Navigating the Return to India as an NRI/OCI

Overview

Returning to India as a Non-Resident Indian (NRI) or Overseas Citizen of India (OCI) involves more than packing.
Requires financial and tax planning to avoid mistakes.

Current Scenario:
- NRIs do not pay Indian taxes on foreign earnings but must pay on Indian earnings (e.g., rental, investment, dividends).
Departure Taxes:
- Most countries impose a departure tax when leaving permanently.
- Example Forms:
  - Canada: Form P1161 & 1243
  - US: Form 8854 for green card holders/long-term residents
  - Germany: Tax return filing needed
  - Australia: Capital gain tax on certain assets
  - Singapore/Dubai: No capital gain tax, but check local banking rules
Re-entry into India:
- Money transferred to India isn't taxed but exchanged through Indian banks.
- Consult tax consultants in your resident country for specific guidance.

Canada Example:
- Taxed on worldwide income if strong ties exist (house, spouse, social benefits).
- Non-residents with no Canadian income are not taxed on foreign income.
- Tax treaties determine tax responsibility for dual residents.
Planning Exit:
- Close international financial ties to avoid complex compliance issues.
- Avoid maintaining non-resident bank accounts, credit cards, or investments.

Resident Status in India:
- May initially qualify as Resident but Not Ordinarily Resident (RNOR) with partial tax relief.
- Post RNOR status, taxed on worldwide income.
- Plan to avoid dual tax compliance challenges.

Investments:
- Non-residents can't contribute to tax-advantaged accounts abroad.
- India taxes dividends, even from tax-free accounts abroad.

Housing:
- Rent initially to understand local dynamics before purchasing property.
- Factors to consider: workplace proximity, amenities (hospitals, schools).
Healthcare:
- Insurance policies may have waiting periods; start process before moving.
- Healthcare in India is significantly cheaper than in the US/Canada.