I am relocating to Bangalore from Kolkata. Any relocation, be it international, within-country or within-city has its financial implications. Within the past five years, I have done four within-country and six within-city relocation. Relocation is a complicated thing, because it involves pulling out an already existing set-up and establishing it at a new location. It not only has a professional angle (getting new job, new responsiblities in profession) but it also involves emotional trauma. I still remmeber my first job and the city I lived in and there are so many memories attached to that city (I met my wife there and courted her for three years). And relocation also has a financial angle, because if not considered properly it can dent a big hole in your pocket.
Here is a guide on what to look out for while in the relocation phase:
Here is a guide on what to look out for while in the relocation phase:
- This would be biggest concern for people who have kids.
- Check out the schooling cycle (usually in India it is June - March)
- Admission process is extremely difficult in good schools, so apply early and check out for contacts (Money doesnt always rule here, but contacts does, always)
- You will have to spend for fees, uniforms (most schools have uniforms), transportation (if your house is far off),
- Children attend "nursery" from 3 years to 4 years, LKG (lower kindergarten) from 4 to 5 and UKG (upper kindergarten) from 5 to 6 years old. Nursery and LKG are what is called "pre-school" in the US, and UKG is plain old Kindergarten. At 6, everyone goes to first grade (some schools call it first standard).
NEGOTIATION WITH EMPLOYER
- Negotiate with your employer to provide you with relocation charges (preferrably not through reimbursement method but direct contact with the packers and movers. This prevents your hassel to negotiate with movers and packers and to pay upfront charges right now. For an within-country charges, the companies can charge as much as 70-80K INR depending on items you own. Car transportation is always extra.
- It is also important to cross-check if the company will offer you escorts and vehicles during the house-hunting period. Also in some cities, the rental deposits are very high (esp in Mumbai and Banglore where equivalent of 8-10 months of rental needs to be deposited with the landlord). This can be huge amount considering the rentals of even 15K-20 per month.
- Talk to your employer about taking care of re-registration of your vehicles (esp if you own car). Even a simple bike re-registration can set you back by 10-15K INR. The road-tax structure in many states is weired that you have to pay 5-10 years bulk, even if you intend to stay just for one year.
- Hopefully your employer should cover travel expenses not only for you, but your immediate dependents too. Sometimes the employer offer a "travel allowance" which is a straight taxable amount given to take care of any spending during your relocation.
SELECTING MOVERS and PACKERS
- If your employer does not provide the relocation service then ask for "quotes" from various companies. Within India Agarwal Packers and Movers is very famous. They are reasonable. But I had once bad experience with them. They brought my bike with the clutch handle broken and since I was busy unpacking things, it got unnoticed until I wanted to drive it.
- Make sure you provide them with as detailed list of items you own as possible. Dont forget to list "computer" without listing "computer table". They are separate items. Similar it goes for TV and Fridge.
- Usually they have conditions like follow, it is good to pay that extra 3%, since the risk is borne by the carrier.
The Carrier on their agent shall be exempted from any loss or damage through accident, pilferage, fire, rain, collision, any other road or river hazard, we therefore recommend that goods be insured under carrier’s risk (F.O.V). While carrier’s risk, no individual policy / receipt from insurance co. will be given. The F.O.V is 3% of the total value declared.
- It usually take one day to cover 300 KM (in India) for any normal transport. So you know how much time it will take for your goods to arrive. It is good to go with the company that provides an online tracking system.
- If you want the company to keep your items for more days after arrival (because you still have to find a house etc), then you will charged extra. The companies charge hugely like INR 12 for one box (your entire package might consist of something like 40-50 boxes). That is like INR 600 per day.
Big Decision : What to do with the house & car
- A big decision needs to be taken if you own a house (either on finance or outright purchase). You can either sell it, keep it vacant or rent it out.
- A house that you own (not on finance) if sold will attract a capital gains tax. But interestingly if the sale proceed is use to buy another house for residential purpose then there is no tax. If you have house on finance, then you need to find a buyer. Get the loan transferred. Otherwise you can pay back the remaining amount entirely to the bank (with some pre-payment penalty) and then sell it.
- If you want to keep the house vacant, then you still have to pay the maintainence bill. Also a vacant house is considered as put on rent for the income tax purpose and hence liable for tax. A vacant house also needs to looked-after with so many cases of forceful acquisition or a breeding ground for illegal activities.
- If you want to rent it out, make sure you give it someone you know or atleast you have someone in the city who can keep a regular check on the tenants (atleast initially). One advantage of a second house is that, unlike a self-occupied house, the entire amount paid as interest on a home loan, even if it is more than Rs 150,000, can be deducted from the pre-tax income. Also, the amount spent on repairing and maintaining the second house is allowed as deduction from the income. So, you will finally pay taxes on the net income from the second house, which is annual rent (higher of actual and notional) reduced by municipal taxes, standard deduction (30 per cent of annual rent net of municipal taxes) and interest on home loan.
- If you are transferring you vehicle, then re-registration is real pain, since you need to get a NOC (No-objection certificate) from the RTO of the current state before you leave. Once you have the NOC, you need to apply for re-registration in the new state within 90 days. The registration will typically take 3-4 months and you have to shell close to 15K-20K INR. If you have an old vehicle, its better to sell it and get a new one in new place.
Disconnecting the ties
- Disconnect gas cylinder. You need to submit your cylinder and regulator with the gas agency and to show them the original papers. They will provide you a transfer certificate, which you will need when you apply at your desitination. Sometimes getting a new connection is very difficult, so dont loose this paper.
- Disconnect Telephony services (with BSNL/MTNL it takes time). With private operators also its not easy, a lot of hassel to disconnect the connection. So possibly apply early. With mobile connections, you can go to the destination city and change it there. Make sure to collect deposits if any.
- Disconnect other utility services like cable TV, Milk, Newspaper/magazine subscription.
- Talk to your landlord and discuss the return of deposits. In India, getting back deposit money is still not easy, landlords creates lot of problems while returning back money (despite having lease agreements).
- It is better to close saving accounts (unless banks like private banks advocate transfer). With new employer you usually have to open new account. With so many relocations, I had close to 7 saving accounts. Now I have closed three. It will be better to inform the bank of new address before you leave so that you dont miss any valuable communication. This can be done on the last day of your stay.
- It is usually good idea to search for the contact details of the all the services you might need at your new house before you leave using the internet (if you have one and do it before you disconnect). The services might include water purifiers, inverters, white goods, satellite radios etc. It is good idea to donate any potted plants to a local park.
Documents, Jwellery, Cloths
- Make sure that you keep aside the important documents, jwellery and cloths that you will need before you things arrive in the new city. Keep the important documents handy like gas transfer voucher or new company's appointment letter, you certificates etc.