Accepted a job offer in Singapore, moving in August. I have about Rs 8 lakh in corporate bonds and G-Secs across different tenures, the longest maturing in 2028. Once I become an NRI my understanding of Indian financial rules gets complicated. Can I keep holding these bonds? Do I need to do anything before I leave? What changes once I become a non-resident?
Good that you are thinking about this before you leave rather than after. The short answer is that you can continue holding the bonds you already own. There is no requirement to sell your existing bond holdings when you become an NRI. The bonds will continue paying coupons and will mature as scheduled. However, your bank account and demat account details need to be updated to reflect your new NRI status and you will need to convert your resident savings account to an NRO account.
And the coupons that keep coming in after I become NRI, do they get taxed differently?
Yes, the tax treatment changes. For NRIs, interest income from corporate bonds is subject to a flat 30 percent TDS regardless of your actual income level, compared to the 10 percent TDS for residents. This is deducted at source by the issuer. You can claim a refund if your actual tax liability under the India-Singapore DTAA is lower, but that requires filing an Indian ITR even from abroad. G-Sec interest for NRIs is typically exempt from TDS but you still need to declare it.