Emigrating from India triggers obligations under FEMA, changes in tax residency status, restrictions on holding Indian financial accounts, and important decisions about Indian assets. Most people who move abroad handle this poorly.
Educational content only — not personalized financial, legal, or tax advice.
This shift is not just a personal milestone; it triggers significant regulatory changes. The Foreign Exchange Management Act (FEMA) dictates how you handle money while living abroad. Under FEMA, you are no longer permitted to maintain standard Resident Savings accounts. You must convert these to Non-Resident Ordinary (NRO) accounts, which are designed to hold income earned within India, such as rent or dividends, or Non-Resident External (NRE) accounts, which are used to repatriate foreign earnings into India.
Generally, if you stay in India for 182 days or more in a financial year, you are considered a tax resident. If you stay for less than that, you are a non-resident for tax purposes. Why does this matter? As a resident, your global income is taxable in India. As an NRI, you are typically only taxed on income that is earned or accrued within India. Failing to track your "days in India" can lead to surprise tax demands or double taxation on your international salary.
Many expats make the mistake of keeping their resident demat and trading accounts open. These must also be converted to NRO-linked accounts. Additionally, if you have Public Provident Fund (PPF) accounts, be aware that while you can continue to hold them until maturity, you cannot extend them once they expire. Planning ahead—such as consolidating smaller bank accounts and updating your KYC (Know Your Customer) details across all investments—prevents your accounts from being frozen due to non-compliance.
Funds in an NRE account can be repatriated back to your country of residence freely. However, funds in an NRO account—which often consist of rental income or asset sales—are subject to specific tax compliance, such as obtaining a certificate from a Chartered Accountant (Form 15CA/15CB) to prove that taxes have been paid on that money before it can be sent abroad. Furthermore, check if India has a Double Taxation Avoidance Agreement (DTAA) with your new country. This agreement prevents you from paying taxes on the same income in both jurisdictions, provided you file the necessary documentation. Proper planning turns a complex regulatory transition into a structured financial move, ensuring your assets remain safe and compliant while you build your future abroad.