5 Things to Review in USD Investments If Your Residency Changes

A client in our WhatsApp community moved from Dubai to London last year.

His GIFT City FDs stayed intact. His mutual fund continued. But he didn't update his KYC or check his UK tax position.

Six months later, he owed HMRC tax on income he assumed was tax-free.

At Belong, we help NRIs across 30+ countries navigate exactly this. If a country move is on your radar, these five reviews protect your portfolio before the move happens.

1. Check Which Products Keep Their Tax Status and Which Don't

Not all USD investments behave the same way when your residency changes. Some stay tax-free regardless. Others lose their exemption the moment your status shifts.

GIFT City USD FDs are the most resilient.

Interest on IFSC deposits is exempt under Section 10(4B) of the Income Tax Act. This exemption stays tax-free even after you become a Resident in India (Source: Belong RNOR Guide).

GIFT City mutual funds are different.

The capital gains exemption under Section 10(4D) is specifically for non-residents (Source: IFSCA). Once RNOR ends and you become full Resident, gains may become taxable: 12.5% LTCG and 20% STCG.

FCNR deposits follow a third pattern.

Interest is tax-free during NRI and RNOR status. After becoming Resident, it's taxed at your slab rate.

Review action: List every USD product you hold. Mark each as "status-proof" or "status-sensitive." GIFT City FDs fall in the first category. Almost everything else falls in the second.

👉 Tip: If you hold GIFT City mutual funds, plan redemptions during NRI or RNOR status when capital gains are exempt. Waiting until full Resident status could cost you 12.5-20% in tax.

2. Map Your RNOR Window and Align FD Maturities

If you're moving back to India, the RNOR period is your single most valuable planning tool.

During RNOR, foreign-sourced income stays exempt from Indian tax. This typically lasts 2-3 financial years after returning.

The exact duration depends on your NRI history. 10+ years abroad typically gives 2-3 full RNOR years.

7-8 years abroad could be shorter (Source: Income Tax Act, Section 6).

The alignment strategy: Structure FD maturities to fall within RNOR. Returning April 2026? RNOR likely covers FY 2026-27 and FY 2027-28. A 3-year FD opened today matures in early 2029, after RNOR likely ends. A 1-year FD matures mid-2027, safely inside the window.

This matters less for GIFT City FDs since their interest stays tax-free regardless. But for mutual funds, AIFs and other status-sensitive products, maturity timing is everything.

👉 Tip: Use Belong's residential status tools to calculate your exact RNOR duration before choosing any new investment tenure. A one-year miscalculation can cost lakhs in unexpected tax.

3. Understand Your New Country's Reporting Rules Before You Land

Your investments don't change when you relocate. Your tax reporting obligation does. And many NRIs discover this too late.

Moving to the UK: From April 2025, the non-dom remittance basis ended (Source: GOV.UK). All foreign income is reportable on your Self Assessment at your marginal rate.

Since GIFT City has zero TDS, there's no Foreign Tax Credit to offset. Review our guide on what UK NRIs should watch for.

Moving to the US: GIFT City FDs are straightforward interest income on your 1040. But mutual funds can trigger PFIC classification with punitive reporting and higher tax.

If a US move is possible, shift from funds to FDs before relocating.

Moving to India: GIFT City FD interest stays tax-free. But you must convert NRE/NRO accounts, update KYC, and report foreign assets on Schedule FA of your tax return.

Failure carries penalties up to ₹10 lakh.

Moving between Gulf countries: Minimal tax impact since these are zero-tax jurisdictions. Update your KYC documents, visa proof and address with your GIFT City bank.

Outdated documentation can freeze transactions.

4. Update KYC Before the Move, Not After

This is the review most NRIs skip. And it creates the most friction.

Every GIFT City bank and fund house has your residency on file. When your status changes, they need updated documents: new country visa, address proof, tax residency certificate.

Skip this, and you risk frozen transactions on redemptions, payouts and new deposits.

Timeline: Start 2-3 months before your move. Contact your GIFT City bank's relationship manager. For mutual fund investments, the fund house may need a fresh FATCA declaration if you're moving to the US or Canada.

Some GIFT City schemes are restricted to non-residents. Moving to India could require exiting those schemes. Confirm with the fund house before your status changes.

👉 Tip: Keep your old country's Tax Residency Certificate even after leaving. You may need it to claim DTAA benefits on income earned during the transition year. The India-UAE DTAA, for instance, requires proof of UAE tax residency for the relevant period.

5. Stress-Test Lock-In Periods Against Your Move Timeline

A 3-year AIF with a move planned in 18 months creates a problem. You'll hold that AIF as a Resident for half its tenure.

The tax treatment during that period differs from what you signed up for.

Review every product's lock-in or penalty structure. GIFT City FDs allow premature withdrawal with a rate adjustment.

AIFs typically have 3-year lock-ins with no early exit. Mutual funds offer daily liquidity but tax treatment changes with status.

The stress test: For each investment, ask: When does it mature? What's my likely residency at maturity? Does the tax treatment change?

If a product matures after RNOR and it's status-sensitive, check whether the expected return justifies the tax hit.

Sometimes a lower-yielding FD maturing within RNOR delivers more after-tax value than a higher-yielding fund maturing after. Track movements on the GIFT Nifty tracker.

Your Next Step

Residency changes don't break USD investments. Poor timing and missing paperwork do.

Thousands of NRIs in our WhatsApp community review these five points every time a move is on the horizon. The discussions are practical, specific and free of generic advice.

When you're ready to act, the Belong app lets you compare FD rates, explore mutual funds and AIFs, and track the GIFT Nifty. Review first. Then restructure with confidence.

Disclaimer: For informational purposes only. Not financial, tax or legal advice. Consult qualified advisors before investing. Rates and regulations subject to change.