Often the tax returns are filed properly in one country but neglected in the other. There are nuances in the tax laws for NRIs which can help in terms of reducing the total tax payable, or getting refunds of taxes already paid. NRIs can avoid double taxation (meaning: getting taxed on the same income twice in the country of residence and India) by seeking relief from DTAA between the two countries. Under DTAA, there are two methods to claim tax relief – exemption method and tax credit method. By exemption method, NRIs are taxed in only one country and exempted in another. In tax credit method, where the income is taxed in both countries, tax relief can be claimed in the country of residence.
With insurance costs coming down, it may be a good idea to look at the latest offerings in each country. Insurance needs to be bought in advance, before an event actually takes place in your life. Requirements for NRIs are similar to those for Indian citizens. NRIs need to submit a copy of their age proof, address proof, identity proof, passport, medical history, income proof, etc. for KYC purposes. If NRI provides the valid Form 10F and Tax Residency Certificate (TRC) then there will be no deduction of Tax at Source (TDS).
Even though the present country may have some form of social security, it may be a good idea to independently build a retirement plan, rather than being dependent on the government for support through retirement. For Non-Resident Indians (NRIs) planning to settle down in India, it becomes mandatory to plan their retirement in advance. In doing this, they have to bear in mind the future value of money, calculate their approximate expenditure and plan their lifestyle.
Whilst it is very tempting to have a better performing asset, rebalancing typically moves money from the better performing asset to the one that has not done that well. Asset allocation will help you minimize losses when returns fall in any one asset class. Equities have delivered superior (relative to other assets) returns in the long run, say 10-15 years. But over shorter periods, returns can be very volatile. In order to protect the downside, you should ideally have assets across assets such as deposits, a bit of gold and even bonds and fixed-income securities.
NRIs may face problems in succession plans. From succession laws that are different in India, to estate or inheritance taxes in case of death that they may need to plan for, and find appropriate solutions. The most important point to keep in mind is to write a Will. For NRIs it is advisable to write a separate Will for their assets in India and another one for their assets in their country of residence. In the absence of a Will, the assets get distributed among heirs according to the succession laws of the country. In India the law of succession depends upon the religion you belong to. A person must write a Will if he wants his wishes to take precedence over the inheritance laws.
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