Why this blog? What we believe….

NRIs have invested heavily in India and they play crucially important role for India’s development. However, unfortunately, our experience of working with NRIs from various countries over a period of many years suggests that they are not being served properly.

This may be because of complicated laws and frequent changes in laws by the Government, ambiguity of guidelines for complying with the laws, subjectivity in interpreting the guidelines by the banks, ignorance of laws, procedures, or requirements or the lack of experience in dealing with NRI issues by the employees or the advisors, conflict of interest by the agents/advisors of various financial intermediaries, ignorance of income tax provisions,  inability to analyze the effect of the any advise in long term or on NRI’s global taxes or other investments, etc.

We believe in changing the current NRI investment, taxation and other consulting practices in India and providing consulting that is in the best interest of the NRIs. We believe in empowering NRIs by providing true (full truth), correct, complete and accurate information, enabling them to make quality informed decision with full disclosure, integrity, confidentiality and ethical behavior.

In this effort, we take a small step by writing a blog educating NRIs about the recent changes, analyzing the effects and provide information to the best of our knowledge in simple and easy to understand language as well as replying to comments by anyone on the blog for free as a service to NRIs for general information purposes. Please read our “Disclosure (read before using)” the blog.

If you have a specific question or peculiar situation that require in-depth analysis and guidance, please “Contact Us” to experience our one-stop all client-centric services.

We provide holistic client-centric consulting considering not only investment products and their features, but also clients’ risk profile, RBI/FEMA rules and regulations, Indian Income Tax provisions, Double Tax Avoidance Agreements (DTAA) and foreign financial and investment compliance requirements. Our financial planning, investments and taxation consulting helps our clients increase their risk adjusted after-tax return while complying applicable rules and regulations in India.

167 Responses to Why this blog? What we believe….

  1. Krishnaraj Ashar says:

    My aunt (A) and her daughter (B) are NRIs (US citizens of Indian origin). A has inherited shares from her husband on his death in 1984; she was a resident then. B had been allotted equity shares of a listed company in about 1986 in IPO under NRI quota, paid from her NRE account. Aunt’s other daughter C is and has been a resident throughout and has also inherited the shares in 1984 from her father. Now if they all sell these shares in 2017 on the stock market through a DP and broker, paying STT, would there be any liability of capital gains to any of them, being LTCG?

    The sale proceeds from the shares of both A and B have been opted by them to be credited to their respective NRO accounts. They do not wish to repatriate. Sale proceeds of C’s shares would be credited to her resident account.

    1. Would 15CA/15CB be required for credit to the respective NRO accounts of A and B?
    2. Can A and C gift their respective sales proceeds to B without the incidence of gift tax and without RBI approval?
    3. Can B purchase residential property in India using her sale proceeds and the gift received from A and C without RBI approval?
    4. If A and C do not gift to B as above, can A, B and C jointly buy residential property without RBI approval and without the incidence of capital gains tax to any of them?

    Thanking you in anticipation,

    Krishnaraj Ashar

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. 15CB/15CA is required for credit to NRE account and not NRO account.
      2. Yes, as per Indian laws as they are considered as gift from relative mother or sister. However there is a limit for gift from resident sister to NRI sister under FEMA. If gift is above the threshold, RBI approval would be required. You would also need to consider the compliance in the country of residence.
      3. If gift properly done and executed, the money belongs to B and she can invest the same in a residential property.
      4. Yes, however, proper documentation as well as compliance needs to be done. They will also be required to file the tax returns. Thanks.

  2. KP says:

    I have a joint NRO and NRE account with my father. Both of us are NRI and US citizens. My father’s brother in India wants to give us a gift check. Several questions:
    - in which account can we deposit this check – NRE or NRO?
    - what are the gift tax rules and implications for my father’s brother?
    - what are the gift tax rules and implications for me and my father?
    - would it be better if the check is wire transferred to US bank account?

    Thank you very much.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. The local funds can only be deposited in the NRO account.
      2. You are not a relative of your father’s brother under FEMA so he is not allowed to gift to you. As per income tax is allowed; however, under FEMA is not allowed. As you are an NRI, FEMA also applies to you. In short, only your father is allowed to receive gift from his brother.
      3. There is no gift tax in India on the giver so your uncle is okay as long as the gift amount is less than $250,000 (provide no other forex transaction by your uncle).
      4. As per US laws, a US resident is allowed to receive foreign gift. However, he needs to report to IRS.
      5. Transferring money from his resident account to your father’s US bank account would be easy as no CA certificate 15CB or filing of form 15CA is required. Thanks.

  3. Subramanian.V says:

    Dear Sri Patel,
    I am a new NRI in USA under dependent GC visa. I am not earning in USA. I have converted by Domestic Account to NRO. Will I get the contracted interest rates(including the additional 0.5% for senior Citizens) for my FDs till its maturity? If there circular if any by RBI can you please give me the reference?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Additional 0.5% fore senior citizen is for resident deposits only. I don’t think any additional rate is allowed for NRIs. Thanks.

      • Subramanian.V says:

        Dear Sri Patel,
        But if the FD is continued till its maturity, is not Bank bound to pay the same rate till its maturity? In my case FD was opened in Dec14 maturing in Dec17. But in between this period(Dec14 to Dec17) my SB a/c got converted to NRO(in Aug 17). As per ICICI Bank, “As per RBI regulation, once you attain an NRI status, you need to Re-designate the FDs opened as a resident to NRO FDs.” I understand that it will only be redesignated & rates/terms etc will remain till its maturity(ie till Dec17 in my case). ICICI Bank has reduced the rate in my case from DEC14 retrospectively now though FD cert & their qly statements since DEC14 till June17 (just before conversion)showed the contracted rate only. I have taken it up with Bank. If U can give me any refrence to RBI regulation, pl give me. I searched but could not lay hand on it.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          1. Yes, I agree. Once FD is issued with the rate, it is a contract and interest rate can not be changed. However, I think it may be because of the higher rate of TDS on the FD for NRIs (30.9%) vs. residents (10%). Please follow up.
          2. Please inquire with your relationship manager what had happened. The customer service department is centrally located and may not be the right persons. If you are not satisfied with the relationship manager, follow up with the branch manager and also escalate the same to upper levels. If not satisfied, you may file a complain to the Bank Ombudsman. Thanks.

  4. Sanjeev Vadeyar says:

    Hello Jigar
    I posted comment yesterday seeking your advice. The borrowing was done outside India in US Dollars.

    Regards

    sanjeev vadeyar

  5. Sanjeev Vadeyar says:

    Hello Jigar
    I am a non resident indian and had taken a loan from another NRI to pay education fees of my daughter. Can i repay this in India in indian rupees in to the NRO account of lender? Will this violate FEMA?

    Thank you

    Sanjeev

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      This may be a classic case of a hawala transaction where money is transferred out of India without normal banking channel. While it may be a genuine transaction, I would not recommend the same. Thanks.

  6. A srinivas says:

    Hi Sir,
    My brother and sister stay at US and Australia. They are looking to invest in india. I had below queries with regard to the same.
    They need to declare anything before investing to their respective countries?
    And say after 5 years they withdrew and want to repatriate, how it will be treated in their respective countries. Will the gains will be taxed or it is zero?
    They are looking to invest US 1 Lakh dollar per annum. Can they invest? Is their any minimum and maximum amount?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. No declaration before investing is required.
      2. Any gain on sale of investments would be taxable in respective countries. However, the investments can be managed in such a way to reduce effective income tax in India, AUS or USA. We do provide guidance/advice. Please contact us. Thanks.

  7. Raj K says:

    Hi Mr.Jigar Patel,
    (Reesending as my email id has changed and older one has problems)
    Thanks for your descriptive and educative blogs.
    I wish to bring the following for your kind clarification as Regulations/FAQs are not clear on these even after reading all master circulars etc..and information is in oblique manner.
    1)As indian citizen,before becoming an NRI I bought a)Agriculture Land small bit b)Residential properties from my local earnings.
    Under general permission,now as an OCI,can I sell them to local persons and Repatriate/(or Remit) the sale proceedings after depositing in NRO a/c and 15 ca/15 cb?
    2)What it means when regulations says you can repatriate funds from two such immovable properties bought bought as NRI.Is it just per annum or NRI can repatriate only from two properties in his life time as NRI.?
    3)Two terms are coined in rules/regulations/FAQs–one is repatriation and other is remit.Are they same or different?If different in which way?
    4)Many bank sites says that NRI after selling property he can deposit the proceeds in CGAS account, in case delay in re investment in property.But regulations says as an NRI you are supposed to fund from NRE/NRO etc only for future repatriation.CGAS doesn’t fall with in these.And also what happens when you buy from local funds.Kindly clarify.
    Many thanks in advance for your kind advice.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Yes.
      2. Only when the properties were bought from NRE account, the principal money can directly be credited to NRE account. If you have more residential properties, the sale proceeds will be credited to NRO account.
      3. Repatriation is transferring money out of India that was originally brought from out of India. Remittance is transferring money out of India. The source can be local (Indian).
      4. For NRIs, it would be NRO Capital Gain Account scheme account. Thanks.

  8. Raj K says:

    Hi Mr.Jigar Patel,
    Many Thanks for your informative and educative blogs.
    I wish to bring the following for your kind clarification as Regulations/FAQs are not clear on these even after reading all master circulars etc..and information is in oblique manner.
    1)As indian citizen,before becoming an NRI I bought a)Agriculture Land small bit b)Residential properties from my local earnings.
    Under general permission,now as an OCI,can I sell them to local persons and Repatriate/(or Remit) the sale proceedings after depositing in NRO a/c and 15 ca/15 cb?
    2)What it means when regulations says you can repatriate funds from two such immovable properties bought bought as NRI.Is it just per annum or NRI can repatriate only from two properties in his life time as NRI.?
    3)Two terms are coined in rules/regulations/FAQs–one is repatriation and other is remit.Are they same or different?If different in which way?
    4)Many bank sites says that NRI after selling property he can deposit the proceeds in CGAS account, in case delay in re investment in property.But regulations says as an NRI you are supposed to fund from NRE/NRO etc only for future repatriation. CGAS doesn’t fall with in these.And also what happens when you buy from local funds.Kindly clarify.
    Many thanks in advance for your kind advice.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Yes.
      2. There is technical difference betweeen repatriation and remittance. Repatriation is transferring money that was originally brought from outside India. Remittance is transferring money. While you may not repatriate as local funds were used, you are allowed to remit the funds outside India from your NRO account from sale proceeds of asset bought legally.
      3. NRIs are allowed to buy property or capital tax saving bonds to sale long term capital gain. Your CGAS account would be NRO CGAS account. Thanks.

  9. Jaswant Singh says:

    Hello Mr. Jigar,

    I have read your blog regarding Indian government not allowing to pay for foreign lotteries. But if on my behalf any of my friend pay for the lottery who is NRI (directly or though online wallets) and if I win the lottery, Is it legal to bring the amount in India by paying the taxes. Please clarify will there by only tax liability or any penalty on same.

    Regards

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I don’t think you are allowed to ask your friend to pay lottery on your behalf. It is nothing but an indirect way to play lottery and not allowed. Thanks.

  10. Narayanan S says:

    Dear Mr. Patel,

    My daughter who is a US citizen with OCI. During her schooling in India I took an LIC Komal Jeevan Child Policy in her name. I have been filing FBAR with the LIC policy surrender value disclosed each year.

    Her policy has just matured in Oct 2016 and LIC has paid the first installment of income into her bank account. Now per India tax law this income is tax exempt.

    However how is this insurance money back income to be reported in US taxes and is it also tax exempt ?

    Thanks,
    Narayanan S.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I don’t think it will be tax exempt in USA. You would need to calculate the income portion and pay tax accordingly. Please contact your CPA. Thanks.

  11. Hello. I just stumbled on your blog site via google. It is very impressive and informative.
    I have sold my residential property in India this tax year and paid CGT in india. My accountant in India is dealing with the tax matters there, I am planning to all the post CGT tax proceeds to U.K. The property was in my and my wife’s name. We are uk citizens for over 30 years and hold OCD and pan cards.
    We are going to bring the net proceeds of the sale to U.K.What are tax implication of this in U.K. I file my tax returns in U.K. myself but never dealt with this kind of situation before. Please kindly guide us in this matter and it will be greatly appreciated. Thanks and Regards Shreelal

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You would need to report the sale of property and gain in your UK tax return. You would also be able to claim the credit for the tax paid in India. So while you may not have to pay tax twice, you would need to report and include the income in your UK tax return. Thanks.

  12. Rushi says:

    hi,

    With almost $17-18 billion being withdrawn from the FCNR(B) deposits in the last quarter, is there a chance that Urjit Patel would bring back the deal Rajan offered in 2013? If not, is it ok to park some funds in an FCNR(B) deposit for a year now? ICICI is offering a 2.45% rate this month (Jan, 17).

    Thanks in advance,
    Rushi

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. I don’t think so.
      2. Whether to invest in FCNR FD @ 2.45% is a personal choice and depends on your investments, risk requirements, taxation / compliance issues, forex market, country of residence, etc. It may or may not be a good investment for you. Unfortunately, I won’t be able to answer the same with limited information. Thanks.

  13. Jagadeesh D says:

    Dear Mr.Jigar Patel,

    We really appreciate for the help rendering to the people like us, proving the needful information and we respect your service.
    We have query looking for your response, we are doing the business in India rendering the services of an International company in India. The business involved is the diagnostic services where we send the patient samples to the international company laboratory for testing and we get the results. the Indian company will charge the testing fee from the patient and the part of the testing fee need to be sent to the International company whose account is there in Switzerland. Please help us to know what will be the TDS deduction during this remittance from India to Switzerland. Is there any other tax existing in order to transfer the money.
    Awatiing for your reply,
    Regards,
    Jagadeesh D

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. As you are getting a service, I would think it is a taxable transaction. Please contact your CA, who needs to review the DTAA between India and Switzerland in detail to determine the tax rate.
      2. The TDS would be higher of tax rate as per Income Tax, DTAA or 20% (if no PAN). If your Swiss company can get you a TRC – Tax Residency certificate, and other conditions as mentioned in a CBDT notification are complied, even if no PAN, DTAA benefit can be available.
      3. You would also need to check whether service tax on reverse charge mechanism applies. Thanks.

  14. Nitin says:

    Hello Sir,
    I came across your blog while searching for some queries and I think you can answer me about my questions.
    I came to US on L1B visa in Jan 2016 and there is no 100% guarantee about when i will return back to India. I may return by end of 2018 or my stay can be extended for some more time.
    I have 3 saving bank accounts in India and also one ICICIDIRECT account which i opened when i was in India and used it to invest in stocks and mutual funds.I was filing ITR in India regularly till last year.
    As I was not aware about converting the status so I haven’t yet closed my saving account and ICICIDIRECT account and open any NRE/NRO account. Also, I have been remitting money to my Indian saving account using online services like xoom,remitly etc. from US income since I arrived here.
    In my ICICIDIRECT account, there are some SIP created which is investing money in Mutual funds on monthly basis and also used it to buy some stocks while i was in US in previous year i.e. 2016.
    So questions are :
    1. what can happen in worst(what is the fine/penalty) if i don’t close my saving accounts and ICICIDIRECT account and keep on doing same as above for my rest of the time in US as I don’t want to get into the complexity of converting accounts as most likely i will return back to India within next 2 years.
    2. I also have opened 401k account in US. In case I don’t change my status in India and then go back to India after 2 years, will I be able to declare 401k as my asset in income tax return in India?

    3. Do I need to file income tax from 2017 onward in India as I have now minimal income in india which is coming from interest generated from money in saving account?

    4. Should i close all SIPs in my ICICIDIRECT account or is it fine to let it continue?

    5. In case I decide to convert my saving accounts to NRO account and open NRE account then do I need to close my ICICIDIRECT account as well and is it possible to do same from US and not physically present in India?

    6. Is there any time frame by law within which NRIs must close their saving accounts?

    7. I visited India recently in Oct 2016 for 2 weeks, does that impact my status being RI or NRI?

    Thanks in advance for your help, waiting for your reply.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. You are in contravention of FEMA provision and may be penalized.
      2. Yes, All Ordinary residents would need to disclose all foreign assets in their income tax return.
      3. If your income is more than 250,000, you are required to file income tax return.
      4. You would need to change the status to NRI. You may continue the SIP if allowed.
      5. The requirement and procedure would depend on the bank’s internal procedures. I think you can change the status from USA. No need for physical presence.
      6. No fixed time, only reasonable time. Usually, 90 days are used as reasonable time.
      7. No.
      Thanks.

  15. Ajay says:

    Hi Mr.Jigar,
    I have LIC Jeevan Anand ploicy , do I need to include Bonus in the 1040 tax return.
    for LIC Jeevan Anand ploicy do we need to submit FORM 720.
    In the FBAR do I need to put the surrender value + Bonus as max value
    please advice me.
    Thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. You would include the surrender value i.e. cash value.
      2. For reporting income, there are two ways – report accrued income annually or report all income at once on receipt basis (on maturity). Different CPAs take different views.
      3. I am not sure about Form 720. Please check with your CPA for reporting of income and value. Thanks.

  16. reddy v says:

    Dear Sir,
    Here is my situation:
    I have transferred my savings in US to my mother as a gift and invested on her name in stocks. Now I want to get repatriate money for buying a house in USA($300K). If my mom gifts back the shares to me. can I sell those and get the money back as its <$1mn? What are the tax complications in this case for me in both India & USA?
    Thanks for your support.

    • reddy v says:

      Sir, continuation to the question above…
      I have another question related to investing in stocks. I’m a long term investor and so far, whatever the capital gains my mom have is of long term i.e. more than 366 days. Does that attract any taxes in repatriating money via gift from my mom(longterm capital gains are on her name). Also as there are no short term gains, my mom never filed IT returns. What would be the best course of action on our part in our scenario if we are doing anything incorrect in terms of the land of the law in both India & US? Thanks.

      • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

        1. Your mother can not gift shares to you without RBI’s approval.
        2. Transferring money to mother with an intention to receive back is not a gift but a loan. Loan amount can not be used for investments in shares.
        3. Investment in your mother’s name of your money may be termed as “benami” transaction.
        4. The tax implications would depend on how your treating the investments. Yes, if it is your mother’s investments, the long term capital gain would be exempt. As you have not shown shares as your assets to IRS, you may not be the taxed in USA. However, you are the ultimate beneficiary so request to consult your CPA. Thanks.

  17. Akshay M says:

    Dear sir,
    Thank you for posting such valuable and great wealth of information.I would be highly oblidged if you could guide me with my query.
    Background: I am working with merchant navy .Due to the nature of my job in the past seven financial year i have been resident four times. I am regularly filing my income tax return whether nri or resident .I am maintaining both resident , nre and nro account. In future also it is going to remain like that.

    Queries:
    1. How can i invest in mutual funds with my fluctuating residential status.I mean is it better to invest as a resident or a non resident?
    2. My company splits my salary into two parts and part is given to me as leave wages.Sometimes it falls into the other financial year so do i have to pay tax on that(assuming i am resident for that financial year) or it should be treated as a part of the total salary.
    Please give answers to above queries with a view so that i would be able to repatriate my funds in future outside india if required.
    Thank you

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. You can not have both a resident and NRI status and maintain Resident and NRI accounts. Either you are a resident or an NRI.
      2. There are 2 Acts – Income Tax and FEMA. The definition of residential staus is differenct under Income Tax Act and FEMA. You would use definition as per Income tax while filing your tax return. However, keeping bank accounts and investments in MF and other assets is governed by FEMA. You need to determine your residential status under FEMA to understand the laws and requirements for your invetments.
      3. It is possible to have different status under FEMA and IT Act i.e. Resident as per FEMA and NRI as per IT or vice versa. However, the residential status is to applied consistently under one act (e.g. banks and investments). So, if you are having NRO/NRE account, you can not invest as a resident. However, you may file the tax return as a resident based on IT act.
      4. You would report and file tax return as per the salary certificate – Form 16 and the TDS certificate 16 A for a particular year so the records of your employer and your ITR match. Thanks.

  18. Govindbhai says:

    Hello,

    I born and brought up in India, holding Indian passport as of now too. I land to Canada in 2012 with the PR and not having any NRE, NRO nor PIO account yet, and found today, i have to open that kind of account in India, I was totally ignored about this before.

    After 2012 till today i don’t have any income in India other than small equity dividend, small amount of monthly pension and minor saving bank interest.

    1} I have investment (equity shares as per current valuation around 50lacs) in India, which was purchased almost 20years before, which was demated as a indian citizen at that time and maintaining same without any transaction. So, guide me how can i deal with that existing demat account and those equities as NRI. If i need to transfer to PIS (Portfolio Investment Scheme), what will be the procedure, is there any tax implication in India and Canada.

    2} I also having inherited agri land as well of today, which i get it in 1997, and involved my whole family names in 2011. We all thinking to become citizen here, and then thinking to get PIO card. does that affect income tax liability when i sell property like agri land(non rural inherited long term) or equity shares (LTCG).

    Really appreciate your kind help.

    Thanks
    Govindbhai

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Please contact the bank, DP and trader where you have account and inform them of your “NRI” residential status and they will help you to open and maange equity shares as per PIS of RBI.
      2. Assuming you received the agri land as inheritance (i.e. after death of your parent/(s)) and your name was included as per will or probate, you may hold the same in your name. Becoming foreign citizen would not affect your ownership rights or taxation in India. Only requirement would be that when you sell the land in future, it would be to an Indian resident who is also an Indian citizen. Thanks.

      • Govindbhai says:

        Thanks for your prompt response!

        1 } Is there will be any tax liability as i am informing bank, dp now that i am NRI ? Bcs in my case i left India in 2012 on PR basis of another country.

        2} In 2017 I am thinking to sell those inherited non rural agri land, and for saving LTCG tax i am thinking to invest in my first resident house in india and approved govt bond for ltcg. So, my question is how can i transferred my new investment amount in future to abroad. Will there be tax liability on it again when i sell that resident house and bond ?

        Request to advised me on the above sited issue!
        Thanks again,
        Govindbhai

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          1. Currently, I am not aware of any bank charging any penalty for the same. However, I can’t say for sure in future.
          2. The interest on bond would be taxable and when you sell the new investment after 3 years at a gain, you would pay tax only on the gain amount. If you sell before 3 years or do not comply with the conditions, you would need to pay the tax on the cost of new property as well as gain. By investing in a residential property and complying with requirements for capital gains exemption, you would not pay tax on the investment amount. Thanks.

  19. Jay says:

    Since 2013, I am an NRI and having Job abord & getting my part of salary locally (After tax paid) in country of residence and my company is sending part of the balance salary to my NRE account. Will this amount will be taxed in India?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      India taxes income on accrued or received basis. As you are working outside India, it is accrued abroad and not taxable for NRIs. However, if the salary amount is received directly in NRE account, it may be considered as received in India and taxable. Please note that tax needs to be paid atleast once, either in your resident country, if taxable or in India. I would think that the salary income is taxable in the coutry of residence but you are not paying tax on the money being directly remitted to the NRE account. I would recommend to deposit the same in your saving account outside India and then remit. If it is remitted directly, it could unnecessarily complicate the matter. Thanks.

  20. Rahil Vora says:

    Dear Jigar Sir,

    Your blog is very helpful to clear may doubts of NRI..I am NRI and living in UAE. During Years 2013 to 2016 , I had done cash withdrawal of 20Lack from my NRI account for my family. Now Old 500 and 1000 currency notes are no legal Tender and my family have 14Lack cash, can I deposit in my NRO account? Any TAX is applicable on deposit? If Bank asks the source, can I sumbit the statements from year 2013 to 2016?.
    Pls. guide. Many Thanks in advance..

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I think you may be able to deposit the same to your NRO account. You may submit the bank statement as proof if required. Please contact your bank to understand the procedures. Also, please note that the deposit will be reported to the Income Tax department and you may get a notice to explain the source. Thanks.

  21. Sudhir Shah says:

    Hi,

    We have been living in USA since 1997 and are USA citizens. We did not know that we needed to report our money and dividend income from India. If we want to transfer all the money to USA, what are our options? All the money in India have been inherited from my father. But right now, we have different PPF accounts under my name and my wife’s name. My second question is: can my siblings gift me money in Indian rupees and can that be transferred in dollars? Is gift money taxable?
    Best Regards,
    S. Shah

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. You need to report your Indian accounts, assets and income if it exceeds various threshold for different forms. If you have not done that, I suggest you contact your CPA.
      2. Your siblings can gift upto $250,000 per year. You may receive the gift in INR in India or directly in your US account in USD. Any foreign gift is not taxable for US residents in USA. Thanks.

  22. Rashmi says:

    Hello Sir,

    I want to know about :

    FCNR accounts taxability when i am-
    1. NRI
    2. RNOR
    3. ROR

    I hold FD in FCNR maturing in 2022. Please advise of taxability of these Interest and in Maturity.

    Thanks in Advance

  23. annie says:

    Dear sir,
    We are NRI . on 2011 we purchased a small underconstruction flat in kolkata. we send all money from our usa bank a/c to builders account directly via icici money2india . and also mentioned their as for “purchasing property”. last year during handover time we were not able to present there and said that you can handover to my mother’s name(family member)..when we will go we can register our property on our name. they just made agreement of sale on my mothers name. My question is that did we do anything illegal? because the property has not been registered yet. and also if we could not go back to india can we refund our money on our name?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As you have invested money, the property needs to be registered in your name only. This would be like a “benami” transaction and is not allowed for NRIs. If the property is not registred, I would recommend to give Power of Attorney (POA) to you mother to register the property in your name but she can sign on your behalf. She can have the possession (on your behalf) but you need to be the owner of the property. Thanks.

  24. Abhijit says:

    Dear Sir, I was on H1 in US and returned 15 years ago to India for good. I had 401K account there with my past employer, where some money is lying.

    I wanted to withdraw the amount and get it credited to my Indian Bank account and close the 401K there. What would be my tax liability in India and US? I have no other US income and I am not paying tax in US after I returned to India.

    Can you please advise on the above. Many thanks.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. For US, you would pay the penalty for withdrawing early as well as the withdrawal would become income and you would pay tax on the same.
      2. For India, you would calculate the gain on sale of funds lying in 401k and accordingly pay tax. You may be able to get the credit for tax paid in USA; however, not for the penalty. Thanks.

  25. Shanta Bhat says:

    I have a joint savings account in India with my mother. How do I convert this to NRE so I can repatriate the funds easily? Are you able to help with this because the bank doesn’t seem to be willing to help with these complicated issues?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Resident account can not be converted to NRE. It needs to be converted to NRO first. Only bank would know how to help you as procedures and requirement would be difference among banks. Thanks.

  26. CA Viswanathan C P says:

    Please inform me about the TDS applicable on payment of referral incentive to the principal liner and their agent in India. They are saying it is covered by section 172 and circular 723 of 1995.
    My view is that Section 172 is a presumptive taxation section for non resident shipping co offering 7.5 % of freight earned as income and covered by DT AA .
    When incentive is paid to the principal non resident TDS will apply at 43.26%
    or If the agent or their branch in India raise an invoice for incentive with local PAN TDS will apply at 5%. pls advise and suggest your view.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Unfortunately, with limited information, I may not be able to answer. Also, it appears that this is a technical matter and there are difference of opinion. I would suggest you contact your CA, explain the situation in detail with agreements and any documentation for the same. If any question, please email us. Thanks.

  27. Lisa says:

    Hi,

    I found your website while searching for filling Us taxes from india.

    Do you help for filling USA income taxes from india ? I am US citizen.

    Thanks in advance

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      While we support tax filing and compliance reporting, we do not file tax return. We also provide consulting for your investments and taxation and foreign compliance but ass we practice as a CA, we are not allowed to practice as a CPA and/or file your return in USA. Thanks.

  28. Preethi K says:

    Dear Jigar Patel Sir, Thanks a lot for the wonderful information. My questions are regarding LIC policy. We are NRIs. We have LIC policy during our visit to India. We purchased this as any other resident of India and not as NRIs. Basically saying we did not give our foreign address as suggested by agent. We are planning to apply for green card. However, the LIC website says NRIs holding a green card are not eligible for LIC policies. We are very confused- first what happens if we inform them that we were NRIs from the time we first got our policies? second what happens to our policy if we apply for green card now? third all our premiums (5 years) were paid by our relative through a check. So in case we decide to terminate our policy whether the LIC will ask as where they should send the money or do they directly deposit in to the account where they were receiving premium from? I do have NRO account in india. Please suggest me what is the best thing to do under the circumstances.
    Thank a ton in advance

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You still do not have a greencard so it may not apply to you. I would recommend to contact your agent and get clarification about how your LIC policies would be affected. I would assume that you would have taken an endowment or traditional or ULIP plan, and as you have paid all your premiums, the sum assured would be lower than the investments including gain/bonus. Please also inquire about the term of policy and surrender value. Based on all the information, take a decision about whether to continue or to surrender/cancel the policy. Please contact us for any future complications/requirement. Thanks.

      • Preethi K says:

        Thank you very much. Appreciate your quick reply with valuable suggestions. We have the Jeevan anand policy taken in Jan 2011. We will surely get back to you in case things get complicated.

        Thank you again.

  29. ASHIT KOTHI says:

    Please add my name into your mailing list. How do I log into your blog.?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      No login required. Blog is open for all. You may also post your comment after entering your name and email. Only approving of comments is regulated and restricted by me. Thanks.

      • Prashant says:

        Hello Jigar,
        I am an OCI living in India. I bought a Money Market Mutual Fund in Oct 2015 and sold it at a loss in March 2016 . I was getting a fixed dividend every month.
        Do I need to file 8621 (PFIC) at all if the Fund amount was less than $25,000? Thanks.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          As you had invested in mutual fund, it would be considered as PFIC and 8621 would apply. However, as you had selected dividend option, there won’t be any income but loss due to rupee depreciation. Also, you would need to include the dividend as income in your 1040 and pay tax on it. I am strongly against selecting dividend option as you would have to pay tax twice. The company declaring is paying DDT – Dividend Distribution Tax @ 40% and you would need to pay tax on dividend income in USA (30% on 60% received) and you would not get tax credit as DDT is on companies and not on you. In short, you would pay tax of 58%. Thanks.

  30. Sam says:

    Hello,
    1) Do FATCA rules apply to Canadians investing in India (abroad)

    2) I have an ICICI bank savings account and a ICICI DIRECT Share trading account. There is 25000 in both. I have not informed them that i moved to Canada 5 years ago (now i’m Canadian citizen too). Will they charge me any penalty if i tell them now?

    Thank you…

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. For Canada, CRS will apply.
      2. Better late than never. So please inform them as soon as possible. Thanks.

    • Madhav Pakhare says:

      I am NRI having SBI NRE account.I am registered as Member f orOf Indian Documentary Producers’ Association(IDPA).Can I have Advance Payment /Fund (US $ 50000 for producing 3 Documentaries over the period of one year)by Foreign Businessman remitted through his Bank account and credited in my NRE account?Is there any Document(if any scrutiny from IT comes forward)required for this?
      Please reply.
      Thanks and regards!

      • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

        1. Would the payment be in a individual name or in the name of a company. Also, you need to clarify the nature, whether gift, loan, part of equity or to cover for exps. FEMA rules would apply. It may also be subject to income tax.
        2. To simplify the matter, you may transfer funds to your foreign account and then transfer from your foreign account to your NRE account. It will simplify the compliance requirements. Thanks.

  31. ShanTha pai says:

    Dear Sir
    I am Nri living in us. I have some money in savings account in India that I would like to bring to US. What is best way to go about it? Will I be taxed in US?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      There is no tax on the capital. Tax is only on the income. If you have reported your Indian Income and assets, you would not be taxed or penalized in USA. Please contact the bank for the procedures. Please check my blog on updated procedures from April 1, 2016 at http://nareshco.com/blog/?p=1387. Thanks.

  32. Kunal Shah says:

    Hi Jigar,

    Please help and guide me with my situation. I’m an Indian citizen, living in the US for the last 10 years and my green card is in process. I have opened NRE account when I first came to the US. I purchased two apartments in India and pay monthly EMIs from my NRE account. I’m selling these two apartments for a loss as I need the money to pay down payment for a house in the US. I would still need some extra money to close the house in the US. For this I plan to take some money from my dad. My dad has a Fixed Deposit and she is planning to break that and give me that money. Questions that I need help with:

    1. What is the process to repatriate INR to USD for the sale of my homes and money taken from my dad?

    2. Do I or my dad need to declare any taxes in India?

    3. Do I need to declare any taxes in the US?

    4. Do I need to file anything related to FINCEN for next year if the amount is repatriated back to the US?

    Please advise.

    Thanks,
    Kunal

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Sale of property is a taxable transaction and need to be handled differently than gift from your father. Your father can transfer funds as gift to you upto $250,000 per year just by filing a transfer request form with the bank in India and money can be transferred immediately. For sale of property, TDS needs to be deducted or you need to get no deduction certificate from the income tax officer and then submit for 15CA to transfer funds to USA.
      2. Not required.
      3. Yes. You need to declare foreign gift received in your 1040. Also, you would need to report the capital gain/loss in your 1040 on sale of property.
      4. Only if your NRO or NRE account balance is more than $10,000, which would be the case when you credit sale proceeds of your flats. Thanks.

  33. Oliver Mendonca says:

    I am an OCI. I have a NRE account in India, haven’t created any online access. How do I repatriate some of the funds? What documents I need send to the bank? Thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You would only need to submit a request to transfer funds. Please contact your bank. Thanks.

  34. Uday Pandit says:

    I am Indian citizen & my son is British citizen.
    I wish to gift Rs 20 lakhs to my son for house purchase.
    Please suggest procedure so that I or my son does not have to pay any tax.
    Regards

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Please contact your bank and understand the procedures and then transfer the funds. If CA certificate is required by the bank, please contact your CA for the same. Thanks.

  35. Raja says:

    Dear Sir,

    Trading in Bitcoins is legal in India ?
    Please let me know

    Thank You,
    Subrahmanyam

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      RBI has issued an advisory to be cautious in buying or selling virtual currency. I am not sure about legality of bitcoin by RBI. However, as Bitcoin is a virtual currency, very prone to money laundering / black money transaction, I would not advise. I think there was a raid in Ahmedabad relating to bitcoin trading by Enforcement Directorate (ED). Thanks.

  36. LSK says:

    Hi Sir,

    I would be traveling to USA for about 2 years on H1B Visa in month of April 2016. As far as I know I would be Resident Alien for tax purpose. What is the salary I have to disclose while filing income tax returns next year in US ? Will I be taxed on Indian salary I received prior to reaching USA (Jan – April 2016) ? Also can I claim standard deduction for me and my spouse while filing returns in USA for filing returns for this year.

    Thanks.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      While you would need to declare your global income, you would get credit for any tax you have paid in India. Yes, you are allowed to file your tax return as Married Filing Jointly and claim standard deduction and personal exemption for your wife. Thanks.

  37. Rajani Srinivasan says:

    Dear Mr. Jigar Patel,
    First of all, thank you running this amazing blog and taking the time to give us your expert advice.
    I used to work in India but I am now a US citizen. Once I left India I stopped paying income tax in India (although I may have had some small income). Three years back I inherited a lump sum from my father (in the form of cash in State Bank of India, in an SB account).
    Question: What is the procedure to transfer this inherited money to the US (I am paying tax in the US on the interest income being earned by this SB account AND SBI has been deducting some tax at the source as well). Will there be additional tax levied by RBI at the time of transfer? If yes at what will be the rate?
    Thank you again in advance for your guidance – I do not have anyone knowledgeable to turn to and SBI has not replied to my inquiry.
    Kind Regards,
    Rajani.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. There is no tax on transfer. Tax is on income only.
      2. Please convert your account from savings account to NRO account. As an NRI, you are not allowed to maintain regular savings account. Then, you may be able to transfer funds to NRE account or to USA. Thanks.

  38. Vineet says:

    Dear sir,
    I am resident in US. I left India with PF balance (7 years contribution) where I believe I got interest for 3 years after the date I left. What are the tax implication in US tax return and reporting on withdrawal year?

    Thank you

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would think only the interest would be taxable. Please consult your CPA. Thanks.

  39. Poornima Mukerji says:

    Dear Mr. Patel,

    I need to get funds repatriated from impending sale of property in New Felhi. I currently do not have a bank account in India( I am a U.S. Citizen residing in USA).
    In your opinion, which bank would be the easiest to work with? I have heard many complaints about Citibank, but good reviews of Yesbank, ICIC and SBI. Which bank would you advise me to open an account with?
    Thank you,

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Each bank has its own pros and cons and I would not comment on any bank on a general platform. I would only say, it also depends on the amount of transfer, availability of documents, TDS rate and amount, whether IT certificate obtained, whether TDS property deducted, whether bank require more documents, bank branch (whether NRI customers), knowledge and EXPERIENCE of bank personnel where you have your bank account, etc. Please let me know more details and I can guide you better. Please send a personal email/Call if more question. Thanks.

  40. Saurabh Jain says:

    1) What is the maximum amount i can remit from my US bank account to my NRE account ?

    2) I and my wife are working in US since last 3 years and invest in India in some mutual funds via SIP route. As per advice of my financial consultant, I have started remitting money from my foreign bank account to my NRE account and from NRE account to my Savings Bank account and SIP from my SBI Savings account. Is it ok to do so and what would be consequences ?

    3) My consultant also told be to declare FATCA. Can you give some idea about it ?

    4) What if i do not disclose the investment made in India to US authorities ?

    Thanks in Advance.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. No limit on money coming to India.
      2. As an NRI, you are not allowed to maintain resident account. I don’t think it is ok. As a financial consulatnt, I would advise you to invest directly from NRE account so that you keep the repatriability of your funds, i.e. on sale, money can be directly credited to NRE account. I think your consultant would know about investment but you need a consultant who also know about FEMA and Indian taxes as well as US compliance requirements.
      3. You are required to make a FATCA declaration and share your information. If you don’t it can be termed as fraud or willful non-compliance which may result in higher penalties.
      4. If you don’t, the Indian government will collect your investment details and will report to IRS. Thanks.

  41. SUNIL SARAF says:

    Dear Sir,

    I would like to share that our client is a pvt. ltd. co. in Bangalore who is arranging a foreign trip for Management College in Bangalore for whom they are catering a 28 day program in Malaysia and 4 day program in Singapore.

    Their training vendor is a university in Malaysia.They are looking forward to making their payment this Wednesday.

    Request you to kindly let us know what documents should they prepare in order to proceed with the payment .

    Looking forward to your help.

    Thanks in advance

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Please contact the bank through which they plan to send the funds and understand their requirement and submit the documents accordingly. Thanks.

  42. Venkat Kishore says:

    I am a U.S citizen recently arrived to India. I also have OCI status. Due to health reasons
    I currently receive U.S disability benefits. I plan to stay in India indefinitely , probably several years. Do I need to pay taxes to Indian government on my disability benefits I receive from U.S government if continue to live India more than a year. These benefits are not a salary.
    I appreciate you response in this regard.

    Venkat Kishore

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As per DTAA between India and USA, social security benefit, public pension or compensation for injuries received in performance of service paid by US govt. are taxable only in USA and not in India for US citizens. You would need to determine if the disability benefit you are receiving is covered under the article. Thanks.

  43. ramkumar narayanan says:

    Hello,

    I am a GC holder, working for a US company. i have a 401K account here. i am planning to return back to india after couple of years. Is it advisable to leave my 401k account as such here and withdraw it later when i reach 59.5? Similarly with my equities. can i leave it here and access it later?

    Thanks,
    Ram.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Yes, you are allowed to maintain your foreign assets. I do have my 401k account in USA. Please remember to report your foreign assets and income in your Indian tax return when you become Ordinary Resident. Thanks.

  44. Sid Kapoor says:

    My parents purchased a property in India in 1975 but it was only registered in my fathers name. They have both been US citizens since 2000. My father passed away recently and we are trying to determine if it is best to transfer the property to just my mothers name or to both my name and my mothers name. I am a US citizen as well. What are the consequences from a tax perspective now and when we sell it later if we put both our names on the property now or if we only put my mothers name on it?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The property will be transferred as per your father’s WILL. If no WILL, it will be transferred to his legal heirs jointly i.e. your mother and you (provided you are only child). I would recommend get a valuation of the property at the time of transfer as it would be the cost of acquisition as per US laws. when you sell, you would need to report the income in India and USA and pay tax. After TDS/payment of tax, you would be allowed to transfer the funds to USA. However, you would need a CA certificate for the same and need to file tax returns. Any transfer by you to your mother would be considered as gift and related rules and regulations needs to be complied with. Thanks.

  45. Dev says:

    Hi Jigar,

    I am australian citizen and have NRO account in india. My dad recently passed away and my mum wants to break some of her fixed deposits and give money to me.

    Can I deposit the money into my NRO account and repatriate that money to australia?

    Thanks

    Dev

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would recommend her to gift money directly to your AU account from her Indian account. It would be easier for income tax and RBI and less procedures. Whether FD needs to be broken or not, please contact your financial advisor or us to understand the options. Thanks.

      • Dev says:

        Thanks for your reply Jigarji. Very much appreciated.

        The FDs will be maturing very soon and I will be travelling to India so that I can help mum in transferring that money to my Australian bank account.

        Does my mum has to pay tax on the FDs before she gift them to me and how hard is it for her to gift that money to me?

        Its fairly substantial amount and I am worried how we will do it.

        What is the procedure to gift someone money?

        Thanks Jigar

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          1. Bank would deduct TDS on interest and your mother would report all her interest income while filing income tax return.
          2. Gift to close relative (to son) would be taxable. However, I would recommend to have a gift letter or deed with signature and PAN of both. Please contact us if any question or need any help with the same. Thanks.

  46. SP says:

    Hi,

    Am a returning Indian that has lived in the USA for around 10 years on H1B visa. I continue to be an employee of my US company and get paid in US dollars into my US account for services I provide. They do not have any branch in India. So my questions are the following:

    1. In the RNOR period, is the salary I earn taxable in India ?
    2. Can I leave my bank accounts and 401k accounts permanently open in the US and just declare them as foreign assets ? In the RNOR period, are the investment returns out of these accounts, taxable in India ?
    3. Assuming my arrangment continues when I convert into a ordinary resident, do i need to file taxes for the US salary in both India and USA?

    Thanks for your help,
    SP

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. You are performing services in India (physically present in India). So, the salary would accrue in India and considered income earned in India. Any income earned in India is taxable in India for resident, RNOR or non-residents.
      2. No need to report foreign assets/income in RNOR status. Only Ordinary residents are required to report foreign assets and income in India.
      3. Even in RBOR, you may need to file both tax return. However, due to DTAA, your income would only be taxed once. Thanks.

      • SP says:

        Thanks for your response. A couple of follow-up questions..

        Can I claim an exemption on federal taxes, social security, medicare witholding and deductions that are taking place from my paycheck in the US ..and just file taxes in India ?

        If I was to convert into a consultant (IT services) instead of a full time US employee, would I need to pay service tax in India in addition to the income tax assuming the amount exceeds the service tax limit ?

        Thanks.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          Only Federal tax can be claimed under DTAA. There is no service tax on export of service. However, the requirements/conditions mentioned to claim the exemptions need to be complied with. Thanks.

  47. Puneet says:

    Hello, I am a UK citizen. I have invested in NRI deposits in India.
    With the signing of CRS agreement with India I may have to
    pay tax for previous years. Going forward should I transfer the current NRE
    Money in my wife’s name who is resident in India and Indian Citizen.
    Thanks

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As per Indian tax laws, any amount transferred to wife is considered as your own and will be clubbed into your income. Please check UK tax laws about gift to wife. Thanks.

  48. Suraksha padman says:

    I have a question about transferring domestic savings account balance to my US bank. I am US citizen and the money in indian bank is from long ago(long before I became UScitizen). Can one transfer ?
    Can I open NRE account from INR in domestic account and later repatriate. I have no family in India.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You are not allowed to have a resident account. You can only have NRO or NRE account. you can transfer the funds from NRO to NRE after CA certificate in form 15CB and submitting 15CA. Once funds in NRE account, you can remit to USA whenever you want. Thanks.

      • Suraksha padman says:

        What is CA certificate in form 15A and what is form 15B? Are they online ? Can I use the INR in domestic account to open the NRE account?

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          1. A CA certificate is required that certify that the tax on the money that you want to remit/transfer has been paid. As per requirement the certificate is required to be issued in a prescribed format as specified in Form 15CB so it is called CA certificate in Form 15CB. Based on Form 15CB, an online form 15CA is to be filed and submitted to the income tax department.
          2. The source of funds in NRE account should be external. However, if you have an NRO account, you may transfer the funds to NRE after submitting CA certificate in form 15CB and filing 15CA. Thanks.

          • Suraksha padman says:

            So what can I do with the INR in the domestic account? Can that be transferred to US bank or can I get a check to be deposited in US bank? I appreciate your reply since NRE can only be funded by external fund.

          • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

            The domestic account can be converted into NRO and NRO funds can be remitted abroad or transferred to NRE account. Thanks.

  49. Pankaj says:

    Hi Jigar it’s Pankaj here I just sold plot in India and I’m going to receive 35 lakh now wanted to deposit that in to my nro or any other suitable account is that possible if yes how much tax do I have to pay I’m uk citizen.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The buyer needs to deduct tax @20.6% or 30.9% based on whether you hold the property for less than or more than 3 years respectively. You can definitely credit your NRO account. However, for transfer from NRO to NRE or to UK, a CA certificate in form 15CB and filing of form 15CA would be required. Thanks.

  50. Abhijeet says:

    Dear Jigar

    I would really appreciate if you can address my query below.

    Just to give a background- I was in US for 3 years – I was on H1 visa working for a US company. I returned back to India for good about 14 years ago and since then I am working for an Indian company.
    When I was in the US, I had signed up for 401K plan. I did not withdraw any money from the same so far.

    My queries:
    1. Till date, I did not disclose about this when I filed IT returns in India. I heard this time there is an explicit clause to this effect. Since this was earned in US and as a retirement fund, should I be disclosing it this time?
    2. What are my tab liabilities in US and in India? After I returned to India, I did not file tax in US (since I had no regular income in US) – In India, I have filed IT returns regularly as Resident – Individual (Ordinary Resident) category, based on my salary income in India.
    3. Do I need to pay any tax this year when I disclose the amount? OR I have to pay it only when I withdraw money from my 401k. Can I transfer this to my Indian Bank (in INR form). I don’t have any other account in US banks. What papers should I have handy for this?
    5. I believe, if I withdraw any amount before my retirement, I will have to pay penalties for early withdrawal in US. What would be your advise – shall I pay penalty and get that money transferred to Indian Bank once for all and close accounts there or I can continue it as is there as my retirement corpus and transfer it on my retirement, when I may need it the most or use for my child’s education in case required.

    Sincerely appreciate you help and time as regards to the above.
    Regards.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Please disclose as a foreign asset
      2-3. No tax liability in USA unless you withdraw and no tax liability in India unless you sell any funds held in the 401k.
      3. I too have a 401k account and funds and I plan to keep it until when I would need it for my daughter’s masters’ education 15 years from now. I do not plan to change the investments or withdraw but would just report the investments in my Indian income tax return. Thanks.

      • Abhijeet says:

        Thanks for your answers.
        What will be my tax liabilities in India and in US when the amount in 401k is withdrawn – now (before retirement) vs. on maturity (after retirement age).
        If I spend this money in US itself say for my child’s education, then would the liability change?
        regards.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          The taxation on withdrawal of 401k is as per US tax laws. The Indian tax laws apply when any dividend is declared or MF is sold resulting in capital gain. The Use of funds is immaterial Thanks.

  51. Vanessa Dai says:

    Good day Jigar,

    I am a Canadian, who would like to move to India to start a restaurant with some local Indian partners. What is the best way for me to transfer my funds to India, as well as ensure that I am able to repatriate them later?

    Also, is it correct that only my Indian income is taxable iif I am non-resident in India but both Indian and foreign income is taxable if I am resident?

    Thank you,
    Vanessa

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      When you move to start a business to imply that you are moving to India for an uncertain periods, you would be considered as a resident and would open a resident account. Assuming you have lived in Canada for more than 8 years, your status would be Resident but Not Ordinary resident for 2-3 years depending on when you actual move. During those years, your foreign income won’e be taxable. Only when you become an Ordinary Resident, your global income will be taxable in India. Thanks.

  52. Kapil says:

    Dear Sir,

    I came to UK for job in April’ 2015. In your blog I have read that I need to inform my bank for converting my Savings A/c to NRO. I just simply have to mail them or is there any documentation involved? Can this procedure be done online as I am currently abroad.

    Thanks & regards

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The bank may ask a proof that you are now living in a foreign country (UK). Yes, it can be done online or by sending the documents to the bank. I suggest you contact your bank in India and follow up. I would also request you to open an NRE account. Thanks.

  53. dipan says:

    Hi,

    I am a US citizen and resident here. What is the limit on the amount of gift that i can receive from brother, mother, uncle? i see that under the LRS, only $125000 can be sent as gift directly. Can they deposit gift money in NRO if the amount is higher than that and then transfer to NRE with 15A/B, i currently only hold a NRE account and wondering if i should open NRO account as well.

    Thanks,
    Dipan

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      $125000 is increased to $250,000. Also, you need to check the definition of Relative under FEMA, which rely on the Companies Act for tax free gift. I don’t think your uncle is your relative under FEMA. You are not allowed to accept gift more than the threshold amount as per FEMA. Thanks.

      • dipan says:

        Hi,

        I read somewhere that parent’s siblings are included in the relative category. Is that true? or it is only applicable in relation to gift tax within India?

        Thanks,
        Dipan

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          It depends on whether you are receiving gift or giving gift. The relative definition is very critical and varies depending on the nature of transaction. Please check my blog “Who is Your Relative” for more information. Thanks.

  54. Nirav says:

    Father (second name son) has about $ 70 k in NRE/NRO(India),
    Son (second name father) has $ 90 k. Both are US residents.
    1) Father does not file in US since below filing limit, Would he have to file FBAR ?
    Form 8938 (page 1 instructions) says no need to file if not required to file tax return .

    2) Son married filing joint. Obviously will have to file FBAR – does he include fathers accounts ?
    3) Hoping son does not need to file 8938 (threshold becomes > $ 150k ONLY if father/son combined. Would India banks report only by first name ? If father files FBAR for him self ($70 k) can son just declare his own ($ 90k in FBAR so as not to file 8938 )

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Both father and son would be required to file FBARs and 8938. In India, only the first holder is considered as owner. In USA, both holders are considered as owners of accounts and funds. Please check with your CPA. Thanks.

  55. kalpesh says:

    I am not NRI yet but will become on 30 Sep 2015 as 182 days in this financial year will be completed. So I want to ask that before that period Can I transfer my savings to India in normal account or I have to wait till become NRI? Is this compulsory to open an NRI (NRE or NRO) bank account ?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would assume that you left India in 2015 for education or job and plan to stay out for the year. As per RBI laws, you become NRI under FEMA when you leave India for job or study. So you are an NRI and can inform your bank of your change of status to non-resident. In that case, your savings account in India will be re-designated as NRO. You may have the same account number and chequebook. To answer your question, there is no need to wait. You may inform your bank of your change in status and you may transfer the funds to your resident account. Thanks.

      • kalpesh says:

        Thank you sir for your guiding.

        I left India on 3 Nov 2014 and transfer my abroad’s salary from Nov 2014 to March 2015 to normal account in India. So in FY 2014-15, I have to pay tax to Indian government? Can you guide me what and how much exemption I can get? ( like 80 C , or 80 GG (80GG can be applicable as I am living outside India with rental house?). what about currency rate ?

        Thanks in advance.

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          Please contact your CA. Any deduction available to NRI will also be applicable to you. There is no part allowance. You will also be allowed basic exemption of 250,000 and 80C of 150,000. However you may not invest in certain investment products as NRI. Please check with your CA. Thanks.

  56. Kumar says:

    Hello sir,

    Your blogs and reply very useful. I have question around capital gain.

    I have bought a property 10 yrs ago while I was working in indian company and I was in onsite (as NRI). I was filed my Tax return until I employed in indian company. When I bought the property, The 50% amount from Overseas sent via normal saving account in india and 50% amount from local home loan when I bought the property. I never had NRO/NRE account.

    Now I would like to sell the property, payoff my existing loan and bring the money to overseas.

    Question:
    1. All the inwards remetence must be via NRE account? Indian saving account inwards can be acceptable?
    2. How capital gain will be calculated?
    3. If i sell the property, I should credit the amount to NRO account or NRE account?
    4. Looking effective way of paying the tax. Do you provide services like this?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. As you are an NRI, you are not allowed to maintain a resident account but would have to inform your bank of your NRI status and bank would re-designate your account as NRO account. As you bought the property from local funds, the sale proceeds would be credited only in the NRO account.
      2. Capital gain = Sale price – indexed cost of acquisition
      3. NRO account. The buyer would need to deduct TDS @ 20.6%
      4. Yes we do help NRIs for selling property, complying with TDS requirements, paying taxes, filing returns and transferring money from NRO to NRE or outside India. Please email us if you need our services. Thanks.

  57. Vinay says:

    Jigar, if I am required to file tax returns in India and the US, will I have to consider the same income for in different years given that US has Dec. year ending whereas India has March? If I had LTCG income in India in Jan-Mar 2015 , will it go on the Indian IT return to be filed by July 2015 but appear on the US IT return to be filed by Apr 2016?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You would prepare a statement of your Indian income for January to December and then report in the USA. So your Jan-Mar income of 2013-14 year and Apr-Dec of 2014-15 would be added to your US income. Similarly you will get tax credit for tax paid in the Jan-Dec period. Thanks.

  58. Alpesh Patel says:

    Dear Sir,
    I am living in the UK and I need to get some money from India to UK to purchase a property. My father will be gifting me the money and he has the money in his NRE account(he is NRI).IS there any tax to be paid for this?

    More specifically, my father has the NRE account in State bank group and I have an NRE account in SBI(if that makes things easier)

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Funds can be transferred from your father’s NRE account to yours. Also, funds in NRE can be remitted abroad easily. As per Indian tax laws, there is no tax on gift received from close relatives. However, you would need to check the gift tax laws of UK (assuming both you and your father are UK residents). Thanks.

    • SUDEEP says:

      Sir,
      One of my clients wants to repatriate capital gain earned in India to US.
      Kindly advise what is the cap limit for repatriation and also whether there is any difference if original investment is not made through his NRE account but directly from his regular account from US.

      • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

        NRI are allowed to remit upto Us $ 1 million per year per person out of balance in NRO account or sale of assets, provided tax has been paid and certain procedures are completed (15CB/15CA). If investments made out of NRE or inward remittance, the sale proceeds may directly be credited to NRE account. Only capital gain portion is credited into NRO. However, I would suggest to contact your CA to structuring the transaction. Thanks.

        • Vinay says:

          Jigar, you mentioned “NRI are allowed to remit upto US $ 1 million per year per person out of balance in NRO account or sale of assets, provided tax has been paid and certain procedures are completed.”

          Can ex-NRI’s (or RI’s) also remit upto US $ 1 million per year? What is their limit?

          • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

            Current limit for resident is $250,000 per year per person. The limit is under the LRS – Liberalized Remittance Scheme and may change based on RBI. It was $200,000 then reduced to $75,000 then increased to $125,000 and now is $250,000. Thanks.

  59. Sunildutt Madav says:

    Dear Jigar ,
    Once again i am looking fro your professional expertise in the below query .

    Query : one of My Client Indian Citizen and resident (50 years old) , was working for IBM in the US for over 6 years. He has got a pension fund from IBM and will be active when, he will about 60 years old. There is another pension amount too from IBM which he plan to activate later (~at age of 60).

    As any pension fund derived from Employer is Taxable , as the same will be taxable t him . Want to understand the benefit under DTAA if any , how he can plan to receive and pay the tax . Is any exemption available , dose he should file any global return ?

    Regards

    Sunildutt

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You would need to understand the pension schemes and DTAA for determining the taxation. For determining if global income is taxable, please determine your client’s residential status whether Not Ordinary Resident or Ordinary resident. Global income is taxable for Ordinary residents. Thanks.

  60. vaish says:

    Dear Jigar ji,

    My client(Indian Company) has to pay seminar fee of Rs. 24,000 to foreign company.
    Shall they deduct TDS?
    If yes, at what rate and under which section?

    Thanks in advance

    Regards

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I suggest you check the agreement or seminar details, the resident country of foreign company and the related DTAA to determine if TDS is required. Thanks.

  61. KSG says:

    Hello Sir,
    I migrated to Canada 2 yrs back .I draw my indian pension in india.I also have income from interest on FDs in india.I have PAN CARD as indian resident. i want to convert my Resident indian PAN card to NRI PANcard change my FDs account to NRO.I am filing my return as Indian resident and paying IT accordingly(which is wrong and I want to correct it). What all actions should I take while sitting in canada.Although amount earned is very small but correction is the answer.Will IT dept charge me or penalise me when I file my next IT return as NRI once I change above and also ask me about why I did not get NRI PAN card earlier etc.Please guide me on this issue. Thanks——KSG

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Please inform your bank of your change in status with proof and they will re-designate your account as NRO. Also, please change your status to NRI under PAN, start filing your income tax return as NRI and inform all (where you have any investments or income coming) of your NRI status. Thanks.

  62. dipan patel says:

    Hi,

    How does inheritance have an impact on taxation? My father passed away in 2010 and i have inherited empty land that we are going to sell. From what i read, capital gain tax will have to be paid in India. Can the proceeds be deposited to NRO and then reinvested in NRE? Also, when would the Form 3520 have to be filled in USA, would it be when the proceeds are repatriated from the NRE account?

    Thanks,
    Dipan

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Assets received as Inheritance are not taxable. However, if you sell any capital gain would be taxable in your hands. You would pay the capital gains tax in India, report selling of property in USA and include income in your tax return and claim credit for the tax paid in India in your tax return.
      2. As you are an NRI, when you sell, the buyer needs to deduct TDS and pay only the after tax amount to you. You may deposit the funds in your NRO account and after CA certificate and following certain procedures 15CB/15CA, you may transfer the funds to NRE account. Once funds in NRE account, you may remit the funds to USA whenever you want. Thanks.

      • dipan patel says:

        thanks for the valuable inputs. Does it get more complicated if my brother who is also part of the inheritance of the land is a Indian citizen? Is there a limit on tax credit on capital income in USA for tax paid in India? i read somewhere where there is a limit on tax credit on interest income

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          If your brother is a resident, TDS would apply only if the value of property (both shares) is more than 50 lakhs. The complication is for NRIs selling property and not residents. There is no limit but any tax you have paid in India would be converted into USD and may be claimed as foreign tax credit based on the formula/calculation worksheet. Thanks.

          • Rao says:

            Dear Jigar, I am Canadian citizen holding OCI and sold a property to my brother who is resident Indian on March 2015. He didn’t deduct any TDS as he did not know. Property sold less than 3 years later. There is actually a capital loss even without indexation because of registration charges, etc. Q: what are the risks for my brother? What penalties will he incurred? What are risks for me? Thx for your consideration.

          • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

            If it was at a loss, there may not be any penalty. However, technically, you would need to obtain a certificate from your income tax officer for no deduction of TDS. Just contact your CA and he will figure it out. Thanks.

  63. Dinesh Pandya says:

    Jigar – first of all thanks for providing this very valuable service.
    I recently found out that I have a joint FDR with my mother in India which is an E or S(either or survivor) with her name mentioned first, and happens to take us over the fbar threshold. I am considering filing delinquent FBARs for the last few years, but have a few questions.
    1. I seem to have some sort of signature authority but the interest income belongs to my mother – would IRS defer to local law and is it safe to assume that my reporting obligation is because of the signature authority, but I do not need to amend any past US tax returns? Would I need to amend returns even just to make it consistent with fbar disclosure?
    2. I have never had a PAN number – if I file FBAR would I need to get PAN number? Can I disclose the account without mentioning a PAN?
    Appreciate your help.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I suggest you consult your CPA before making any decision and act on his/her adivce. PAN is not required for FBAR. Financial accounts are reported based on the identifying number (account number or account ID) in FBAR. Thanks.

  64. V MC says:

    Dear Sri,

    I am an NRI, living in UK, and my parents would like to gift some some of their retirement benefits to me.
    What is the best method to receive this gift.
    Do we need to pay any tax to HMRC, kindly advice.

    Thanks for your Yeoman service
    MC V

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Assuming your parents are Indian residents, they are allowed to remit funds from their account to your UK account by making a declaration that they are giving gift to their NRI son/daughter. The limit was $125,000 of equivalent (GBP 75,000) per person per year, which is now revised (on Feb 3) to $250,000 (GBP 150,00) per person per year. I think in the UK, the gift is on the giver and not receiver so you would not have to pay any tax. However, I would suggest you to contact your UK tax lawyer. Thanks.

  65. J C Kapoor says:

    This is a professional service you are rendering and I find it really informative, good work Jigar !
    Well, I have a small query. My son took an edu-loan from Credila for his MBA from Michigan and I was the co-applicant. The first disbursement was done thru my account in India, and interest payments were made by me from the same account until this January. From February onward, regular EMI will begin, and Credila wants these to be paid from the same account. My son want to send this amount from his bank in US to my account for this purpose. Will this remmitence will be deemed as my income and hence taxable. Can he claim tax benefit on these payments here in US?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      I would suggest you to convince Credila to accept the repayment from your son’s account in USA. This will make your life a lot easier and save you conversion cost – twice.
      To answer your question, any gift from son is not taxable in India. However, you would need to do paperwork every time you transfer funds out of India. I strongly strongly suggest to contact Credila and explain. Also, you are a co-applicant and what if the bank account is closed or changed. They have to adjust. Thanks.

  66. Manjeet Kathuria says:

    Hello Sir,
    I came across your blog while searching for some query.
    I read your responses and am convinced that you could help me.
    I am planning to work as a Freelancer as a programmer from India to serve the US clients. I shall be thankful to you if you please let me know , will I have to pay tax to govt as income tax apart from the RBI which is held by them as conversion rate
    Thanks in advance.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      RBI does not charge any tax or held any money as conversion rate. It is the bank that receives $ and converts in INR to your bank. The only tax you will pay is the income tax while filing your tax return for the year on the income you show after expenses, if any. Thanks.

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