Going Back to India to Retire: A How-to Guide

Are you retired and receiving Social Security benefits? Did you know that your benefits may continue if you leave the United States for more than six months? This, of course, depends on which country you end up calling home. India is one of those countries. But there are some factors you may want to consider that can affect your benefits, property ownership, taxes, and citizenship status before you pack up and move to the subcontinent.

Key Takeaways

  • U.S. citizens can continue receiving Social Security benefits in India for as long as they are eligible to receive them.
  • India doesn't recognize dual citizenship but does grant Overseas Citizenship of India status to those who qualify.
  • Medicare doesn't cover overseas medical expenses and the Indian health care system is overburdened, so it's a good idea to consider a private health insurance plan.
  • Non-resident Indians and OCIs can legally own nonfarm and exercise property.
  • India has tax treaties with many countries, including the United States, that allow individuals to avoid double taxation.

Social Security Benefits

The Social Security Administration (SSA) allows U.S. citizens to receive benefits even if they live in certain countries. You have the right to continue receiving your Social Security benefits in India for as long as you are eligible under your own earnings or are a dependent/survivor. This means:

  • You earned a minimum of 40 credits under the Social Security system or worked in the U.S. for at least 10 years
  • You are a beneficiary of someone's benefits, as long as they earned at least 40 credits or worked in the U.S. for at least 10 years and you lived in the U.S. for at least five years

Benefits are also paid to anyone who is an Indian citizen but not a U.S. citizen and has "met an exception to the alien nonpayment provisions of the Social Security law."

Your benefit payments can be deposited directly into an account at a bank or other financial institution in the U.S. or India. Direct deposit eliminates wait times and provides you with immediate access to your funds.

If you don't want to use direct deposit, you may choose to receive benefit checks by mail. Social Security and federal benefit checks are issued by the U.S. Treasury between the 10th and 15th of each month and then mailed out. You can also pick up your check every month at the U.S. Embassy if you live in the New Delhi Consular District or at U.S. Consulate offices in Mumbai, Kolkata, Hyderabad, or Chennai.

Nonresidents can only open rupee accounts in India for the duration of their visas. Accounts are automatically closed unless their visas are extended.

Dual Citizenship and Visas

United States citizens may be able to enjoy dual citizenship with many other countries. But that doesn't apply to India. In fact, the country's constitution doesn't allow its citizens to hold citizenship with any other nation.

Citizens of other countries may be granted the Overseas Citizenship of India status in certain cases. OCI is the closest thing to being a dual citizen. You qualify for OCI if you:

  • Are a non-resident Indian (NRI) and/or previously held an Indian passport
  • Are married to an Indian citizen for at least two years
  • Have at least one parent, grandparent, or great-grandparent who is or was an Indian citizen

You can become an OCI as long as your home country allows dual citizenship. You can eventually become an Indian citizen if you are an OCI for five years and live in India for at least one year. This special status doesn't grant voting rights but does allow you to freely travel in and out of India. You can apply for Indian citizenship after five years as an OCI.

You can obtain a tourist visa from an Indian High Commission or your local Indian Consulate General. But these visas are only valid for 180 days (six months) and cannot be renewed or extended. And they don't grant you any rights, such as employment or land ownership.

If you want to stay in India longer than 180 days and don't qualify for OCI or permanent residency, you may be able to get a long-term visa. This visa is given to anyone for employment purposes, to set up a business, or to attend school. Applications must be made in person within 14 days of your arrival in India.

You cannot claim Overseas Citizen of India status if you are a citizen of Bangladesh or Pakistan.

Health Care

If you receive Medicare and decide to move away from the United States, it's important to know where you stand. Recipients don't receive coverage for health care services if they live outside the United States. Benefits are available to you upon your return to the U.S., but a 10% higher premium applies for every 12-month period you could have been enrolled in the program but were not.

Regardless of whether you choose to retire in India or anywhere else, it's important to consider how you'll pay for your health care. India has a decentralized universal health care program that provides individuals with free in- and outpatient medical services. But this system is severely underfunded and is plagued with staff shortages, as well inadequate supplies—especially given the rise in coronavirus-related cases.

But there's a very good chance that you may not qualify for Indian health care—at least right away—which is why private health insurance is the best option. In fact, many Indian residents take out private coverage for themselves and their families.

Land Ownership Laws

NRIs and OCIs can legally own nonfarm property and exercise property ownership rights. You can legally buy property in India as a foreign national as long as you are an Indian resident. To qualify, you must have lived in India for more than 182 days during the previous financial year.

Remember that a tourist visa is valid for only 180 days, so you aren't considered a resident if you're traveling the country on this kind of visa. So you must demonstrate a continued presence in India if you want to work, carrying on a business or vocation in India, or for any other purpose that would indicate your intention to stay in India for an uncertain period, such as going to school and, thus, entitle you to own property in the future.

Real estate transactions in India are complicated whether you are an NRI, OCI, or a foreign national resident. Work with a qualified real estate attorney to protect your interests and help ensure a smooth process.

Taxes

Indian tax laws can be very complicated and are subject to frequent change. As such, it's probably a good idea to hire an experienced tax accountant to receive the most favorable tax treatment possible during your stay in the country. This is an even better idea if you intend to maintain a long-term residence there.

In a nutshell, Indian residents are taxed on worldwide income. An individual who is a resident but not ordinarily resident or an NRI is only taxed on Indian-sourced income. Although you must file your taxes in both countries, India has tax treaties with other countries, including the United States, which means you can avoid double taxation by taking advantage of specific exclusions and tax credits.

If you are a U.S. citizen traveling or living abroad, consider enrolling in the Department of State's Smart Traveler Enrollment Program, which provides security updates and makes it easier for the nearest U.S. embassy or consulate to contact you or your family in case of an emergency.

The Bottom Line

Visiting a foreign country is one thing, but settling in one is a completely different experience. Even if you have family in India and no language barrier, you find adapting to the new surroundings, customs, and way of life very challenging. While some adventurous retirees enjoy these changes, others may find them overwhelming.

You may be better living overseas on a part-time basis—perhaps six months at home and the rest of the year abroad. Consider your comfort level, friends, family, finances, and health care needs before making any decisions to retire overseas full-time. And don't forget to iron out the details of your Social Security benefits and land ownership if you are planning a retirement abroad before you make your big move.

Article Sources
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