NRI Financial Compliance Checklist 2025: Banking, MF, Tax
Why in the news
A guide listed the compliance steps for Indians who move abroad, starting with the rule that renouncing citizenship without an OCI card forces NPS account closure after notifying the NPS Trust.
Key facts
| Area | What an NRI must do |
|---|---|
| Bank accounts | Convert resident accounts to NRO; open NRE for foreign income |
| Mutual funds | Change status to NRI, link folios to NRO, give enhanced KYC to a SEBI-registered KRA |
| Demat | Convert to an NRI demat; open an NRO non-PIS trading and demat account |
| PPF | Continue till maturity; not extendable beyond 15 years |
| EPF | Interest turns taxable; choose to continue or withdraw |
| Insurance | Tell life and health insurers about NRI status |
NRO vs NRE
- NRO: rupee account for India-sourced income such as rent; interest is taxable.
- NRE: for foreign income; interest is tax-free and repatriable.
Mutual funds and trading
- KYC papers: identity proof, visa, residency permit or OCI card, overseas address proof, and FATCA (US) or CRS declarations (UK, Canada and others); some fund houses reject FATCA/CRS jurisdictions.
- Taxation as for residents, but TDS applies on redemption.
- Repatriation: NRO up to $1 million/year; NRE uncapped.
- Allowed: F&O via a custodian in an NRO non-PIS account. Not allowed: intraday equity, commodity, currency or SGB trading; some brokers permit BTST.
Tax rules
- Resident if present 182 days or more in the year, or 60 days plus 365 days in the previous 4 years.
- Non-residents pay tax only on India-sourced income.
- File an ITR if income exceeds the basic exemption, or with LTCG, a TDS refund or carry-forward losses.
- DTAA avoids double taxation on capital gains, interest and dividends; claim with a Tax Residency Certificate, Form 10F and a no-permanent-establishment self-declaration.
Exam angle
- NRO taxable, NRE tax-free; DTAA claim documents; 182-day test.