Queries
Saumya Tripathi, New Delhi
I will be getting married this June and will move abroad. Will this relocation affect my status as an Indian with regards to the ownership of my Employees’ Provident Fund (EPF), Public Provident Fund (PPF), bank accounts and my investments in stocks and mutual funds? What paperwork do I need to do?
Two kinds of bank accounts are kept by non-resident Indians (NRIs): Non-Resident External (NRE) and Non-Resident Ordinary (NRO) savings accounts. An NRE account is for depositing the NRIs’ foreign income earned outside India and is tax-free whereas an NRO account is for NRIs’ income earned in India, such as from sale of property, rent, investments, and others.
Transfer of money from NRO to NRE account or repatriation outside India can happen post payment of taxes, if applicable. To transfer funds from NRO to NRE account or repatriate outside India, an NRI needs to submit form 15CA and 15CB. Form 15CB needs to be obtained from a chartered accountant (CA). It shows the source of funds of the NRI. Form 15CA can be filled online. Practically, it is the CA who files both the forms after due verification. For example, in case the funds are received as a gift from the father, no tax needs to be paid in India and the transfer can happen without the payment of tax. However, in case the funds are received from rental income in India, the tax should be paid before transferring the funds outside India.
The CA will verify these details before issuing Form 15CB. The evidence for the source of funds accordingly must be submitted to substantiate the transaction. Other ancillary documents like passport, PAN Card, Foreign Exchange Management Act (FEMA) declaration and form are also required.
Vivek Jalan, Partner, Tax Connect Advisory
Tarun Sinha, Jamshedpur
I have just started working as a website designer and want to start investing for my future. But I don’t have knowledge about markets and investments. How do I start investing and simultaneously improve my knowledge on the subject?
As you are starting your investing career, you can take these steps to begin your journey:
Emergency Fund: Start by building an emergency fund for 3-6 months of your living expenses. It is for financial security in case of unexpected expenditure or loss of income.
Insurance Coverage: Ensure you have adequate health insurance. If you have dependents, take adeqaute life insurance to provide financial support in case of any unfortunate event.
Diversified Portfolio: Diversify your investment portfolio by including a mix of equity, debt, and possibly real estate based on your risk tolerance and financial goals.
Systematic Investment Plan (SIP): Consider starting SIPs, preferably in diversified equity mutual funds at your age. It allows you to invest in a disciplined manner, and you can benefit from rupee cost averaging.
Retirement Planning: Evaluate your goal and estimate the amount you will need. Consider options like PPF, National Pension System (NPS), and SIPs for long-term growth.
Debt Reduction: Prioritise paying off high-interest debt, if any, to free up more money for investments.
Professional Advice: Consult a financial advisor who can help tailor an investment plan based on your unique situation, goals, and risk tolerance with requisite tax efficiency.
Don’t ignore aligning investments with your financial goals and re-assessing your strategy and portfolio regularly.
Col. Sanjeev Govila (Retd), CFPCM, CEO, Hum Fauji Initiatives