Leaving India for good is a decision that many individuals contemplate at various stages of their lives.
Whether it’s for better job opportunities, higher education, or a different lifestyle, the allure of foreign shores has always been strong for many Indians.
But what drives this desire, and how should one prepare financially for such a move? Let’s delve deeper.
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Why the surge in Indians leaving for other countries?
The phenomenon of Indians seeking opportunities abroad isn’t new. However, the reasons have evolved over time.
A recent survey conducted by Nupur Dave, as mentioned in her article on LinkedIn, sheds light on the current motivations:
Economic Opportunities in Leaving India for Good
A significant number of Indians believe that moving abroad provides them with better job opportunities and the potential to earn more. The perception is that NRIs (Non-Resident Indians) have a higher earning potential, with many associating them with affluence.
This is especially true for those in the tech industry, where the lure of FAANG companies (Facebook, Apple, Amazon, Netflix, Google) is strong.
Quality of Life
Many respondents in the survey cited a better quality of life as a primary reason for leaving India for good. This includes access to better infrastructure, education, healthcare, and even the latest gadgets.
The idea of a “cheaper luxury” life, where high-quality goods and services are more affordable, is appealing to many.
A non-judgmental society is another significant draw. Many Indians, especially women, appreciate the freedom from societal scrutiny and the ability to live life on their terms without being judged or questioned.
Distance from Relatives
Interestingly, some respondents saw living abroad as an opportunity to maintain a healthy distance from relatives, avoiding the obligations and expectations that often come with close family ties in India.
However, it’s essential to note that while 75% of the respondents expressed a desire to move abroad, not all are actively pursuing this path. Some are held back by love for their parents, while others find the path to securing a job abroad challenging.
The importance of being financially prepared.
Leaving India for good is not just an emotional decision but also a financial one. Here are some considerations:
Setting Salary Expectations Right
Many Indians have misconceptions about the salaries they can expect abroad. While some might hear about exorbitant packages, the reality can be quite different.
It’s crucial to research and set realistic salary expectations based on the country and industry one is targeting.
Understanding the Cost of Living
While salaries might be higher abroad, so is the cost of living. Expenses like housing, healthcare, education, and even daily essentials can be significantly higher than in India.
It’s essential to budget for these and ensure that the move makes financial sense.
Preparing for Initial Expenses
Moving to a new country comes with its set of initial expenses. This includes visa fees, flight tickets, initial accommodation, and setting up a new home. Having a financial buffer can help in navigating this phase smoothly.
Being Aware of Financial Obligations in India
Those leaving India for good should also be aware of any financial obligations they leave behind. This includes loans, mortgages, or any other financial commitments. Ensuring these are taken care of or managed from abroad is crucial.
Financial Planning Before the Move
Before leaving India for good, evaluating your current financial status becomes paramount. Start by assessing your assets and liabilities.
This gives you a clear picture of your net worth. If you have assets like property or investments in India, consider whether you want to liquidate them or maintain them for future returns.
Budgeting for the move is another crucial step. Leaving India for good involves various expenses, from visa fees to shipping belongings. Research the cost of living in your destination country.
This helps in setting up a realistic budget and ensures you don’t face financial hardships upon arrival.
Assessing Assets and Liabilities
When you’re thinking about leaving India for good, it’s essential to have a comprehensive understanding of your financial standing.
Begin by listing down all your assets, including properties, investments, bank balances, and other valuables. Subtract your liabilities, such as loans or debts, from your total assets to determine your net worth.
This exercise will provide clarity on whether you should sell certain assets or keep them for potential future returns.
If you own property in India, decide whether you want to sell it or retain it. Selling can provide a significant amount of liquid cash, which can be useful for your move.
However, if you believe the property’s value will appreciate over time, you might consider keeping it as an investment.
For those with investments in stocks, mutual funds, or other financial instruments, consider the implications of leaving them in India. You might want to liquidate some investments to fund your move or transfer them to more globally recognized platforms.
Budgeting for the Move
Leaving India for good requires meticulous financial planning. From visa application fees to the cost of shipping your belongings, many expenses need consideration.
Visa and Documentation Costs
Different countries have varying visa fees. Research the specific visa type you’re applying for and account for any additional documentation or legal fees.
Shipping and Relocation Expenses
If you’re planning to take your belongings with you, get quotes from multiple shipping companies. Consider the cost of shipping versus buying new items in your destination country.
Understanding the Cost of Living Abroad
One of the most significant financial challenges when leaving India for good is adapting to the cost of living in a new country. According to a comprehensive guide on “A Little Adrift Travel Blog,” the cost of living varies significantly across major expat spots.
For instance, living in Ajijic, Mexico might cost a single person around $700-$900 per month. Residing in Boquete, Panama could set you back around $800-$1,100 per month. Chiang Mai, Thailand is popular for its affordability, with an average cost for a single person being around $600-$800 per month.
These figures give a ballpark estimate, but it’s essential to delve deeper into the specific city or region you’re considering.
Researching Healthcare and Insurance
Healthcare costs can vary widely between countries. While some nations offer affordable and high-quality healthcare, others can be expensive.
Ensure you research the healthcare system of your destination country and consider getting health insurance that covers you internationally.
Don’t forget to account for other miscellaneous expenses, such as initial accommodation costs, transportation, setting up utilities, and any unforeseen expenses that might arise when you’re settling in.
Banking and Money Management
Banking plays a pivotal role when you’re leaving India for good. As you prepare for this significant transition, understanding the nuances of banking and money management becomes essential.
The Significance of NRO/NRE Accounts
Benefits of NRO Account
An NRO account allows you to manage your income generated in India, such as rent from properties or dividends from investments.
You can deposit any savings you had before relocating, as well as earnings from other sources in India, like rents and dividends.
It’s also possible to open a joint NRO account with a resident Indian. Balances in the NRO account have a restricted repatriation limit, with NRIs and PIOs allowed up to USD 1 million.
Advantages of NRE Account
The NRE account primarily caters to funds generated from foreign countries and transferred back to India.
Funds in the NRE account are fully repatriable, meaning you can move both the principal and interest amount from India whenever you wish.
The interest earned on the funds in your NRE account remains non-taxable in India. However, taxation might apply in your country of residence based on its rules.
This account can be primarily used for crediting funds transferred from your overseas account. Moreover, you can link your NRE account with an investment & trading account to invest money in Indian investment instruments.
Setting Up a Local Bank Account Abroad
Once you’ve made the move after leaving India for good, establishing a local bank account in your new country becomes a priority.
This account aids in managing daily expenses, receiving salaries, and handling local transactions.
Choosing the Right Bank
When selecting a bank abroad, consider the international transaction fees. If you plan to send money back to India or vice versa, opt for a bank that offers competitive rates.
This ensures you maximize your savings and get the best value for your transactions.
Integrating with Digital Banking Platforms
In today’s digital age, many banks offer online platforms and mobile apps that make banking seamless. Before finalizing a bank, check their digital banking features.
This ensures you can manage your finances on the go, especially if you have commitments in India and need to monitor both your foreign and Indian accounts simultaneously.
Investments and Retirement Planning
When you’re contemplating leaving India for good, your investments back home shouldn’t be left in the dark. The global landscape offers a plethora of opportunities, but it’s essential to ensure that your hard-earned investments in India continue to thrive.
Managing Investments in India
For many, leaving India for good brings up the question of what to do with existing investments.
Real estate, stocks, and mutual funds are significant assets that require careful consideration.
According to a report by Mint, when you change your residential status, it directly impacts how you handle your investment products in India.
Real Estate Investments
If you own property in India, you have a few options. You can sell it, which might provide a substantial amount to invest in your new country.
Alternatively, you can rent it out, ensuring a steady income stream from India even after leaving.
Stocks and Mutual Funds
Your stock portfolio and mutual fund investments also need attention. Some expats choose to maintain their stock portfolios, while others might liquidate them.
If you decide to keep them, ensure you update your KYC documents with your new residential status. Remember, once you’re an NRI, you can’t source money from a resident Indian account.
Investments should come through your NRE account.
Retirement Planning for Expats
Leaving India for good also means rethinking your retirement strategy. Every country has its pension schemes and retirement benefits.
It’s crucial to understand these before integrating your Indian retirement funds.
Understanding Pension Schemes Abroad
Different countries offer various pension schemes. For instance, the US has its 401(k), while the UK offers the State Pension.
Before leaving India for good, research the pension schemes in your destination country. This will help you decide how to integrate or complement them with your Indian retirement funds.
Integrating Indian Retirement Funds
If you’ve been contributing to retirement funds in India, like the Provident Fund, you might wonder what happens to them after leaving India for good.
While some choose to withdraw their funds, others let them mature and transfer them later. It’s essential to understand the tax implications in both India and your new country before making a decision.
Taxation and Legal Implications
When considering leaving India for good, understanding the taxation and legal implications is crucial.
The financial landscape of your destination country can differ significantly from India, and being well-informed can save you from potential pitfalls.
Double Taxation Avoidance Agreement (DTAA)
The Double Taxation Avoidance Agreement (DTAA) is a tax treaty India has signed with over 80 countries worldwide.
Its primary purpose is to ensure that individuals and businesses do not pay taxes on the same income in both India and the country of their residence.
What is DTAA?
DTAA is a bilateral or multilateral agreement between countries. It ensures that taxpayers don’t face double taxation on their global income.
For instance, if you earn interest from deposits in India but reside in another country, without DTAA, both India and your country of residence might tax that interest.
DTAA agreements prevent such scenarios, ensuring you aren’t taxed twice for the same income.
Benefits of DTAA
- Avoidance of Double Taxation: The primary benefit is the avoidance of paying taxes on the same income in two countries.
- Lower Withholding Tax: Taxpayers can benefit from reduced Tax Deduction at Source (TDS) on interest, royalties, or dividend incomes in India.
- Tax Credits: Some agreements provide tax credits in the source or country of operations, ensuring taxpayers don’t pay the same tax twice.
- Exemptions: Agreements with certain countries, like Mauritius, Cyprus, and Singapore, exempt capital gains tax, allowing taxpayers to minimize their tax liabilities.
DTAA Rates and Countries
India has DTAA agreements with 85 countries, with TDS rates on interests ranging from 7.50% to 25%. Some of these countries include Australia, Canada, China, France, Germany, Japan, Singapore, the UK, and the USA.
Before leaving India for good, it’s essential to check the specific DTAA rates and provisions for your destination country.
Beyond taxation, there are several legal aspects to consider when leaving India for good.
Visa and Residency Permits
Before relocating, ensure you have the appropriate visa and residency permits for your destination country.
Each country has its visa categories, such as work, student, or investor visas. Research thoroughly and apply for the one that best suits your purpose of stay.
Managing Property in India
If you own property in India, you need to decide how to manage it after leaving India for good. You have several options:
- Selling the Property: This provides a lump sum that you can invest or use in your new country.
- Renting Out: This offers a steady income source. However, you’ll need to manage tenants and property maintenance, possibly through a property management agency.
- Leaving it Under Care: If you have a trusted person in India, they can look after your property in your absence.
Before leaving India for good, it’s imperative to prioritize health insurance. Every country has its healthcare system, with varying degrees of public and private involvement.
By researching the healthcare system of your destination country, you can determine the type of health insurance plan that best suits your needs.
This ensures that, after leaving India for good, you won’t face exorbitant medical bills or lack access to essential healthcare services.
Life and Property Insurance Considerations
Life and property insurance policies safeguard your family and assets. If you already have these policies in India, you need to decide whether to transfer or purchase new ones abroad.
Some insurance providers offer international coverage, while others might restrict their services to specific regions. Ensure you understand the terms and conditions of your current policies.
If they don’t provide adequate coverage in your new country, consider purchasing new policies after leaving India for good.
Navigating International Insurance Markets
Insurance markets differ from one country to another. Factors such as regulatory environments, risk profiles, and cultural attitudes towards insurance can vary widely.
Familiarize yourself with the insurance landscape of your destination country. Seek advice from local insurance agents or expats who have experience in that market.
Their insights can guide you in making informed decisions, ensuring you get the best coverage after leaving India for good.
Currency and Exchange Rates
Currency management is of paramount importance when leaving India for good. Exchange rates fluctuate due to various economic, political, and market factors.
By understanding these dynamics, you can make informed decisions about when and how to convert your money.
This knowledge is especially crucial if you have financial commitments in both India and your destination country.
Hedging Strategies for Currency Management
Hedging is a risk management strategy employed to offset potential losses in investments.
When it comes to currency, hedging helps mitigate the impact of adverse exchange rate movements. One common hedging technique involves using financial instruments like derivatives.
For instance, if you’re concerned about the rupee’s value decreasing against the dollar, you might enter into a futures contract that locks in a specific exchange rate for a set date in the future.
This approach ensures that even if the rupee depreciates, you’re protected from the negative financial impact. However, it’s essential to remember that hedging also means you might miss out on potential gains if the rupee appreciates.
When leaving India for good, consider your risk tolerance and financial goals before deciding on a hedging strategy.
Utilizing Online Remittance Platforms
In today’s digital age, several online remittance platforms facilitate international money transfers. These platforms often offer competitive exchange rates and lower fees than traditional banks.
Before leaving India for good, research and choose a reliable remittance platform. This ensures you can easily send and receive money across borders without incurring hefty charges.
Staying Updated on Global Economic Trends
Global economic trends can influence exchange rates significantly. For instance, geopolitical events, interest rate changes by major central banks, or global economic crises can lead to currency volatility.
By staying updated on these trends, you can anticipate potential exchange rate movements and plan your currency conversions accordingly.
This proactive approach can save you money and reduce financial stress after leaving India for good.
Cultural and Social Financial Adjustments
When you’re leaving India for good, it’s not just the physical shift that matters, but also the financial adjustments that come with it. Every country has its unique financial norms and practices that can be quite different from what you’re used to in India.
Tipping and Spending Habits
One of the first things you’ll notice is the difference in tipping culture.
While in India, tipping is often discretionary and varies from place to place, in countries like the USA, it’s customary to tip around 15-20% of your bill at restaurants.
Similarly, shopping habits might differ. While bargaining is common in many Indian markets, it might be considered rude in many Western countries. It’s essential to familiarize yourself with these nuances to avoid any faux pas.
Building a Financial Support System
Leaving India for good means you’ll need to build a new financial support system. This involves understanding the local banking system, investment opportunities, and tax implications.
Joining expat communities can be beneficial. Fellow expats can offer insights into managing finances in a new country.
Networking with local financial advisors can also provide guidance tailored to your needs, ensuring a smoother transition after leaving India for good.
Life is unpredictable. Emergencies can arise anytime, anywhere. And when you’re in a new country, away from your comfort zone, it’s even more crucial to be prepared.
The Importance of an Emergency Fund
Before leaving India for good, it’s imperative to set aside an emergency fund. This fund should cover at least six months of your expenses.
Whether it’s a sudden job loss, medical emergencies, or unexpected repairs, having an emergency fund ensures you don’t have to dip into your savings or take on debt.
Insurance – Your Safety Net
Based on the information from the article, it’s evident that insurance plays a pivotal role when leaving India for good. Ensure that your previous insurance coverage from another country is valid in your new residence.
If not, it’s crucial to get comprehensive health and life insurance coverage. Especially after the COVID-19 pandemic, having robust health insurance is more important than ever.
For life insurance, opt for a term plan that offers substantial coverage without burning a hole in your pocket.
Navigating the Insurance Landscape
Different countries have different insurance norms. For instance, while health insurance might be optional in India, it’s mandatory in countries like the USA.
Research the insurance landscape of the country you’re moving to. Understand the premiums, coverage, and any other benefits that come with it.
Keeping an Eye on Global Events
Global events can have a direct impact on your finances.
For instance, economic downturns, political instability, or global health crises like the COVID-19 pandemic can affect job markets, stock markets, and overall economic health.
Being aware of these events and preparing for them ensures you face fewer hardships after leaving India for good.
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