed fund transfers, and loss of benefits. This comprehensive first time NRI guide provides a structured approach to ensure full compliance and set up a robust financial life across borders.

Phase I: Pre-Departure Financial Compliance

The critical actions taken before leaving India set the stage for compliant financial management abroad. Completing this NRI checklist moving abroad section is the primary step to avoiding legal issues.

Mandatory Account Conversion and Setup

The most immediate and critical compliance task is updating banking status.

• Convert Resident Account: Under FEMA regulations for NRI, a person who leaves India for employment or an uncertain period instantly becomes a Person Resident Outside India (PROI). Existing resident savings accounts must be converted to a Non-Resident Ordinary (NRO) account. This is the base account for all Indian-sourced income.​

• Open NRE Account: It is essential to open a fresh Non-Resident External (NRE) account to hold income earned abroad. Note that existing resident accounts cannot be converted to NRE accounts - NRE accounts must be opened as new accounts. The NRE account is crucial because it allows both the principal and interest earned to be freely repatriated (sent abroad) and is tax-free in India.​

• Action: Start the application for NRO conversion and fresh NRE NRO account opening before departure.

To learn more about NRO/ NRE accounts, click here.

Mandatory Penalty and Risk Assessment

Failure to convert the resident savings account to an NRO account is a severe FEMA violation. This failure is the single greatest penalty risk on the NRI Financial Checklist.

Note: FEMA penalties vary based on violation severity and duration. Consult a qualified professional for specific penalty assessments.

Streamlining Existing Investments

Investments made while a resident are legally required to be reclassified under the new status. This mandatory step is key to a smooth NRI bank account conversion.

EPF and PPF:

• EPF (Employee Provident Fund): Moving abroad for employment provides the option for immediate EPF withdrawal. NRIs can maintain EPF accounts, but withdrawal before 5 years of continuous service attracts taxation on interest. Withdrawals after 5 years of continuous service remain tax-free. Evaluate individual tax implications before deciding on withdrawal.​
  
  
  

• PPF (Public Provident Fund): Existing PPF accounts can be maintained by NRIs until maturity. However, NRIs generally cannot make fresh contributions to existing PPF accounts after acquiring non-resident status. The account can only receive deposits made before becoming an NRI and will continue earning interest until the 15-year maturity period.​

Phase II: Financial Transition and Documentation

Upon establishing residency abroad, immediate actions finalize the status transition and enable international financial flow. This stage completes the crucial NRI India submission.

Finalizing Residential Status & KYC

The status change under FEMA must be communicated to all financial institutions.

• Notify Banks: Formally submit the signed application for conversion of the resident account to NRO and opening of a fresh NRE account.​

• KYC/FATCA: Finalize Know Your Customer (KYC) documentation for NRI status and provide Foreign Account Tax Compliance Act (FATCA) compliance details to the Indian bank. This ensures transparency required by international agreements.​

• Passport Validity: Ensure the passport is valid for at least six months beyond the planned date of departure.

Legal and Property Management

Legalizing access to Indian assets prevents complications later.

• Power of Attorney (POA): Granting POA to a trusted relative or individual in India is advisable for managing real estate, rental collection, and minor banking tasks. A POA is crucial for managing assets when physical presence is not possible.​

• Property Accounts: Rental income from property must be credited to the NRO account as per IT and RBI circulars.. Appointing a POA and engaging property management services helps ensure smooth maintenance and tenant management.​

Investment Infrastructure

RBI and SEBI require NRIs to convert resident Demat accounts into NRI Demat accounts. Trading on Indian exchanges as NRI requires opening a Portfolio Investment Scheme (PIS) account through designated banks, separate for NRE-PIS (repatriable) and NRO-PIS (non-repatriable). Inherited shares, as clarified by SEBI, may require settlement through NRO-PIS unless documentation supports repatriation eligibility.

Here’s our complete guide to NRI stock trading in India.

Phase III: Banking, Investment & Repatriation 

Managing finances as an NRI relies entirely on the distinction between repatriable and non-repatriable funds.

Comparative Analysis of NRI Accounts

The following table summarizes the purpose and tax treatment of the primary NRI accounts:

Repatriation Limits and tax Compliance

Sending money accumulated in India back to the country of residence (repatriation) is a primary concern for most NRIs and a key part of the first time NRI guide.

• NRO Repatriation Limit: Repatriation from the NRO account is capped at a maximum of USD 1 million per financial year. This applies to capital gains and asset sale proceeds.​

• Tax Compliance: All transfers from NRO require the submission of Forms 15CA and 15CB (Chartered Accountant Certificate) to the bank, confirming that all applicable Indian taxes have been paid.​

• Tax Slabs: For FY 2025-26, basic exemption for NRIs is ₹4 lakh. The tax slabs cited here match government announcements for the current year, but since rates can be revised in every Union budget, confirm via the official Income Tax portal.

• ITR Filings: NRIs must file Indian ITR if taxable income in India crosses ₹4 lakh; else, PAN may be marked “inoperative,” creating broad financial and KYC issues.

Here’s our complete guide on NRO to overseas account transfers.

Phase IV: Taxation and Mandatory Reporting

Tax compliance extends beyond India and requires diligence in the country of residence. This section covers essential tax items on the NRI checklist moving abroad.

Indian Income Tax

As an NRI, income earned outside India is not taxable in India. Only income earned or received in India (e.g., NRO interest, rent, capital gains) is taxable.​

NRI Tax Slabs for FY 2025-26 (New Tax Regime)

Note: Tax slabs are subject to annual budget changes. Surcharge of up to 25% may apply based on income levels. Verify current rates with the Income Tax Department.

Planning to return to India? Learn about RNOR status benefits.

• DTAA: Tax liabilities can be minimized through Double Taxation Avoidance Agreements (DTAA). Individuals should consult a guide on DTAA Benefits for NRIs for the specific treaty between India and the country of residence.​

To understand more about DTAA benefits for tax optimization, click here.

• Filing Requirement: ITR must be filed if taxable income in India exceeds the basic exemption limit.​

International Reporting

Tax reporting obligations vary significantly based on the country of residence, and disclosure requirements extend well beyond the United States.​

United States

For NRIs in the US, compliance with FATCA (Foreign Account Tax Compliance Act) and filing FBAR (Report of Foreign Bank and Financial Accounts - FinCEN Form 114) is mandatory if foreign financial accounts exceed $10,000 at any time during the year. Form 8938 must be filed if specified foreign assets exceed $50,000 (single filers) or $100,000 (married filing jointly).​

CRS Countries

The Common Reporting Standard (CRS) is the international equivalent of FATCA and applies to over 100 countries including the UK, Canada, Australia, Germany, France, Singapore, and others. CRS enables automatic exchange of financial account information between tax authorities.​

Country-Specific Reporting Requirements:

• United Kingdom: Self-assessment with foreign income declaration required when foreign assets exceed approximately £50,000

• Canada: Form T1135 (Foreign Income Verification Statement) mandatory if specified foreign property exceeds CAD 100,000

• Australia: Foreign income must be declared in tax returns when aggregate foreign assets exceed AUD 50,000

• Germany: All offshore assets must be declared during annual tax filing regardless of threshold

• Singapore: Global income must be declared in tax returns; all foreign income is taxable unless specifically exempt

• UAE: While UAE has no personal income tax, banks report account information to foreign governments under CRS

• France, Spain, Italy, Netherlands, Sweden: Foreign bank accounts must be declared with varying thresholds (Spain: €50,000+)

Key Compliance Point: Financial institutions in India automatically report NRI account information to the tax authorities in CRS-participating countries. Non-disclosure or under-reporting can result in severe penalties, blocked remittances, and potential prosecution.​

Rupeeflo is purpose-built to solve these complexities for the first time NRI guide user. As a dedicated digital platform, Rupeeflo seamlessly facilitates the mandated financial transitions: digitizing the opening of NRE NRO account opening, managing PIS account linkages for stock investments, and providing expert consultation on tax filing and DTAA benefits. By using Rupeeflo, individuals ensure their NRI checklist moving abroad is not just completed, but optimized and compliant, allowing them to focus on their new life abroad with total financial confidence.

Frequently Asked Questions

1. Is it advisable for an NRI to close all resident credit cards?

Yes, it is highly advisable to close or cancel existing resident credit cards. Continued use, though possible, results in high international transaction fees and can lead to complications with the bank regarding the change in residential status.​

2. Can I transfer my existing life insurance policy to NRI status?

Yes. Existing life insurance (like term plans) can generally be continued, but the insurance company must be notified of the change in residential status immediately. The policy remains valid, though some health and rider benefits may change.​

3. What is the deadline to convert my resident account to NRO?

FEMA regulations require the conversion (or closure) to be done immediately upon acquiring NRI status (i.e., the day the individual leaves India for employment or an uncertain period). Delays risk penalties under FEMA provisions.​

4. Is there any penalty if I don't file an Indian ITR because I have no taxable income?

While there is no penalty if gross income remains below the taxable threshold, non-filing for several years can lead to the tax department treating the PAN as "inoperative," which creates severe hurdles for all future financial transactions, remittances, and property sales.​