NARESH J. PATEL & CO.
Chartered Accountants
Address:
804, Mauryansh Elanza, B/S. Parekhs Hospital,
Shyamal Cross Roads, Satellite, Ahmedabad-380015.
Phone:
+91 79 2675 2544/45 (India)
+1 (773) 455-7323 (USA)
E-mail: info@nareshco.com
Website: www.nareshco.com
NRI related questions/queries: nri@nareshco.com
Direct Contact Information:
Jigar: +91 90999 42563; jigar@nareshco.com
Chintan: +91 90999 21163; chintan@nareshco.com
Reecha: +91 90999 42564; reecha@nareshco.com
964 Comments
Hi, I want to transfer from my NRO account to NRE account. The amounts are long capital gains thru sale of shares. Please can you let me know what documentation is required for forms 15CA & 15CB and what your charges would be. Does this require a visit to your office or can this be done thru email / courier. I am based in UK and have my NRO/NRE account with ICICI Bank, Indore.
Thanks
Sandip Barman
Dear Mr. Barman,
Thanks for visiting our blog and leaving a comment.
1. Required Documents could be bank statements – Indian/UK, income tax returns, money transfer receipts, gift letter, stock statement, copy of will, etc. and will depend on your case.
2. The fees will depend on no. of certificates, no. of documents to review, expected hours for verifying source of funds and/or nature of gain, whether we are providing other services or helping out with 15CA, etc.
3. It does not require personal visit to our office and can be done through email/courier.
Please email/call to discuss specific details. Thanks!!!
CA certificate/ Form 15 CB:
When the banks have all details for funds which were directly transferred into NRO account from abroad and if we can provide money transfer receipts as proof, what is the need of a CA certificate. Banks do cut tax at source so they have all the evidence.
Can you provide a CA certificate at nominal cost. I can send you electronically details of remittances and tax statement.Please let me know your charges and what you need for providing such CA certificate / Form 15CB
Thanks & regards,
– Arvind
Dear Sir,
i am a Chartered Accountant in Delhi,
actually im rendering Consultancy services in UK and shall received at RS.100000 and i dont want to receive this amount in India. i want to open a new account in UK and transfered this amount directly from client to UK account without coming in india.
my question is –
Is this freely permissible under FEMA and RBI, and if yes then which section or notification or circulars provide and what is the procedure.
please reply as soon as earlier.
im waiting for your reply.
its urgent
Thank you
Whether you want the funds in India or UK, it would be taxable as world income is taxable for residents. FEMA allows residents to own foreign currency, foreign security or immovable property situated outside India under section 6(4). Whether bank account is allowed? That is a question and in the literal meaning, it is not. I hope this helps. Thanks.
Dear Mr. Patel,
If I want a dollar draft to be issued out of my NRO account for my son’s University fees in Canada, will I be needing 15CA, 15CB or any other forms/documents? Kindly let me know.
Regards
NO 15CB/CA required for educational expenses and fees. Thanks.
sir i want to talk to u can i talk to u … ?
plz tell me……..
Thanku sir
Thankyou very much Jigar to resolve my queries & help me complete Form 15cb. God bless you!!
Hi Jigar,
I have come back from USA to India, but i still have money in my USA Bank accounts.
I have already paid tax on this money.
Can you tell me how i can get this money from USA to India, without incurring any Tax enquiry from the Government?
Do i have to pay tax on this amount in India as well?
what is the best way to transfer my USA dollars to my Indian Bank account?
Thanks
Just Wire the money… Income earned outside India is not taxable for NRIs and there is no tax on just transferring or remitting the money to India.
Sir
I want to transfer my money, tax paid, in Canada to a friend in Canada as loan. She wants to return the money from her relative’s account in India to my NRO account. I am an NRI and my friend is a Canadian PR holder. We recently moved back to India. Is this allowed? Will I have to pay tax again in India?
Thanks
This is considered a “hawala” transaction. Also, money received from your friend’s relative to you may also be taxed in your income as a gift received from non-relative and you would have to pay tax on the same. I strongly suggest not doing it. Instead, please transfer funds from your Canadian bank account to your NRO account in India. Also, if you have moved to India, you are not allowed to have NRO account but need to convert it to the resident account. Thanks.
Hello Sir
I have funds in Fixed deposits in my NRO account , Money was transferred from my US account to friend’s NRE account first. Then it was transferred to my newly opened NRO account. I can provide the proof of transfers from US acct
Now, I would like to transfer these FD’s maturity proceeds to my NRE account. For making this transfer possible can you please advise what I should do? Would it require 15CA/CB? Would really appreciate your inputs on this — Thanks
I would assume that TDS would have been deducted on your NRO FD. Please contact the bank and explain your situation. As 15CB/CA required for taxable transfers only, you may be able to transfer funds from your NRO to NRE.
Hi Mr. Patel,
I am currently working in USA on H1B. I had transferred some funds from my local US Bank account to my Dad’s Bank Of India account in India somewhere in mid of 2011. I do also have NRE and NRO account with ICICI bank. Recently I am in need of those funds so wanted to transfer the funds back. My dad has deposited all the required funds (that I initially transferred) into my ICICI NRO account from his own ICICI bank account and NOT from Bank Of India account to which I initially made transfer to. So is this a problem? Meaning is it that my dad has to transfer funds from the same Bank Of India account to my NRO account for me to transfer it further to NRE account or it can be any back from my dad’s side? Please advice.
I have submitted all the required documentation like 15CA form, Chartered Accountant signed 15CB form, Request Letter and all supporting transaction documents but I am still having problems transferring money from NRO to NRE.
Please let me know if you are open for any appointments just in case to discuss this case in more details.
Thanks in advance for all your help !!!
S Shah.
1. The bank where you transferred funds from abroad and the bank from where you remit funds does not matter. However, the bank used to remit funds need to be same.
2. Once you have 15CB, submitted 15CA, I am not sure why you are having problem.
Do let me know if you are still stuck. Thanks.
Dear Mr.Patel
I want to transfer my NRO amount to USA bank account. What is procedure? I took the US citizenship and presently staying in India. I don’t want to keep the NRO amount and I want that into dollor amount. Give me your advise. Thanks.
The procedure is the same as I mentioned in my 3 blogs for transfer of funds from NRO to NRE. Instead, you would transfer the funds to USA. Thanks.
Dear Mr PATEL,
I am a UK citizen and am looking to invest £30k over a long period. Deposits in UK currently do not have a great yield and I do not mind what currency it is in and am looking for a investment period in excess of 10 years.
I currently bank with SBI as an NRI customer and have a few NRE deposits.
What is currently my best option
Please advise accordingly
Your help and opinion shall be appreciated.
What is currently my best option
Thanks
R PATEL
Also I would like to add that currently I am confused between NRE Deposits or FCNR accounts, as in which option to go for.
Thanks
Ritesh
The only difference is whether you are comfortable in taking currency risk or not. NRE FDs are in Indian rupees, so in future, it could fluctuate from Rs. 50/ GBP to Rs. 250/GBP. No one knows. If you are okay with that, you can get higher return by investing in NRE deposits. If you do not want to take that risk, you are better off by investing in FCNR deposits in pounds (GBP). It pays higher return that you would get on deposits in UK.
thank you for your help. Very much appreciated
If you want security or safety of your nominal principal amount, Bank FD would be great. If you are ready to take currency risk (investing in Indian Rupees), invest in NRE FD. If you do not want the currency risk (1GBP could be 200 Rupees in 10 years), you are better of investing in FCNR deposits. As your investment horizon is long term of 10+ years, I would strongly advise you to invest a part of your funds in Equity markets in India through equity based mutual funds. Long term return on all NRE FD, FCNR FD and Equity mutual funds are taxfree in India.
Cosidering your advice of equity based mutual funds.
Sorry but I do not have any knowledge of that i.e risks involved and whether it can be done through a bank or broker?
Can you please guide me in the right direction for more information relating to mutual funds.
Thanks
Equity based mutual funds are great investment vehicle if you are okay with temporary fluctuations of market price and you are a long term investor. Please contact us via email or phone call for the same. Thanks.
My son in Washiington wishes to use the leveraged NRI Deposits route. We would like to know which banks in India are presently iinvolved in doing this business. Also which branches in Mumbai. Most grateful for an early reply.
Sharad Bailur
As mentioned in the blog, the Leverage NRI deposit route was open for a specific limited period only until Nov. 30, 2013. The RBI has not extended but closed the swap window. As a result, you may not invest in Leveraged FCNR Deposits. Thanks.
Dear Mr Patel,
What is the normal time frame for obtaining the 15CA and 15CB forms for remittances below Rs 50,00,000. Normally how long should a CA take to complete them, and how long would the bank take to process the documents.(actual remittance may be a matter of 2/3 days). Does it go to the RBI as well.
Regards
Ranajit
The time frame depends on availability of documents for CA to trail the funds, verify the source and whether taxes have been paid. Once CA is satisfied, 15CB, 15CA and transfer can be completed in 1-2 days.
The 15CB certificate is issued by the Chartered Accountant to you and submitted to bank. 15CA is submitted online to the Income Tax department and an acknowledgement of submission is signed by you and given to bank. Bank act as an Authorized Dealer of RBI and processes the remittance. Thanks.
Dear Sirs
I would like to employ your services to assist me with the closure of an HSBC NRO Savings account which was opened for me to receive funds following the death of my father some 18 months ago. the estate is now closed and the rupee funds are lying in this account. According to HSBC I require FORM 15CA & 15CB, Certificate by Chartered Accountant for certifying the source of funds. Would you be able to advise me and provide me with an estimate of the time this will take and also the cost to myself. I am a resident in the UK and require these funds to be transferred to my UK HSBC account.
Kind regards
We would love to help you for the same. Please email us your requirements with brief history of the sources of funds and after verification of the documents and source, we would issue the certificate. However, the cost and time would vary depending upon the complexity and time required to establish the trail of funds, determining source and whether taxes have been paid. Once verification is done, it would take 1 day to issue 15CB certificate and file 15CA to the Income Tax Department and an additional day for the transfer of funds. Thanks.
Hello
My parents are here in the USA and recently got their GCs. They file their taxes in India. They want to transfer some funds here into the USA into my account.
Need to know the best way to do this with naturally least tax implications. What are the limitations in transfers annually etc
Can they bring money into USA like for their maintenance and deposit into my account?
Can they transfer into like a education 529 plan for my kids?
Need to know if I will have any tax implications too?
They have a will setup and want to transfer/gift property/proceeds of inheritance in my name. Again what is the best way to go abt this with least tax issues for both sides.
I know there are too many questions but if need be we can skype/talk too. Let know what works best for this.
Thanks
Mahesh W
1. Your Parents can transfer (remit) upto US$ 1 million per financial year from India to USA. There is no tax on transfer provided the amount is already after tax. Any transfer from their account to yours would be considered as Gift. As the Gift tax laws of both countries differ, care should be taken.
2. A will is highly recommended and considered the best way for any transfer as inheritance in both the countries. Estate duty/tax of both countries to be reviewed. While USA has estate tax, India has comparatively no estate duty. However, as your parents have a GC, the estate tax/duty of USA would apply and a careful planning is recommended for persons with significantly higher wealth.
For detail discussion/consultation, please contact me on my email or cell phone mentioned in the “Contact Us”. Thanks.
Dear Jigarbhai
I am a chartered accountant from Kolkata and really impressed by the way you deal with various queries.
I have one query:
An NRI from Canada has sold his ancestral property. The purchaser has not deducted any tax while making any payment. The NRI has filed Income tax Return in India for AY 13-14 declaring the sale. But no tax was payable thereon as capital gain returned was loss as per Return.
The proceeds have been deposited in his NRO account. Now how the money should be transferred to Canada:
a) By way of transfer towards “family maintenance or savings” in which case no Form 15CA/CB will be required or
b) As transfer of sale proceeds of ancestral property in which case Form 15CA/CB will be required. But in this case how a CA can be sure whether there was any tax liability on the sale transaction.
We approached ITO with an application to issue certificate as regards tax liability but were refused on the ground that application from the purchaser can be entertained only u/s 195(2).
Kindly advise.
Regards,
Pankaj Khara
Thank you for your comment and nice words of appreciation.
1. If the bank can transfer the proceeds as “family maintenance or savings”, please do so.
2. TDS or payment of tax is only if there is any income. If there is no gain as a result of the sale of property, no income, no tax. How to be sure is subjective on the CA. I would review the purchase deed, sale deed, bank statements, DTAA, ITR filed as well as a declaration by the client. Also, you may try to explain the updated CBDT notification to the bank personnel and remit without 15CB/15CA, you may have to issue the 15CB/15CA. In such case, please explain the nature of transfer with reasons why taxes, if any, was deducted/paid or not in the certificate.
Thanks for your prompt reply.
Pl further advise on this:
A non resident of UAE is paid commission for procuring export orders. Services are rendered outside India. Export proceeds are received in convertible foreign exchange. Commission agent claims that he has got no business connection in India as such no tax should be deducted on payments made to him.
Kindly advise what declaration/documents should be obtained from him by the Indian company or CA who has to issue certificate in Form 15CB
Thanks and regards,
The declaration/documents required for issue of ANY certificate would be subjective and would depend on what makes you as a CA comfortable that the Certificate is correct. The documents/declaration may depend on how well you know the client, his business, transactions, whether you have done similar work, if this is single or regular transaction for client, amount, etc. Thanks.
Dear Jigarbhai,
We have transferred in total 4750 dollars to Srilanka for the booking of package for them as Travel Agent.Now the question is do we need to furnish form 15 CA CB to our bank.We are not getting satisfactory solution and guidence here.Please advice..
If you have already transferred the funds, no forms to be submitted. 15CA/CB required BEFORE transferring the funds. Also, as you are a travel agent, the remittance (transfer) would be covered under the nature of “Travel under basic travel quota (BTQ), which is included in the specified list and no 15CB/CA is required. Thanks.
Dear Sir, I have a Question. My client is earning professional income from USA. Currently he is getting the amount directly into his Bank Account in India. So all the payments so received will be liable to tax in India. However he is planning to deposit the professional receipts directly into his Bank Account in USA and then transfer the amount into his Bank Account in India. In this way he is thinking of avoiding the taxation of Professional receipts in India as his employer will pay him the professional charges into his USA Bank Account. Please suggest if it possible for him to avoid Indian Income Tax on the professional receipts received directly into his USA Bank Account.
You need to determine if your client is a resident or a non resident. If resident, his global income would be taxable whether received in India or USA. If Not Ordinary Resident, any income from business controlled from India is also taxable. Also, whether he is employee or consultant may also affect the taxability. So it is important to determine his residential status and nature of income and everything else would be clear. Thanks.
Hello Jigar Bhai,
Excellent website!
I am a US Citizen. How do I report interest income on 5 yr FCNR USD Fixed deposit account? Do we report it at maturity? Or does it need to be reported on accured interest basis? Also how is it supposed to be reported? As a 1099-INT? or 1099-OID? Do you have an article covering this topic?
Thanks and Regards,
Mridul
While Interest is paid quarterly, annually or cumulatively on maturity, it usually accrues on a daily basis. So, it would be advisable to report on annual basis – Calender year for US residents. If you have deposited the funds in Citi bank or any US based bank, they would issue the 1099-INT. However, if you have deposited in any of the nationalized or private bank in India, they would not issue the 1099-INT and you would have to report the same (after conversion in USD) as an interest income in your tax return. If your funds in India are above the threshold (50k single, 100k MFJ), you may also have to file Form 8938 to IRS. Also, do not forget to include the accounts in your annual FBAR filing with the Department of Treasury. Thanks.
Dear Jigar Patel,
I really like your blog and the way you help people answer the questions.
I moved to Australia 4 yrs back. before coming to Australia I purchased a residential land (year 2007). Now I want to sell the land. The purchaser want to pay 60% now and do the agreement and after 6 months pay the rest and sign the sell deed. I will visit India during the sell deed.
My question is if I take the 60% now…
1. Can I transfer the 60% from my NRO A/C to NRE A/C now? What is the procedure?
2. Can you provide me the service? What will be your charges?
Please advice.
Regards
Thanks for your kind words and it feels great when our initiative is appreciated.
1. The transfer procedure for NRO to NRE would be the same – CA certificate in 15CB, filing of 15CA to IT dept and application to bank. Whether you can transfer 60% now would depend on whether agreement that you are entering is the final or can be broken and whether TDS deducted and at what rate. From the brief info, I would think it may not be final. There is no sale without sale deed and my advice would be to complete the sale and transfer all at once. Please check with your bank because ultimately they will transfer the funds.
2. We do provide the service and the charge would depend on the scope of work whether you want us to contact/inform/educate the buyer of the TDS provisions, file your tax return, help with the transfer from NRO to NRE, etc. Please email if interested. Thanks!
Thanks for your reply.
I would like to know say for an example 40L(and bought in 2007 in 9L) is the sale value and then how much I have to pay for overall tax. Is it…
capital gain + TDS + income tax + other tax??
Regards
Sudipto
Dear Sir,
We are into Import business, we have a foreign service payment for quality inspection performed on the products in China, the payment comes to around INR :22000, bank asked us to 15CA since it is service payment..
our query is service payment is comes under taxable ? considering new amendment.
As your payment is less than 50,000, assuming your payment during the year would be less than 250,000, you may just submit 15CA in part A. It is very short and simple form. If question, contact your CA. For more information on the new amendments, please review the blog and comments at http://nareshco.com/blog/?p=909. Thanks.
Dear Jigar,
Let me congratulate you for nice and informative blog and secondly to the point answers. I have a querry in relation to new Form 15CB wherein we need to provide details of Capital Gains (Part C of Form 15CB).
Our clients, a Mauritian entity, buy and sell shares in India. The money in Bank account is debited for Purchases made, Credit for Sales effected. Idle fund lying is taken back and for the remittance, certificate 15CB is to be issued.
Now, the issue is how to compute Capital Gain in such scenario, since, the money taken back is out of common pool. How to work out the capital gain figure here.
Kindly throw some light on the issue.
Thanks & Regards.
Thanks for your nice words. We really appreciate it and gives us some boost.
While the money is invested out of the common pool and there are multiple buy and sell transactions, the source of the funds would be from one of only 4 categories – Dividend income, Short Term Capital Gain, Long Term Capital Gain or the Principal that was brought from Mauritius. You would need to make a detailed analysis of the common pool and determine/allocate the funds in to these 4 sources and you may also have to go back or analyze earlier years’ transactions.
Also, DTAA between India and Mauratius gives relief on taxes/TDS especially capital gain. In the new Form 15CB, instead of just stating the capital gain is not taxable, you would have to calculate the tax based on Income tax without DTAA benefit and then claim the relief under DTAA and have calculation. Unfortunately, there is no easy way.
I hope this helps. Thanks.
Dear Mr Patel,
I am a resident of UK.
About 10 years ago my family inherited property in India.
This was sold and funds were credited to Nro account. These funds were then fixed and on maturity of the Fds’ tax was deducted by the bank and remited to Income tax department.
It has come to our notice that Nro funds can now be transferred to Nre account after taxes have been paid.
My question is, Does the bank still require form cb15 even if we do not wish to remit these funds outside India and to transfer funds to our Nre account.
Thanks for your earliest reply.
Nilesh
The question would be whether you paid taxes or filed income tax return when you sold the property. The funds in FD has 2 components – principal and interest. While TDS deducted on interest, it is also important that the tax is paid on the principal amount (sale of property). It has been almost 2 years (May 7, 2012) since transfer from NRO to NRE has been allowed. In your case, 15CB/15CA may be required and the source of principal funds is sale of property which is taxable in India. Thanks.
Hi:
I had a question.
1) I opened both NRO and NRE savings and FD accounts with Citibank a while back in 2010. I wish to close the NRO account and keep the funds in NRE.
I emailed the bank and they mentioned that 15CB/15CA certificates are needed.
The tax is deducted on the NRO account and FD account. I am not sure if the 15CA/15 CB certificates are needed in my case.
2) Another question is do I have to file Indian Income Tax return? I have gone through different websites and there is so much information that its confusing. The Income Tax of India website mentions that if tax is deducted and the source of income is only savings and interest, then there is no need to file ITR. Please advise.
Thanks much,
1. I don’t think you would need 15CB/15CA. Please try to convince them that the money came from abroad to NRE and deposited in NRO FD on which TDS deducted, and no need for 15CB/15CA. Please post comment how it was resolved for general benefit.
2. If your income in India is more than the basic exemption limit i.e. Rs. 2,00,000, you need to file your tax return. Also, if TDS deducted @ 30.9% from NRO and you want the income tax department to refund the excess payment of tax, you need to file your tax return.
3. As your income is only interest, for NRI, TDS deducted @ 30.9% whereas if you file, you could get Rs. 200,000 basic exemption, Rs. 100,000 investments deduction and your income will be taxed at 10% and 20% rates until Rs. 10,00,0000. So if you don’t file, you won’t get the refund and you would be at a loss.
4. As NRE interest is taxfree, and NRO to NRE transfer is allowed, NRIs should not keep any money in NRO. I have advised my clients to even break an FD to save 30.9% TDS and no need to file tax for claiming refund. Let me know if you need help with tax return filing or NRO to NRE transfer. Thanks.
Dear Sir: I live in usa and planning to sell my flat which I owned before immigrating to us. I recently opened an nro a/c so that the proceed from real estate transaction can be deposited there. I would like to remit that amount to us. What would be steps I need? I believe I need 15ca and cb forms. ? I would be paying the capital gains in us once the amount is transferred but hopeffuly no tax at source. Regards, sunny
1. For remitting the funds to USA, you would need to pay tax, obtain CA certificate in 15CB, furnish the info in 15CA, provide documents to the bank’s satisfaction that taxes, if any, has been paid. On verification, bank would remit the funds. If you are stuck or need guidance, let us know.
2. As your flat is located in India, you would have to pay the tax in India. While as a US resident, you would also have to show your capital gain tax in India and pay tax there, you could claim the tax paid in India as a rebate that would reduce your US tax liability. Thanks.
DEAR MR NARESHBHAI PATEL
I REVIEWED SOME OF YOUR LEVERAGE FCNR ARTICLE
KINDLY WRITE IN DETAILS INVESTMENTS IN FCNR IN GENERAL AND LEVERAGE OR ANY OTHER FORM OF SAFE INVESTMENT YOU COULD SUGGEST
DR ESTEEM
Hi Jigar,
I live in Chicago and I plan to sell my flat in Mumbai. I purchased the flat about 5 years ago mostly with funds/USD transferred from US to India. After selling, I want to use the sale proceeds (after repatriation) to buy a house in USA.
* Will I have to pay taxes in India – since I will use the funds to buy a house in USA?
* What documentation will I have to produce at the bank to repatriate?
* Are there any other tax implications that I should consider?
Hello Sir,
I am NRI, USA citizen since few years and have NRO and NRE accounts since about 20 years. I have stock dividends that I deposit into NRO and at times some gift money from parents into NRO account. Interests in NRO accounts (income less than Rs. 2 lacs) are always taxed and I have never recovered them back as I never filed taxes in India. Couple of questions
a) Can I deposit the dividends from the stocks in India to NRE account instead of NRO account?
b) To transfer funds form NRO to NRE – how many years worth of documentation of source of funds is required ? Is it bank specific? If so its ICICI. Do I also need 15CB and 15CA?
c) In 2007 I bought property in India through funds in NRO and NRE account. In 2012 I sold the property and sale proceeds are deposited in capital gains account in India. I need to move those funds to USA. So I believe the steps are file taxes, pay taxes and get 15CB and 15CA? How long does it take, any idea? Is bank specific ? If so its Bank of Baroda.
I may have to reach out to you to get your services on some of the above. What is the best way to contact you and understand your fee structure.
Thanks
1. Funds in NRO can be transferred to NRE account or remitted abroad (USA) provided income tax, if any, has been paid. If the transfer is taxable, e.g. sale of property, 15CB/15CA may be required.
2. RBI has authorized banks to approve such transfer. As banks are responsible for the transfer, they may ask for additional information depending on their internal procedural requirements, with may differ among banks.
3. The number of years of document requirement would depend on your CA who would complete the 15CB/15CA requirement and bank who will process the transfer.
4. Once all the documents are in place, the transfer can be completed in 1-2 days.
5. Our fees would depend on the work we perform and the agreed upon scope of work. Please contact at the email and/or phone number in the Contact Us page. Thanks.
Hi Jigar Sir,
First of all thanks for the great information. I will keep it quick as I know you must be busy :
– I opened a NRO account in August 2011 with approx. $215,000 @ the rate of USD/INR 46. Since then the dollar has appreciated to Rs.60. The funds are with SBI bank and I had signed the DTAA agreement with the bank and I have paid taxes (believe only 15%) in India.
– Recently in Feb 2014 I converted my account from NRO to NRE by filing the 15 CA/CB form.
Question I have :
– I have lost on the currency depreciation although I have earned 9% interest on my FD deposit. So technically I haven’t made gains here, I am also flat or negative. Do I still need to declare my accounts in my IT returns.
– I haven’t declared these accounts before. Should I declare them or close them before June 30th deadline
– I paid 15% tax in India for the year 2011,2012, 2013. Am I fine to say that I made a mistake and pay 15% more in US (assuming my tax bracket is 30%).
– Can I transfer the funds in my NRO account to my dad’s account and make myself as a beneficiary in order to avoid paying taxes in US as they won’t track my dad’s account.
Sir, it will be helpful if you could advise quickly as the June 30th deadline is approaching.
Regards,
Gaurav
1. Declaration and taxation has no relevance. You need to declare. If taxable, pay tax; if not taxable, do not pay tax.
2. You just can’t declare going forward but would have to declare retrospectively by participating in the OVDI scheme.
3. If you make a mistake, you correct by paying what you owe and also interest and penalty.
4. While you may give gift to your dad as per Indian Gift tax but as a US resident, you would have to declare if you gift more than annual gift limit (about US$ 14,000).
5. If you have a signed authority over account, you still need to disclose.
6. Please call to discuss. Thanks.
Hi
I have a question , I want to do a wire transfer to USA from India. amount is $2460.
Its a yearly support/maintenance fee against a software that we have purchased in the past ( the S/W is not installed in India). Last time (3 years ago) the bank did not asked for 15CB/15CA but this time I am asked to submit 15CB/15CA.
do I need to fill these forms ? I ask this because lot of information in those forms are not relevant, looks like they want me to pay tax for this payment. whereas this I can only do after my company calculates the income tax.
please help
Thanks
Partha
If the transfer is taxable and the nature of payment is not included in the specified list (exempt), Form 15CA would be required. If the payment exceeds 50,000 at one time or 250,000 in a year, Form 15CB would also be required. If you were to pay this amount in 4 installments, 15CB may not be required and you may be able to remit the funds by just filing Form 15CA part A. Anyway, please contact your CA who would help you with the forms and help you remit the funds. Thanks.
Hi,
We are immigrating to USA and would like to transfer all our wealth to USA once for all. The wealth accumulated is from sale of shares, MFs, land and housing property.
What do we need to do?
Thanx,
Narendra
You will be able to transfer the funds. As a resident, migrating to other country, you can take $100k per person with you. Once NRI, you can remit upto $1 million per per per person. Contact your bank and your CA. Thanks.
Dear Jigar,
Trust things are upbeat with you! I’m an NRI settled in United States, seeking your able guidance in the following matter-
” I’m planning to buy shares of an *unlisted company from a resident Indian seller (an individual person, not a corporation). The payment to the seller will be made exclusively from my NRE Account. After the payment is made, how can the seller credit the shares in my NRE Demat account? ”
*The unlisted company belongs to the Insurance Sector and will likely launch an IPO in 2015.
I’ll wait for your earnest reply. Thank you very much for your time.
Regards,
Chirayu
1. NRI is allowed to buy equity shares of an Indian Company under PIS (Portfolio Investment Scheme), FDI (Foreign Direct Investment) or Other. Also, investment can be made on repatriation or non-repatriation (when you sell, amount credited in NRO) basis.
2. Under Portfolio Investment Scheme (PIS) of RBI, NRI is allowed to buy shares of an Indian company through a registered broker in a recognized stock exchange i.e. shares of public company both on repatriation and non-repatriation basis.
3. For investment in private company, investment can be made as FDI or on non-repatriable basis. So while you can purchase shares of a private company and pay out of NRE, it may not be on a repatriable basis. You would need to contact with the company whether they have a Demat facility of not and then your broker/demat participant (DP).
4. Acquisition or transfer of shares under private placement can be made through FDI out of NRE, however, additional rules and requirements (pricing, CA certificate, etc.) needs to be followed or complied. For reflecting funds in NRE Demat, contact the company, registrar agent and/or your broker/DP. Thanks.
Hello Jigar
I am kamaljeet singh , residing in new delhi, India. I want to register a company in canada as a non canadian residence. I have checked with canada revnue agency and CIC , they said yes it is possible. Can you help in that.
Hi Jigar,
Firstly, Kudos for the great information on this site!
My wife is now an NRI working in US. She has some balance in her resident indian account, which she has not converted to NRO. She is looking to repatriate this amount to US. The amount is around USD 50,000.
The money was earned through her salary and Fixed deposit interest. So all taxes have already been paid.
What would be the process for repatriation? Do we need to get a CA to fill form 15CB / 15CA? Does the resident account need to be first converted to NRO?
Thanks a lot.
If you can convince the bank to transfer without 15CB/15Ca, great. If not, ask her CA who prepared the taxes to issue 15CB, file 15CA and give documents as required to bank for the transfer. As per FEMA, she should inform bank of her change in status and bank would re-designate the account as NRO. Thanks.
Dear Jigar,
Need your view and clarity on taxation of NRE deposit interest in india.
I am an engineer relocated from USA to india in July 2012 after 13 years of stay in USA.
I have opened certain NRE FDs in May 2012 with 1 year term, which my bank(SBI) let to run to the maturity and paid me interest on May 2013 without any TDS.
So Does this interest attracts any tax in india for FY 2013-14?
If it is taxable:
– Is it full ammount attracts tax? or only portion accrued after i moved to india ( July 2012 -May 2013)?
NOTE: my residency status will be RNOR for FY2013-14 ( in case if this has any relation)
Thank you in advance for the help,
Vijai.
If you are allowed to maintain NRE account as per FEMA, interest on NRE deposits will be exempt from tax in India. No tax is to be paid. However, in your case, when you become resident as per FEMA, you are to inform bank of your change in status and you can not keep NRE account. The amount in NRE account can be transferred to resident account or the Resident Foreign Currency (RFC) account at your discretion. Interest on resident account would be taxable, whereas RFC account would not be taxable for not ordinary resident (RNOR). Thanks.
I am a US citizen and starting a business in US. I want to borrow about $25000/- from my sister and parents in India. They have the equivalent Rupees with them and have already paid taxes on them. I don’t have any NRE/NRO account how can they remit the money to my account in US.
Yes, they can. 15CB/15Ca would not be required as “Loans extended to non-residents” as well as “Remittance towards personal gift and donation” are included in the specified list. Thanks.
Plz advise as to what should a CA report in point no. B8 of revised form No. 15CB, i.e. section under which income is chargeable to tax (without considering DTAA). Suppose remittance is for royalty as per Article XII of DTAA Australia. How should I report in point no. 8B? And what if TRC of recipient is not obtained by the remitter?
If TRC is not obtained, DTAA benefit may not be applied and TDS at the rate prescribed in the Income Tax act needs to be deducted. The section under which income is chargeable would be the section of the income tax act related to that payment. Thanks.
Dear Sir,
I seek your valuable advice on the following matter.
I am an Indian by birth but have become an Australian citizen very recently. I am now selling a flat that was purchased in my name 25 years ago in India. I hold an NRE and an NRO account in India. I have never filed any Income Tax in India as I never had any income there. However I pay my taxes in Australia on my income.
When I sell my flat the proceeds of sale will be placed in the NRO account and I would like to immediately transfer the money to Australia as I am in the process of purchasing a house in Australia.
1. Will I have to pay any tax on this – if so does the bank deduct the amount or do I have to get a CA to calculate the tax payable and pay it to the IT dept?
2. How can I transfer the money to Australia?
3. What is the approximate time frame taken for such transactions to be cleared.
Much obliged
Shirley
1. Whether you would have to pay tax or not would depend on the purchase cost, indexed cost and the selling price. As the payment is made to you, a NRI, the buyer would have to deduct the tax at source (TDS) @ 20.6% of the gain. The 1% TDS is for only residents and does not apply to you.
2. Once tax is paid, a CA would certify in the form 15CB, you/your CA would intimate to the income tax department in form 15CA, both forms are submitted to bank with other procedures/requirements and money can be transferred to Australia by the bank. If you do not have a CA, let us know.
3. The time frame depend on whether buyer deduct TDS, time taken for transaction to be complete, how long it takes for CA to issue/comply with 15CB/15CA and bank to satisfy with the transaction. Thanks.
Hello Sir,
I have recently become an NRI and hold an NRO account. If the NRO account has INR 3,00,000, the interest yielded in FD for a year after TDS is INR 18,900. This income (interest) is lesser than the taxable income of INR 2,00,000. So, can I file a tax return? Should I submit any forms? Will there be a reduced tax or any refunds at all?
Appreciate your help.
Only if your income is more than basic exemption limit i.e. Rs. 200,000 in 2013-14 or Rs. 250,000 from 2014-15, you are required to file your tax return. In your case if your income is less than 200,000, there is no requirement – for residents or for NRIs to file the tax return. However, if you want the income tax department to refund the taxes (TDS deducted by bank), you need to file the tax return within 2 years. Thanks.
Dear Sir/Madam,
I hope you can help me out on a query. I am an NRI living in the EU with NRO and NRE accounts in India. Since 2011 my uncle in India pays in an allowance to my NRO account monthly (INR 300000,-) and this I send to Europe every two to three months with help of CA. My question: Since the easing of laws in 2013, do I still need a CA to transfer money from NRO to NRE or from NRO to EU since purpose is remittance by non-residents towards family maintenance and savings (for my sister and myself).
Would be so thankful for an answer.
Thank You.
Gift from close relative is not taxable for you or your sister. Your uncle may be able to transfer the funds to your directly in EU. Contact the bank. While you may be able to transfer the funds from NRO to NRE without 15CB/15CA as it is a gift, which is not taxable, it could be difficult to convince your bank to do so. Thanks.
Hi Jigar,
I am a chartered accountant. One of my NRI client wants to sell his Residential House in India which was bought in 2006. He was referring to making an application with the ITO for assessing the Capital Gains before the sale transaction.
Is it required.
As per me the CA needs to issue for 15CB & the client needs to file form 15CA online.
He needs to forward both these forms to the bank for making remittance.
Also we wants to claim exemption of capital gains by investing in specified bonds.
Can you please clarify the procedure from the time of sale till remittance of funds.
1. 15CB/15CA comes only after TDS.
2. ITO certificate is required to determine TDS amount or the rate of TDS.
3. ITO certificate is required only if you or the buyer can not determine the actual tax amount.
4. The procedure would be to first calculate the tax amount, buyer to deduct the TDS of tax amount, CA to issue certificate and bank would remit the payment. Ofcourse, it may not be as easy as it looks when you are actually doing it. Good luck!
Jigar,
Thank you for the excellent information on this site.
What are the guidelines for SFOP filing in the US. I had invested in some mutual funds (total <25k USD) a few years back and liquidated then last year. Do I need to amend my taxes for previous years. I heard that there was no need if amount is less than $100k for MFJ. Is this correct? The proceeds remain in India. Additionally, I had a Citi NRE for which I reported 1099-INT in my taxes.
Thanks.
There are four separate requirements as follows. Please do not mix them:
1. FBAR – if you have more than $10,000 in any foreign financial accounts
2. Form 8938 – if you have more than $100,000 in foreign financial assets if filing MFJ
3. Form 8621 – if you have mutual funds and you opt to be taxed on unrealized basis.
4. interest income in 1099-INT – include in your income
Please understand these requirements, consult your CPA and let me know if you have any question. Thanks.
Thanks Jigar for both responses. Very helpful. I will go through all the requirements and get with you directly by email if I need your assistance.
Jigar,
I found on your FATCA blog post that the limit is $100k in assets in calendar year (for MFJ). Does this limit include property as well? My wife inherited some property from her parents (who are now deceased). Would we need to file SFOP to amend past 3 years’ tax returns in the US? Also, would we report the asset value at what we think the market price is or the indexed govt price that potentially we can obtain from some authority in India?
Thanks.
Real Estate is not to be included in the Form 8938 or FBAR. Thanks.
Can you please advise what happens to Saving Bank Fixed Deposits when one’s resident status changes from Resident Indian to NRI ?
Should all these Resident SB FD’s be liquidated and also reopened again as NRO FDs?
Appreciate your advise.
Regards, Rama
All residents accounts are “Re-Designated” as NRO. There is no conversion or transfer but just re-designation of accounts from resident to NRO for reporting and monitoring purpose of RBI. The account number continues to be the same as well as you may use your old resident chequebooks to withdraw funds from the NRO account. The resident accounts and FD will continue and won’t be liquidated. Thanks.
Hi,
I am in Brokerage business.I am in air ticketing brokerage business.I buy air ticket from agent and sell that ticket to my client.i am taking my commission per ticket.
I want to know do i need to pay service tax of my income?
you can contact me on my email id.i am interested in taking service from your company.
Hi mr patel
What percentage of taxes we pay in USA AFTER SELLING OUR LOT AND FLAT in India ,please clarify this,is it what ever the bracket we are in or how does it go
Thanks for your great input
The % of tax would depend on whether the gain is long term or short term and your tax slab. I suggest you contact your CPA in USA for the same. Thanks.
Hi Mr Jigar Patel
I am an NRI USA and want to sell my lot and Flat in India, we have to pay TDS in India ,but do we have to pay taxes in USA also
As a US resident, you would need to show the sale of property and pay tax. However, you can claim the tax paid in India as a foreign tax credit in your 1040.
Hi Mr patel
Thanks a million ,if I am in 30% bracket in USA ,AFTER I sell my flat and lot,which is long term capital gain,do I get the tax deductions as foreign tax credit on my 1040 on TDS I PAID in India and pay the difference ? How does it go please clarify ,I will check with my accountant in US A also.
I am from Bangalore India,you can help me with this issue right or do we need to find an accountant inBangalore
Hi Jigar,
I’m in USA with my wife and kid. We never reported any India bank account details until now (September 2014), without realizing the implications. We have two accounts one for me and the other for my wife.
In My account I don’t have more than 10K. In my wife’s account we have many transactions in 2013 that are more than 10K.
We don’t want to hide anything, but we came to know about this rule only now. Thinking that will help, we closed my wife’s bank account 3 months back.
What are our options now ?
1) Don’t do anything now and see what happens. Really don’t want to do this, but I’m asking anyway.
2) Consult an Auditor in USA and go through all information and see how we can approach IRS now.
3) Can you help with this ?
Thanks for doing this as your site is full of explanations which will help a lot of people like me.
Suresh.
Please consult your CPA. You may want to check the voluntary disclosure initiatives – streamlined or OVDI. You may not do anything if you closed your account before June 30, 2014. However, please do based on the guidance of your CPA. Thanks.
here’s a challenging scenario…appreciate your insights…
SETTING THE STAGE
– My parents live in India and are retired. They live off the income generated from their Fixed Deposits
– I live in the US and heavily invest in stocks
– My annual return far exceeds the FD rate my parents make in India so I want them to send me the $ as a “gift” so I can open a separate stock account and trade their money
– I then want to send them the annual returns so they can use that money for living expenses
QUESTIONS
– How can my parents send me money to the US? Is there an annual cap? They currently bank with SBI
– How can I receive this sum? Is there a cap for me?
– Will either of us be taxed on the principal amount? Will we lose any more money moving money around besides the FX rate diff?
– Is there a simpler way for my parents to open a stock trading account in US and transfer money to that account?
now that you know the background on this topic, are they any ideas or insights you can offer based on your expertise in this field?
Thank you in advance
1. You understand that investment in equity comes with risk. If your parents are retired, they would like to have a secured return to live off. However, whether to invest in equity or FD, I leave the fine judgement on you.
2. Your parents can give gift of $125,000 each to you i.e. total of $250,000 per year.
3. There is no cap for you. The transfer can be made easily through SBI bank by making a declaration that they want to give gift to son.
4. There is no gift tax in India. Also, the gift tax is on donor in USA. Foreign gift is not taxable in USA however, gift from foreign persons needs to be reported to IRS in a form.
5. Gift would be easier, simpler and faster.
6. I would say FD provides the security that they want. If you want to invest in equities, invest in Indian equities as the return would be better than US. Also, as the money will be used or eventually transferred to India in INR, US investment in USD has currency risk i.e. INR could appreciate e.g. from 61/$ to 59/$ or lower, negatively affecting return. Please let me know if you need any guidance for asset allocation or investments. Thanks.
Hi Jigar:
I relocated to US in May 2013 in L1A. Filed my US tax return in Feb 2014 for 2013. I received my green card in May 2014.
Due to my ignorance I didn’t declare my Indian investment income of USD 7K from 2013 as part of my US tax return . I was not aware of FBAR as well.
Now
1. I want to amend my Tax return and declare this 2013 income and pay appropriate tax. Do you think it is a good Idea?
2. Now I want to submit FBAR as well , but as I missed the deadline by 3 months do you think I will be required to pay penalty of 27% of My largest Indian brokerage holding. This will be a disaster . Please let me know your thought.
How you can help me in this situation. I tried reaching you and call you again.
Thanks
Santanu
1. Yes. That is the right thing to do.
2. Unfortunately, there is no extension of deadline. You may qualify for the Streamlined Filing Compliance procedures of IRS where you would only pay penalty of 5%. I advise you to hire an experience tax attorney in US for the same. Thanks.
Dear Sir
This is Gopinath Srinivasan from NJ USA. I am a US Citizen and holding OCI. I have purchased a flat (FLAT #A) back in 1997-98 for our personal use (I was holding h1B visa when i purchased FLAT #A). My parents, brothers lived there(FLAT #A) from 1999 to 2004 and my parents moved to another house and my brother continued to live there(FLAT #A) till mid 2012. Whenever I visit, I used to stay during my visit (usually 3 or 4 weeks). Due to my dad’s health condition in 2012, my brother moved with my parents and locked this house. Since then, it is locked. Now I am planning to sell the FLAT #A now.
Initial purchase price was INR. 12 lakhs
Potential selling price may be INR 65 lakhs
In 2012, I have entered into another flat purchase agreement from another builder in July 2012 (FLAT #B) and for initial few payments, I have transferred money from here and later in June 2013, I have initiated Bank loan from SBI for every quarterly installment payment arrangements . The project hasn’t completed yet and most likely it will be delivered in 1st or 2nd quarter of 2015.
Now the question here is:
What are the capital gain apply in India for the sale of existing flat (FLAT #A) and new construction agreement (FLAT #B)?
Can I use the sale proceeds to cover the loan from SBI?
What are the tax implication in USA?
Please advise
Thanks
Regards
Gopinath Srinivasan
1. Your capital gain after indexation would be about 28 lakhs (65-(12*1024/331)). You may claim exemption if the gain is invested in acquiring residential property 1 year before or 2 year after sale of original property.
2. While capital gain on sell of one property can be claimed as exemption if invested in another residential property in India, you may not get the exemption for the same as the Indian property was not your principal home and you may have to pay tax in the USA.
3. If you anyhow have to pay tax in US, I would recommend you to contact your CPA in USA and seek his advice. Thanks.
Hi,
I am an NRI based in USA. I am in the process of selling my flat in India and the expected capital gain will be around Rs. 80 Lacs.
However, I also started the buying process of another flat in India in 2011 (price is Rs 90 lacs). I already made majority of my payments in and expect to get possession in 2015.
Note that both my flats are investment properties (rental).
The question: Can I full claim tax exemption on my capital gain, since my new asset will costs more than my capital gain on the old asset? Will Section 54 apply to me?
1. Yes, you can claim full tax exemption from capital gain tax in India.
2. If you are based in USA, your global income is taxable in USA i.e. capital gain on sale of flat. In USA, you may not claim the exemption on sale if both property are investment properties. So you may want to pay tax in India and claim the tax paid as foreign tax credit in your US tax return. Thanks.
Dear sir
My daughter a US citizen came to India in august 2018 and has since been living in India. She started to work and made some money and has filed IT return as per Indian laws from year to current year.
She is now planning to go back to USA but before that she wants to update her IRS filing so that she may not have any problem there. She got stuck here because of a court case regarding her matrimony which was settled in 2012.
I am looking forward for some one to help me fill in the iRS for all the years and acc to my information she may not have to pay any tax as her income was quite low here until last year.
Please advise
skbhan
HP
I would assume your daughter has been living in India since 2008. As a US citizen living outside (in India), the threshold for reporting financial assets and income is high. She can also claim the foreign income exclusion for her salary income of about $95,000. So while she would not have to pay tax in USA, she needs to declare and file her income tax return. I hope this helps. Let me know if any question. Thanks.
Hi,
My brother lives in USA. He is a NRI. Can u pl clarify whether he can invest in the stock market in India. If yes, pl let me know the broad steps.
I am in Hyderabad and manages his financial accounts in India.
Thanks
Venkatesh
Yes, he can invest in stock market as per the PIS (Portfolio Investment Scheme) of RBI. There may be some brokers, who may not open his account due to FATCA but some are ready to open. Please check with your broker. He may be willing to open a US resident’s account. Please also check with the bank as NRI can only invest under PIS and reporting/monitoring by RBI required. Thanks.
Hi Naresh
Thanks for your blog and patience answering all our questions.
I bought a flat in Bangalore in 2005 for 40L before migrating to USA in 2007. The flat was rented out from 2010 until now. I have NRI loan for 30L towards the same flat. I have been paying the loan using my US earnings.
Now I am planning to sell the flat for 90L and the sale amount will deposited into my NRO account. I would like repatriate the balance amount (after paying the bank) from NRO to US bank account. I would like to use the amount to buy a property in USA.
Here are my questions:
1. Is 60L taxable?
2. Since I paid the EMI via US earnings, can I show this payments and reduce the taxable income?
2. What would be tax since US has DTAA with India? 15% or 30%
3. Since I am located in US, would you be able to provide service?
Thanks
Murali
1. Without indexation your gain would be 50L (90-40) and not 60L. As you bought the flat in 2005, you qualify for the indexation. In your case the indexed cost of your flat and then capital gain needs to be calculated. You would pay tax on capital gain after indexation only @ 20.6% in India.
2. No. The interest payment during the year help you reduce your income. It does not increase your cost. As per RBI regulation, all the rent should go towards your loan amount.
3. In India, the long term capital gain is taxed @ 20.6% after indexation, which will be lower than the 15% without. You would need to show this income in the US and claim the tax paid in India as foreign tax credit in your tax return.
4. Yes, we will be happy to provide the service. Please contact us via email.
Thanks!
Thanks! Even though the flat was bought in 2005 it was registered only in 2013. Does it still qualify for indexation?
Looking for your guidance.
You would need to review the language used in the agreement to determine the actual date of purchase. Please consult your CA. Thanks.
Hi Jigar,
I am an NRI based in USA and trying to sell a flat in Mumbai. I am considering to invest part of my capital gain the tax-free infrastructure bonds in India. However, I am not sure if the tax exemption will be respected in USA. So, will I still have to pay the taxes in USA even for the capital gain invested in infrastructure bonds? Will appreciate any clarifications on this.
Dear Mr Jigar Patel,
I find your site very informative and intellectually-enriching! Thank you for sharing your views and important changes.
I have been an NRI for about 15 years now. In 2006 I opened a PIS (Individual, equity investor) with ICICIDirect (3-in-1 account). Everything worked well, however, in 2012 I was transferred to the USA (was outside US until then). ICICI immediately alerted me, and enforced FACTA-based restrictions on my trading account…..allows me to use PIS (secondary market trading), but cannot invest in IPO, cannot hold mutual funds, amongst other restrictions you may know.
Frankly, there is not a lot of time for me to be trading regularly….but I do once in a while. The inability to bid for upcoming IPO issues, listing gains, no mutual fund holdings make me wonder these:
(i) Does having a PIS, trading account and Non-PIS IPO trading account serve its purpose of investing in the Indian market as an NRI RETAIL investor?
(ii) Should I opt for the “Category III FPI” as it include all others FPIs such as individuals, family offices, corporate bodies, trusts, foundations, endowments, etc. Costs US$300 per year (almost Rs 18000/yr). Is that the only way for me to invest in all equity instruments?
Your advise appreciated. Thanks in advance.
HAPPY NEW YEAR.
1. You are an NRI retain investor and the restrictions are not from RBI. The restriction is because you are a US resident being enforced by the bank and/or mutual funds. While ICICI may not allow you to invest, other banks or local brokers may allow you to invest in Indian equity market.
2. NRIs are not allowed to register as FPI. Thanks.
Dear Mr. Patel
I am a US Citizen or Indian origin residing in US. I have 3 different NRE FDs that have matured and auto-renewed the last 2 years. My question is regarding FD interest taxation in US,
1. Should I report interest at end of each year even if the FDs have not matured or at each maturity date for each of those FDs or should I only report the complete interest once I decide not to renew those FDs anymore. Accrued interest or earned interest?
Thanks for your help,
Subbu
Interest accrued on a daily basis so I would suggest you to obtain an interest certificate from your bank for the calender year and report the interest amount in your US income. Thanks.
I am selling a house which I inherited from my parents, I build the house for my parents
thirty five years ago. At the moment I am living in UK, I am selling the house for 2 crores.
My query is, whether I can remit 2 crores to UK by paying some tax to Reserve Bank of India.
Kamal Rihal
Yes, you will be able to remit the funds to UK provided you sell the house as per RBI rules, you follow TDS provisions and pay tax. Also, you would need to obtain CA certificate in Form 15CB, file 15CA and submit them to bank for transferring money. You are also required to file your income tax return for the sale of property. Please contact us know if you need help in the transaction. We have helped many NRIs having properties all over India for the same. Thanks.
Mr Patel,
I am a US citizen and my brother wants to transfer $25K to me from his FCNR account in India. State Bank of India says there are restrictions. Can you please advise if such restrictions exists/
Thanks,
Zinnia
FCNR is a deposit account. So only on maturity, your brother will be able to transfer. Also, if both of you are NRIs, transfer may be allowed. Please follow up with the bank and get more details of restrictions and RBI guideline and let us know. Thanks.
Sir,
I came to the US as a student in 06/2011, graduated in 06/2013, and have been working here since. Since in 2013, I was still on F1/OPT, I could file my 2013 returns through 1040 NR therefore didn’t have to file FBAR. Till Sept 30th 2014, I was still on F1 OPT extension. My H1B started from October 1st 2014. So for 2014, I will need to file 1040 and also file FBAR.
Till 11/2014, I had RESIDENT Indian bank accounts with HDFC and ICICI, brokerage accounts (MFs and stocks) with HDFC and ICICI Direct-combined value of around $60Ks. These were not declared as NRI because since coming to the States in 06/2011, I never visited India until 11/2014.
While visiting India, in 11/2014, I closed my resident bank accounts, sold all my stocks, almost all MFs (except ELSS worth $1500) and closed my RESIDENT brokerage accounts as well. The long term equity capital gain was about $21,000, so after indexation not much taxes in India-will file Indian taxes in 05/2015. Now I only have one ICICI NRE/NRO account with about $60Ks, a private equity fund holding of unknown value – my contribution being about $8Ks, a LIC policy in which I have contributed $3.5Ks, a bank locker with jewelry of $10Ks, PF acts of unknown value.
1) Do I need to show the long term capital gain on my 2014 IRS returns? The bank and brokerage accounts were not declared as NRI, hence the question.
2)Depending on YES or NO to Question (1), should I declare only my ICICI NRE/NRO -$60K worth (opened in Nov 2014) on the FBAR or should I declare even my Resident Bank accounts and my Resident brokerage accounts which I closed in Nov/Dec 2014 anyways?
3) If I don’t declare my Resident brokerage and Resident bank accounts in the FBAR, then I don’t have to show any long term capital gain in my FY 2014 IRS returns either because neither my resident bank acct nor my resident brokerage accts were treated as non-resident so not covered under FACTA. I could only declare my ICICI NRE/NRO in the 2014 FBAR. Am I wrong?
4) Now I have one ICICI NRE/NRO account with about $60Ks, a private equity fund holding of unknown value – my contribution being about $8Ks, ELSS MFs of $1.5Ks acquired prior to 06/2011. Will declare these on FBAR. But have a LIC policy in which I have contributed $3.5Ks, a bank locker with jewelry of $10Ks, PF account of unknown value and my ancestral house. Do I need to declare these as well on FBAR?
Best
Gaurav
The residential status is for a year and not for a period. If you were a resident, you would be a resident for the entire year i.e. calender year 2014. Also, as per RBI/FEMA laws, you are an NRI since you left i.e. from 2011-12. I would think you would need to report all your income and assets during the entire year of 2014 even if account is closed or not, held as a resident or NRI. I would suggest you to consult a CPA in USA. Thanks.
Hi Jigar
I am an NRI working in Gulf Country. My son is a NRI working in USA. Since as a NRI from Gulf countries, I am exempted from paying tax on interest income of NRE deposits in India , as well as in country of my residence, my son transfers funds from USA to my NRE account in India.
Can you please clarify our following concerns ?
1) How much money can he remit to my account in a year without attracting tax issues in USA ?
2) Is he required to furnish the amount remitted to the tax authorities in USA while filing tax returns ?
3) Please let me know if there can be any adverse implications in future, while sending his money back to him to USA.
Waiting for your valuable advice
Thanks
Mendonca
1. As a US resident, the gift tax is attracted for gift of more than $14,000 per year, which does not require any reporting. Also, make sure that he is not a co-owner or joint-owner of the account as it would be considered as his account as well.
2. Not if it is less than $14,000 per person per year (calendar). Any amount more than $14,000 needs to be reported. The taxability depend on whether it is counted as your life time gift limit or not. Please consult your CPA.
3. You need to consider the nature of transaction – gift, loan, income and then the rules/regulations related to the nature may apply.
Dear Mr.Patel,
Thank you for the posts which are very helpful for many people.
I have the following querries:
I am Indian citizen and my wife is Canadian citizen holding OCI. We both live in the Gulf for many years and all our savings are in NRE A/C. Now, we plan to returb back to India shortly. We both have NRE A/C accounts ( one account in which my name is the first holder and the second one is where my wife’s name is the first holder). We have a joint NRO Account with the same bank (SBI).
Now, my question is:
1. How long can we keep our Indian Rupees (sent from abroad) as NRE after returning to India?
2. I have ancestral property of approx. 1 crore which I want to sell and take it to Canada where I finally want to live.
3. How can I transfer my property money to Canada and what is the tax implication?
Awating your reply. God bless you.
With Best wishes
Hary Paul
1. I am not sure if you are returning to India for a short term or permanently. If Permanent, then you are to transfer funds from NRE to Resident account or RFC (Resident Foreign Currency) account. Money in RFC is fully repatriable so you would be able to transfer all the funds in RFC to Canada. If temporary, it is okay to continue the NRE account. The money in NRE is fully repatriable.
2. Yes, you are allowed to transfer the sale proceeds back to Canada, provided you have paid the tax upto $1million per year.
3. You pay tax in India on the capital gain, comply with RBI/Income tax department as to 15CB/15CA and then transfer the money. Thanks.
Dear Sir,
I have Query regarding trf of USD from Indian concern EEFC a/c to another Indian Concern EEFC a/c?
sir i have to make payment to Shipping co. for Ocean Freight in US Dollar.i ve my EEFC a/c shipping line also having EEFC a/c in india. my banker is saying i have to submit 15 CA, CB but i cant issue 15CA,CB to indian concern.So is there any way for trf this amount from one eefc to another eefc please help me.thank you
I don’t think 15CA would be required for payment out of EEFC account. I would suggest you to contact your bank and consult your CA. Thanks.
Hi Jigar,
Should NRE/NRO accounts with Citibank India (an Indian subsidiary of US financial institution) be required to be reported on Form 8938? As you know, IRS Instructions for Form 8938 state the following:
“The following financial accounts and the assets held in such accounts are not specified foreign financial assets and do not have to be reported on Form 8938
A financial account that is maintained by a U.S. payer, such as a domestic financial institution. In general, a U.S. payer also includes a domestic branch of a foreign bank or foreign insurance company and a foreign branch or foreign subsidiary of a U.S. financial institution.”
Thank you.
The account with foreign branch of US institutions is not to be reported in Form 8938. However, it is to be included in the FBAR. Thanks.
We are an Indian company based in gurgaon (Haryana). We want to open a set up in USA. Please let me know what is process & cost of the same. Also need to know the timeline of this.
Kindly reply.
The process, steps, timeline and cost would depend on the structure you select for the setup. I suggest you first determine the structure. Thanks.
Hello Sir,
I read your blog regarding FATCA and FBAR. Me and and family got green card in Oct 2010 but we actually never moved to US until Oct 2012. My mother don’t have a job till date and my father didn’t have one till 2012 end after arrival in US. So, they didn’t filed and tax returns. After that my father starting working and he filed his tax return for 2013 jointly with my mother. Recently, I came to know about FBAR and now I am so worried about it.
My mother has a NRE account opened in 2012 which around $11K for that year only and after that the amount is less than $10K from year 2013. She had other two accounts as normal account in an Indian bank. One is a joint account with my brother(student) that has $36K(savings account) and $18500 (deposit account). Both these were opened in 2012 only.
Its 2015 now, and we haven’t filed any FBAR since we had no clue about it at all. These are tax things, a normal resident coming to US will be unaware of these things. I am now worried about filing it because of penalties, since these are my mother’s account and she don’t file any taxes as an individual.
Could you please suggest me the best option to opt for ? Literally we had no idea about FBAR, if now we file an FBAR, how much will be the penalties and for how many years we have to file ?
Thanks
Vicky
Please note that ignorance of law is not an excuse. I think you may qualify for the Streamlined Voluntary Disclosure initiative by IRS wherein you would pay 5% penalty on the balance. I would suggest you to contact your CPA in USA for the same. Thanks.
I think this is a wonderful site to have plenty of responses related to remittances. I would like to have one more please.
I am working in Dubai (United Arab Emirate) and due to volatile situation in job market, i may loose my job.
I have a loan of 40 lacs in Dubai and need to be paid fully before I leave UAE (Dubai). I have enough fund in NRO account as this fund was transferred from my NRE account to NRO account.
Now, I want this fund back from my NRO account to NRE account back.
Can I do this with AXIS bank without filing 15CA and 15CB form?
After getting this fund in my NRE account, can i transfer this money from NRE account to my account in Dubai? How much time will be taken by this process?
Request you to give guidance on this issue please.
While I would think 15CB/15CA is not required in your case as your principal was originally transferred from abroad and TDS deducted on any interest income, you would need to convince the bank for the same. If not, you would need to contact a CA to issue 15CB/15CA and complete the formalities. The time would depend on the CA to issue the certificate and bank to transfer the funds. I would assume 1-2 week total for the same. Thanks.
Hi Jigar
Thank you very much for your advise to my earlier queries. I understand that NRI in USA is allowed to give gift to the tune of US $ 14000 per year to the close relatives. I want further clarification on this if US $ 14000 is total amount allowed in a year or it can be 14000 each, to each individual. In this case whether the gift can be 14000 each to father & Mother separately which amounts to 28000 per year. Please advise.
Thanks once again.
Yes. It is $14,000 per person per year. As per US laws, there is no distinction between close relatives or not i.e. you can gift to anyone, including your friends or even me. However, as per Indian laws, gift from only close relative is exempt from tax. So persons other than to whom you are a close relative, e.g. your friend or me, it would be added to the income if it is more than Rs. 50,000 per year. It is also important to note that the gift giver should be a close relative of gift receiver and not vice versa. Thanks.
Jigar,
This is very informative. I have a question:
1. If my cousin (my Father’s Brother’s son) who is an US Citizen wants to gift me (Indian Resident)
a. Is there limit how much he can gift me?
b. Will he be taxed in US? If Yes, at what % and can he be covered under DTAA so that he need not pay?
c. If b is true, how much I need to pay in India if he does not pay in US?
d. If b does not apply, since he has paid gift tax in US, under DTAA, can I avoid paying tax in India.
e. What are required from his and my side in terms of documentation?
Further, In the same scenario, if my cousin gifts to my mother who is his father’s brother’s spouse (Is it close relative), then what does he pay in US and how much should my mom pay in India? Further, can she gift this to me? 🙂 !!!
Thanks in advance..
Sorry, missed an important point, if the gift is more than $40k, then how it works in the above case(s).
1. It is allowed under US IRS laws but as he is not your relative, it would be considered as a gift from non-relative.
2. IRS limit is $14000 per person per year without filing any form. In India, there is no limit.
3. US taxes gift on donor so any gift more than limit would attract gift tax unless reported or adjusted against life time gift limit.
4. In India, gift is on receiver. As you are receiving gift from non-relative, any gift over Rs.50,000 per year would be included in your income.
5. DTAA does not apply.
Gift should be received from close relative and not paid to. While your mother may be a close-relative to your cousin, your cousin is not a close relative to your mother. So while your cousin may receive tax-free gift from your mother, he may not give tax-free gift to her. It will be included in your mother’s income if it is more than Rs. 50,000. Thanks.
Dear Mr. Patel,
I am glad to see your blog while trying to understand FATCA and FBAR requirements. Your answers are precise and crisp. From the NRI fraternity I thank you for educating us on this difficult topic.
Apologize for lengthy description and number of questions. I guess my case resembles with good number of NRIs. I am Resident American since 2009; have been filing taxes jointly with spouse in the US regularly using online tax websites (don’t have CPA). Immigration Status: Permanent Resident since Nov 2013; resigned Indian company and joined same company’s US entity in Feb 2014. Started understanding the concept of showing global income while filing taxes and hence these questions.
Here are sources of my Income in India
1) Rental Income: Have apartment in India and have been getting rental Rs 17k/month since 2009. Have a loan on this property and have been remitting money monthly to savings account to pay EMI.
2) Stocks: Hold DEMAT account with ICICI with “Resident Indian” status, have stocks with current value of upto INR 3 Lakhs. These stocks were purchased online since Aug 2011 while in the US and I am not active on these now.
3) Savings Accounts: Hold four accounts, but two are active. One with ICICI and another with HDFC. Both are Resident Indian accounts and I did not inform any these banks about change in my status. During 2014 calendar year, there were two occasions when the balances of these accounts were Rs 6.25 Lakhs and Rs 8.5 Lakhs respectively for a short period. Reason: I withdrew my Retiral benefits when I resigned my job in India and the amount was credited to these accounts. Also remitted some of my US savings when exchange rate was good and invested in buying plots in India. Banks paid Interest amount of Rs 11,690 and Rs 1,944 respectively during 2014 calendar year on these accounts.
4) MFs: have one active with HFDC Top 200 with monthly SIP of INR 2,000 paid from ICICI account monthly.
5) Life Insurance: hold various policies for self, spouse and kids. Pay total premium of Rs 40,000/annum again through ICICI Savings account.
6) PPF: Have one for self (Postal) and another for spouse (SBI) in active Resident Indian status.
Questions: FBAR and FATCA
1) I never declared my Indian Income on US tax returns or my Indian Accounts in FBAR. As I started learning FBAR and FATCA recently, I would like to come clean. What will be FBAR and FATCA compliances that I have to follow for now and past?
2) Should I declare all accounts that I am holding in India? i.e. two savings, DEMAT, PPF, MF?
3) Once I declared these accounts, should I file for FBAR every year even when none of these held more than $10,000 balance during calendar year?
4) To avoid some of the complications, I am planning to close HDFC account prior to Jun 30th of 2015 and ICICI account by Dec 2015. I would like to ask my father to open ICICI account and will start operating this online from here, remit money and pay my bills (EMI, Insurance premiums, MFs etc). Doing this I don’t have to declare these accounts in FBAR as they are still Resident Indian status. Is this ok?
2014 Tax filing (in Feb 2015):
5) Should I show my Indian income on 1040? How will IRS know that I own apt and received income in terms of PF money in absence of US Indicia? PF money is non-taxable in India
6) If I have to show, will it be Rs 17k*12 (rental income) + 13,634 (savings a/c interest)? I don’t see any other income in 2014 that I have to declare.
7) As I did not show rental income on any US returns since 2009, is it ok if I just show it going forward?
8) How will IRS know that I held the apartment since 2008 and did not declare rental income on US returns?
9) Should I inform banks holding my other accounts (Demat, PPF, MF) about change in status?
10) I have plans to sell the apartment in next two years and use these funds as down payment for my first home in the US. When this happens, should I declare capital gains/loss on the US tax filing? I paid high price when I purchased apartment and hence return is negative considering interest on loan and depreciation. Can I show capital loss?
Thank You.
Dear sir, you have a long list of questions with a lot of if and but. If interested, I suggest you contact/call us for the same. Thanks.
thank you. Will do.
did you get answer to your quesitons, can you post here !!
Hi ,
My brother living in USA .He has property in India.
He decided to sell it. Can he use normal saving account to deposit the amount come from sale of property?
Thanks
As your brother is an NRI, he is not allowed a resident saving account. He needs to inform the bank of his residential status and bank would re-designate his account to NRO. He may continue using same account number and cheque book. Thanks.
We had purchased a 1/2 acre plot named solitude which is near Lavasa around Pune area in the year 1997 for INR 2,75000. We have an offer of INR 2300000 from the same people who we purchased the plot. Initially we paid in installment from our NRE account with HSBC but we no longer bank with them.
We would like to use this fund for our son’s higher education outside India and would appreciate if you could advise how can this be done and what is the cost to us.
Your urgent reply on this one will be appreciated
As you are an NRI, the buyer needs to deduct the TDS and pay you the balance. You would need to obtain the CA certificate of the TDS deducted/tax paid, complete formalities for transfer and you would be remit the funds outside India. As the source of funds is taxable (sale of property resulting in capital gain which is taxable in India), if TDS is not deducted or tax is not paid, or CA certificate not obtained, you may not be able to transfer the funds. Thanks.
Thanks Jigar, it was nice talking to you please advise when should we start the process as the complete payment will be done by June 2015. What is TDS and what will be the cost to us also we were informed something called Indexation
Please advise and thanks for your promt reply.
TDS is 20.6% on the capital gain after indexation. The TDS is the responsibility of the buyer and he needs to deduct TDS in every payment. If he has not done in earlier payments, make sure it is properly adjusted before you enter into an agreement/receive all payments. Thanks.
Hi
I see lots of good questions and answers from you. Thanks for doing this. Hopefully, i will engage you for my needs in the short future.
I’m an NRI (US passport) who plans to work in India for a year. I will be paid in Indian rupees. I have an NRO account. I’m thinking I need an NRE account with the same bank (HSBC) so the salary can go into NRO and from there to NRE. Is that possible?
If not, repatriating from rupees to USD from NRO account will need a certificate from CA and what not. Am i right? What is the best advice.
Thanks again
Narsi
If you move to India for employment or anything that indicate permanent move, you may not be considered an NRI under FEMA and may not be able to open/maintain NRO or NRE accounts. You would open a regular resident account and when you move back to USA, you may convert the account to NRO and then transfer the funds to NRE. Also, you may not keep NRE account and the funds in NRE needs to be transferred either to RFC (Resident Foreign Currency) account or the regular resident account. This is the correct situation. However, due to ignorance or lack of experience/procedures in handling such issues or fear of losing clients, bank may allow you to keep NRO/NRE accounts. In every case when you try to transfer funds from NRO to NRE or from resident account to abroad, you would need CA certificate as nature of payment is taxable (salary). Thanks.
I am a NRI based in Gulf, and i have a ancestral land which was gifted to me , I want to sell the land , i have a buyer for the land, I want to know what would be tax i will have to pay, as i plan to keep the amount recieved in my normal savings account in india and use it to buy another property, Do i need to inform my bank , about the money which is going to paid through RTGS.
As an NRI, you are to convert your resident account into NRO account. If the land is agricultural, you can sell it to Indian resident only. Also, as an NRI, you are not allowed to buy any agricultural land in India. If it is a non-agricultural land, you may sell and buy another. However, if you want to save the capital gains tax, you would need to invest the sale proceeds in the residential property only. The tax on sale of property at 20.6% on the capital gain calculated based on indexed cost of the property. Thanks.
I am selling my property in india before march 2015 which i am having for more than 10 years. Can i save the capital gain tax by reinvesting the proceeds to buy property overseas.
NO. The Finance Act No.2 allows exemption from capital gain if the property you buy is located only in India. Thanks.
My brother and I are both NRIs living in the USA, and have inherited stocks held in paper form. We are familiar with the process of changing title to our name. However, the problem is that we do not have an Indian residence address for correspondence in our name with each of the share registrar company.
Since we have the physical shares, they will be sent in to the registrars with all supporting documents to change title to our name. The address problem is to receive the corrected shares back from the registrars.
Of course, once we receive the shares, we would deposit in a demat account and deal with the liquidation process. Is there a secure way of receiving the shares after title change?
Thanks
Mukesh
I think NRIs are allowed to invest in India under PIS and as a result the correspondence address in India would not be a requirement. I would suggest you to contact an experienced broker dealing in NRIs to find a way. Thanks.
Hi,
I am an NRI, I sold some shares that I received from an Indian company as RSU. I sold these from non-pins NRE account. The bank has sent me an email to send proof of repatriation and Cost of acquisition. I have been holding these shares for 2+ years so I don’t think there will be any TDS. As far as repatriation proof, I don’t think these were given on a repatriation basis. In this case, I assume the bank is going to deposit it in the NRO account. Can I transfer this money back to NRE account through forms 15CA and 15CB? Are these forms still needed even if the money is not chargeable to tax?
Thanks
Rohit
Yes, you can transfer the funds on sale of assets acquired under FEMA. If bank require 15CB/15CA, you would need to provide the same. Thanks.
Hi Jigar,
This blog is super-informative and answers are to the point and easily understandable. Thank you and your firm for putting in so much efforts.
I have an NRI account in India since 2011. I am a green card holder. My dad resides in India and has name in my account. I have around 20k in FD & I have not declared it on US Tax return since it was a gift to my dad. But supporting documentation was never made that it is a gift to my dad. Now the question is do I have to declare it and if yes how do I report from year 2011-2013 on FBAR?
Thank you in advance for your help.
You may check the Simplified Compliance Procedures where you start reporting and paying taxes in USA after paying previous taxes, interest and penalty. If it was not your money, you may want to remove your name or signing authority from the account by gifting the funds and closing your account. I suggest you consult with your CPA in USA and CA in India and evaluate both options before making decision. Thanks.
Hi,
Thanks a lot for your reply. Do you have any branch in US and if yes, can they help me file FBAR with voluntary disclosure for previous years?
Thanks in advance for your help.
We are based in Ahmedabad, India and do not have any branch in India. We support your compliance but we do not take any responsibility or file any forms. Please consult your CPA. Thanks.
Hi Jigar, 13/03/2015
I am an NRI based in the UK. I have some funds in rupees lying here in an NRE account at my bank. My relationship officer is advising me to fix it for 5 years in a scheme, which converts the money in to Japanese yen now and then reconverts it back to Indian rupees after 5 years. The returns are about 11% per anum. However, I am worried that in 5 years time the rupee may have depreciated against the pound to the extent that it would wipe out all the interest I may receive. Please let me have your opinion on such a transaction. Also, I would be grateful if you would point me to a web site that quotes forward rupee/ pound or dollar rates for up to 5 years.
I would be very grateful if you could spare some time for my query.
Thanks in advance
Yours sincerely,
Hari Krishna.
If you are worried about INR/GBP exchange rate, I would suggest you to keep FD in FCNR account and not in NRE. The NRE funds are denominated in INR so you would have same currency risk. As NRE accounts usually yields 9% compared to 11% in FCNR & forward cover, unless the amount is large and/or it is a very small portion of your total wealth, I would not recommend. Please review my blog on related subject. Thanks.
Jigar,
This is very informative. I have a question:
1. If my cousin (my Father’s Brother’s son) who is an US Citizen wants to gift me (Indian Resident)
a. Is there limit how much he can gift me?
b. Will he be taxed in US? If Yes, at what % and can he be covered under DTAA so that he need not pay?
c. If b is true, how much I need to pay in India if he does not pay in US?
d. If b does not apply, since he has paid gift tax in US, under DTAA, can I avoid paying tax in India.
e. What are required from his and my side in terms of documentation?
Further, In the same scenario, if my cousin gifts to my mother who is his father’s brother’s spouse (Is it close relative), then what does he pay in US and how much should my mom pay in India? Further, can she gift this to me? 🙂 !!!
Sorry, missed an important point, if the gift is more than $40k, then how it works in the above case(s).
Thanks in advance..
1. It is allowed under IRS laws but as he is not your relative, it would be considered as a gift from non-relative.
a. IRS limit is $14000 per person per year without filing any form. In India, there is no limit.
b. US taxes gift on donor so any gift more than limit would attract gift tax unless reported or adjusted against life time gift limit.
c. In India, gift is on receiver. As you are receiving gift from non-relative, any gift over Rs.50,000 per year would be included in your income.
d. DTAA does not apply.
e. A gift deed/letter to be prepared and declaration made by him to IRS and you to Income tax department
Gift should be received from close relative and not paid to. While your mother may be a close-relative to your cousin, your cousin is not a close relative to your mother. So while your cousin may receive tax-free gift from your mother, he may not give tax-free gift to her. It will be included in your mother’s income if it is more than Rs. 50,000. Thanks.
Hi!
I’m NRI currently base in singapore. I’m already filing my returns in India.
I have one property in U.S which is on rent & that rental income is in U.S only, not transferring in India. Should I disclose rental income of U.S in India while filing tax? If Yes what would be tax?
Thanks
1. As you are an NRI, only Indian income is taxable in India. You do not need to report US income in India.
2. If you are a US resident (citizen/green card holder), you would need to report your Indian and Sinpaore income to IRS of USA.
3. Being a resident of Singapore, if Singapore laws require, you may have to report your Indian and/or US income to Singapore authorities. Please consult CA/CPA in Singapore. Thanks.
hi
i recently moved Singapore and want to sell a residential plot in India and buy a flat in Singapore. do i have to pay capital gains tax or can i avail tax exemption as i would be buying a flat for own residence. what would be the the best way to remit the money as the proceeds of sale would go to my saving account.
thanks
deepika
The capital gain exemption is available only if the property is located in in India. Once tax is paid/TDS is deducted by buyer, you can transfer the funds to your NRE account or to your bank account in Singapore. Thanks.
Kindly provide me your contact no
I am in india.
Our contact information is in the “Contact Us” page. For more information visit http://www.nareshco.com or http://www.expertnri.com. Thanks.
Hi Jigar,
I am have transferred some funds from US to India in my resident account back in 2010. Later, I closed all my resident accounts and had to move the funds to my father and mother accounts and shown as a gift given to them. After few years, I have since opened NRO and NRE accounts. My father has transferred funds back in my NRO account and given me gift letters for these funds. All the funds are duly tax paid when they were in my account and my father and mother account.
Now, I would like to transfer these NRO funds back to my NRE account. When I went to file 15CA – looks like none of tax aspects are applicable to me and hence I don’t have to fill the 15CA on NSDL website. I am contacting few CAs to issue us 15CB only; which is what I plan to submit to the bank for NRO to NRE transfer (Same bank).
Questions:
1. Would 15CB alone be okay for the bank for NRO to NRE transfer.
2. Bank is asking for an undertaking in annexure 3 in lieu of 15CA/15CB but the language of annx 3 is very tricky and I am hesitant to sign such undertaking. (please see below speciman from the bank). Should I sign such undertaking and not submit 15CB. (given that 15CA is not applicable in my case)
3. Could 15CB alone be sufficient in my scenario as I don’t have application of 15CA (given no tax as source in my scenario)?
4. Bank is also asking below information with Annex 3. Is it okay to submit these?
Kindly provide following document for transfer of funds.
1.Anx 3–attached here with
2.Tansfer instructons / debit authority.
3.Documentary evidence for source of funds.
Thank you so very much for your help.
Please advise.
Thank you,
—————ANEX 3 from the bank————————————
Specimen declaration obtained from the Remitter
On the letterhead of the Remitter(Not applicable in case of individuals)
Your father could have given gift to you in USD that you would have credited in your US bank. If funds are already in NRO, you may have to obtain CA certificate and follow procedures as required by your bank.
1. 15CB alone is not enough. you would also need 15CA.
2. Anex 3 is not applicable for individual, as mentioned in the bracket
3. Please contact your CA who issued 15CB and then bank and complete the transfer. Thanks.
Hi
I used to have a joint account with my father in India resident SB account where i used to remit money to help my family..My father is the primary holder in this account.He is retired and has done Fixed deposits in his name with this Bank account which he now wants to transfer to me as he is old and is not able to do all the banking transactions .These FD all put together is more than 30 lacs as he invested all the money he got when he retired in same plus other FD which he had done all his life.
I am now not a resident in India ,so I need to understand how can he transfer this money to me legitimately and is a limit on the amount that he can transfer to me . Will this be taxable in India or considered as a gift . For it being considered as a gift do i have to maintain some documentation?
Your father can remit upto $250,000 as gift to you directly in your country of residence. There is no gift tax to you as per Indian laws as you are a close relative. You would need to check laws of your resident country about whether any foreign gift from your father is taxable. It is not taxable for US residents but needs to be declared to IRS. Thanks.
For gifting a property to my NRI son. please advise as follows-
1. Can the property be gifted without travel to India through certain documents with Indian Consulate and Legal Affidavits?
If so, what are the documents needed and do you or your affiliates offer such services, please respond with applicable fees and time duration?
2. If point 1 is not possible, what documents I need to carry to India and if both my and son’s presence is needed in India while gifting or I could handle alone myself with certain documents from Indian consulate.
3. What are the detailed stages/steps/ documents/forms in completing the gift and the concerned authorities? Is it necessary to hire some expert agent services to do it expeditiously?
4. How much time does it take normally if done through an service provider or self-served?
5. How much will be the stamp duty for registration and other expenses etc?
Thanks
You can gift the property to your son, provided it is not an agricultural land, farm house or plantation property. I would suggest to consult a civil lawyer specializing in gifting real estate transaction in your city/state as he would know local laws about registration of property, stamp duty and documentation requirements. Thanks.
In case by oversight farmhouse was gifted to son who is NRI in 2009 what are the implications. Does it make a difference that since than that zone “regularised” i.e. now considered as residential.
You may sell and luckily, it may not be noticed and you may be off the hook. Regards.
Dear Jigar,
My son is a green card holder of USA and wants to transfer USD 100,000 into my NRE account in India as I am also NRI in Middle East. My son doesn’t have any account in India.
Kindly advise if my son can do the needful without paying any tax in USA as he has already paid taxes on his earnings. Also, does he have to fill any taxation form in USA declaring the transfer.
Thanks in advance.
Your son can transfer funds directly into your NRE account in India. There is no tax on transfer. However, there is a gift tax if gift is over $100,000. If he does not want to pay gift tax, he would need to file a form and inform IRS to consider this gift as a part of his life time gift/inheritance limit. Thanks.
Dear Jigar,
Thanks for your advice. But can you kindly reconfirm that gift tax in USA is applicable over $100,000.
Best regards,
Gift tax in USA is applicable over $14,000 per person per year. Thanks.
Dear NJP Team,
I’m on a temporary employment opportunity in UK since January 2013 and have been depositing my savings converted back in to my resident bank account with ICICI. However, recently I’ve started using NRE account. Could you please advise if it’s useful to repatriate previously converted rupees in resident account to NRE account, and whether you can provide any assistance as necessary such as issuing a CA certificate and what details that I need to furnish from my side.
As your residential status is NRI, I would suggest you change your status with all banks and other financial accounts from resident to NRI e.g. resident bank account will be re-designated as NRO. You ma also ask your employer to transfer funds into your NRE account and not resident account. Yes, you may be able to transfer from NRO to NRE; please contact your CA; it would be faster, simpler and cheaper. Thanks.
Dear Mr. Patel,
I commend you on hosting a most informative site … I have question on US cap gains of inheritance in India.
I am NRI US citizen. My relative in India recently got Succession Certificate to take possession of shares in Indian company left behind by our ancestor who died in 1980 (I am named as heir in the petition for Succession Certificate).
My relative received the shares, sold my portion, and transferred cash to my NRO account in India – I have now transferred funds to my US bank.
Neither inheritance nor long term capital gains tax was levied in India.
Will I be required to pay US capital gains tax?
I think that since I never really possessed shares and did not sell them myself, I should not be liable for US cap gains tax. I think it is the estate of my deceased ancestor that held and sold the shares – and the actions of the estate should be exempt of any US tax liabilities. Will the IRS agree with this view ?
Your comments will be much appreciated,
Niraj
As you inherited shares, any gain from inheritance to sale would be income and you would have to pay tax on the same in USA. Please note that there is no estate duty in India. I would suggest you to contact your CPA. Thanks.
Hi
My aunt is a US resident. She sold a Long term capital asset in India and wants to invest the money in a residential property in India. Hence she will not be paying any tax on gains in this assessment year. I want to know whether she will have to submit any proof to the IRS in USA so that tax will not be deducted in USA.
Thanks
The exemption is under Income Tax Act of India. It may not be available under IRS laws. I would suggest to pay tax in India and claim foreign tax credit in her US tax return and then invest the balance amount. Please contact us if you need help with tax filing or investments in India. Thanks.
Hello Sir,
My dad sold one of our ancestoral property, and completed form 15CB/CA using a CA. The money is in my dad’s savings account. I only have an NRE account in INDIA, not an NRO account. Is it possible for my dad to move the money from his account into my NRE account, by providing those documents.
Thanks
As your father completed 15CB/15CA procedures, I would assume he is an NRI. In that case, after 15CB/15CA procedures, the sale proceeds after tax can be transferred from his NRO account to NRE account. Once money is in his NRE account, he may transfer funds to your NRE account. Thanks.
No Sir. My dad is not an NRI, so he does not have NRO/NRE accounts.
In this situation, how can I move the money from his savings account to my NRE account?
Thanks
If your father is not an NRI, there is no requirement of 15CB/15CA. He can gift upto $250,000 to you that you can directly credit to your bank in USA. In India, banks would not directly credit funds into your NRE. You would need to credit your NRO account and then transfer funds from NRO to NRE. Thanks.
Hi Im a NRI setttled in Australia for 11 years now and planning to buy a property in India. I plan to fund the property by using my NRE account and my dad transferring into my NRO account.
1 . Is the transfer from dad to my NRO account taxable to me?
2. Do I need to show the evidence of transfers from my dad into my NRO account?
3. The proceeds from the sale of the property would be split into NRE and NRO account or can i deposit the entire proceeds into my NRE account?
1. You need to determine the nature of transfer from your dad to you. If it is gift, it is not taxable in India. You need to check Australian laws. If it is a loan, you need to check if it comply with RBI requirements.
2. If gift, it is recommended to have a gift letter/deed.
3. Only principal amount paid from NRE can be credited directly to NRE account. Thanks.
i have a question
can i download CA and CB forms
(from which site?)
and fill them out and get it signed by my CA who does my taxes in india?
Form 15CB is a certificate by CA. Your CA should know this. You can also google and find the form. The 15CA needs to be filed online through your income tax login. You may also be find the form online for information purpose or download the utility from the income tax india efiling’s website. Thanks.
Hi,
I have recently moved from the UK to India on employment basis, at the present time I have a NRE Account and a NRO Account. I have been told that I can put my salary which I earn in India (Indian Rupees) into my NRO account, now I would like to transfer the money to my bank in the UK for this the bank manager has recommended to transfer money from NRO account to my NRE account, for this he has said I would require the 15CA and 15CB. Is this the best way to transfer money to my UK account?? Are there any better options to transfer money to the UK??
Please can you let me know what documentation is required for forms 15CA & 15CB and what your charges would be. Does this require a visit to your office or can this be done thru email / courier. I am based in Pune and have my NRO/NRE account with SBI Bank.
Thanks
Helson George
As you have moved to India for job, you are considered a Indian resident under FEMA and are not allowed to maintain NRO or NRE account but only Resident account. Only NRIs are allowed to maintain NRO or NRE account. Thanks.
Dear Mr patel
Do we have to have OCI TO sell our realeastate and bring money to USA
NEED SOME FEED BACK
YOUR ADVICE IS GREATLY APPRECIATED
THANKS
Geetha Murthy
OCI/PIO are not required. You would only need your PAN card and bank account for selling property, paying tax/TDS and bringing money to USA. Thanks.
Than k you very much for your response and it is greatly appreciated.
I am tied up with my husband with his health issues and can I give power of Attorney to someone in the family and do you suggest or help us with this too.
I am from Bangalore can I coordinate a CPA FROM .Bangalore with your firm since you are up to date with International rules and do you have a team of your own to help us even from Bangalore.
Please help me I am willing to pay for any services since it is so hard to travel to INDIA in my situationfor me.
Your input is greatly appreciated .
Thanks
Geetha Murthy
I am not sure which service you want from us. If you want to sell and register a house, you may give a POA to your relative who will sell the property on your behalf and a lawyer in Bangalore would help you for the same. If you need help in TDS or calculation of gain or payment of tax or filing of return or remittance of funds on sale of property, let us know. Thanks.
Dear Sir/Madam,
While browsing I found your blog that is very informative and conceptual.
Few days back I opened the NRE and NRO accounts with ICICI Bank with whom I already had domestic savings account.
I used to deposit amount in INR converted from earned USD.(9 lac in NRO account and two FDs one INR 15 lacs and one INR 2 lacs)
Now that account has been converted to NRO account. I donot have any income in India except whatever interest I would earn now onwards and earned already when it was resident savings account.
Can you please help me how I can transfers funds from NRO account to NRE account. I gave asked ICICI Bank but they are saying you need to submit 15ca 15 cb form.
Any help is highly appreciated.
As interest income is taxable, the bank would need 15CB/15CA. Please contact your CA or us for the same. Thanks.
Hello,
I am an NRI based in the UK. I have a flat in Gurgaon that is under construction. Possession and registration of the flat is due in July 2016.
I bought this property through my remitted money from the UK and paid all the money through my NRE account. I have paid around 85% of the total cost.
I was in need of money back here in the UK and therefore therefore planning to sell my flat ahead of possession and registration in the next few months.
I want to understand the following :
a) Process for getting the sale proceeds repatriated ?
b) Is it required by law that I must take possession of the flat and get the registration done prior to selling and repatriating the funds ?
Regards
Pathaka
You may cancel your flat and the builder may give you refund of your investments and you can credit the same funds directly to your NRE account and remit the funds abroad. Please contact us if you have any question. Thanks.
Dear Jigar,
I have a similar case, the difference is the construction of the property is not yet started and so I wish to cancel and refund the money back. I had paid the money from my NRE account as an RTGS transfer.
I went to the bank and they said you can’t credit the funds back to my NRE account.
Is there any rule that I can show to convince them?
Do I need any documents other than the cheque given by the builder?
Thanks!!
I am really sorry for the ignorance of the bank employees. As per FEMA, you may credit directly the refund of booking amount. Check the RBI website for the list of approved/allowed credits into NRE account. you may need a letter from the builder that he is returning the money. Bank may ask for a ledger account. If you paid from NRE account of different bank, the NRE bank account statement may also be requested. Thanks.
Hello Jigar
I hold both NRE and NRO savings account in Kotak Mahindra Bank. I wish to transfer my money from my NRO to my NRE A/c. However, the bank insists that they require CA certificate to do such a transfer. The total amount to be transferred is to the tune of about Rs.5 lac.
As per your blog, these certificates may not be necessary always. Can you advise what can be done?
Thanks
The source of funds is important. As bank does not want to take any responsibility of taxation, they insist on CA certificate. I would suggest you contact your CA and provide the certificate. I think they would only require a CA certificate and the Form 15CB/15CA. Thanks.
hello,
my father owns several properties in India. he wants to gift us one of the houses so we can sell it and then bring the money back to the US.
He is a US citizen and so are we. The house is residential and market value is about $2.5MM. the house was built about 10 yrs ago and has appreciated over time.
a) is it better for him to sell it and just gift us the money
b)is it better to transfer the property in our name and then we sell it ( im worried about short term cpaital gains)
c) what paperwork do I need to show from India all the way to the US
d) should we just work on creating an estate and trust etc.. and then put the money in the trust and handle it that way?
e) are you able to help us if we need to hire someone? the property is in delhi.
thanks
I would suggest him to sell the property and gift after tax money to you. It would be easier, quicker, cheaper, cleaner both in India and USA. It would save you stamp duty on registration of gift of immovable property as well.
If gift, the cost and holding period of your father would be considered as yours as per Indian income tax laws. As per US tax laws, he would also need to pay gift tax on market value of property and that would become your cost.
We serve clients and properties located anywhere in India and we do provide such services. Please contact us if you have any question. Thanks.
Hi ,
I have a query regarding selling my property in India.
I am currently in USA and want to sell my apartment in India
Can I sell my apartment by giving power of attorney to one of my family members without travelling to India
Please provide the clarification
Thank you
Sravan
Yes. If you have given POA, your physical presence is not required for selling property. Thanks.
Thanks Jigar Patel for your response.
May I know where I can download POA form
thanks
Sravan
You may google the same and will find a lot of POAs. However, I would suggest you to contact your lawyer who will draft a customized POA for your needs. Thanks.
Thank you for the clarification
Thank you
I have just onw final query
Can I give POA to the purchaser directly so that he can register the property to himself or do i need to give it to someone else
Please clarify
As you are a seller, I would suggest to give the POA to someone else and not purchaser directly. Thanks.
Dear Jigar Bhai,
I am a self-employed consultant who is currently providing services in Hong Kong. My work will entail me to be in India for less than 182 days during the current FY 2015-16. I wish to understand that, can I get the remuneration for the services provided directly remitted to India to my resident account and would that be taxable ?
Thanks
Vivek
Any income for providing service in India may be treated as Indian income would be taxable in India, even for NRIs. Thanks.
Dear Mr Jigar Patel
I have an NRO account in INDIA – BOB
am in Dubai- i need some finance
can i transfer fund from my NRO ACCOUNT to my friends NRO ACCOUNT sum of Findian rupees 350000 BY CHEQUE
AND HE PAYS ME IN DHIRAMS HERE
This is called a “hawala” transaction and is not legal. I would suggest you remit the funds out of your NRO account. Thanks.
Dear Jigar Bhai
dear sir
Can you explain me
I have NRO ACCOUNT IN INDIA
Am I need of some finance
Can I transfer from my NRO account to my friends NRO account a sum up to Indian rupees 350,000
By issuing a cheque on his NRO account and he pays me in DHIRAMS
As mentioned in my earlier post, it is considered as a ‘hawala’ transaction and is not allowed. I suggest you contact your CA for remitting your funds from your NRO account to UAE. Thanks.
Dear Jigarji,
I have a property in India which is listed under HUF. IT return is being regularly filled.Recently i ,Karta and other members of HUF have become Citizens of USA.Please advise if the tenant of the property has to deduct 10%TDS as being done presentlyor 30%. Payment in indian rupees is directly being paid to HUF account in Indian bank.
There are different views one being that as the payment is being made in indian bank in indian rupees NRI status does not differ anything as PAN details are being provided for form 26A, and only10% is to be deducted as TDS from rent.
Are form 15Ca and CB to be filled by tenant?
Would very much appreciate your kind advise.
TDS @ 30% apply only if the HUF’s residential status is “Non-Resident”. Unless whole of HUF’s control is situated outside India, it is considered as a resident i.e. if you, as a karta, do not visit India even for a day in the financial year, the status would be “Non-resident”. Form 15CB/15CA are only required for transfer of rent outside India or from NRO to NRE account. However, if the residential status of HUF is “Resident”, you are not allowed to have NRO and NRE account. I suggest you contact your CA for more clarification. Thanks.
hello jigar, i have a question.I have been living in usa for the last 18years and am holding a greencard status.i have an account in india in indian rupees and am paying taxes on the interest in india, do i have to report that to the irs over here, and will i have to pay double taxes.it was a gift from my grandmother for the amount 80,ooo us.if i have to pay taxes in usa how much will i be paying?
Yes you do. As a US resident, your global income is taxable in USA. For any taxes paid in India, you may claim foreign tax credit. You would also need to file FBAR to the Department of Treasury. If you have not filed, you may want to review the Overseas Volunteer Disclosure Program or Streamline Compliance procedures for filing deliquent FBARs. I would suggest you to consult your CPA. Thanks.
Dear Sir,
As per Fema Regulations, Can a resident individual remit the amount to non resident individual as a gift, where both individuals are not relatives as per companies Act?
Thanking you in anticipation for prompt reply on your end.
No. Thanks.
I was working in U.S on H1B visa till last year and returned back permanently to India in January 2015. I still have some money in my US bank accounts which I intend to use when I travel US to meet friends and family. Do I need to declare and pay taxes on that amount when I file my taxes next year? Is it correct that under new tax laws I need to pay 30% tax on my foreign account balances?
Tax is only if you do not declare your account. If you declare you assets abroad, you would pay tax only on income (i.e. interest amount). Thanks.
Dear Sir,
I am Resident of USA & from last 6 months I am providing Teaching service to company in India (I have Pan No & Saving Bank Account in India) so plz tell me what is the rate of tax & Is 15ca & 15cb required to transfer the fund from that company to my Indian bank account .
1. As you have a regular savings account, you are considered as a resident of India. If you are an NRI, you can not have a resident account but an NRO account.
2. Assuming you are an NRI, as Teaching service is your income chargeable to tax, TDS needs to be deducted. As no special rate is available for the nature of your income, TDS @ 30.9% needs to be deducted. Thanks.
Dear Mr Jigar,
I came across your blog and it is extremely informative. I currently live in UK and my query is regarding transfer of funds to UK for purchasing a property
I have 2 queries:
I have been issued shares by my India based company as ESOP. I have paid for these shares using my UK account and shares are deemed repatriable as per the docuemnt issued by my company. I hav already paid tax on these shares in UK. Once I sell these shares can I move the money to UK without paying any further tax in India?
2nd- I am going to sell a property in India. Is there any provision that I can transfer that fund to buy property in UK and not pay the wealth tax.
I did not see any UK number on your website, I am happy to contact your local office if you can give me the details.
1. Assuming the shares of company is listed and you sell them on exchange after 12 months of holding, any gain would not be taxable as you would have paid STT.
2. Since last year, claiming deduction for buying a property outside India for property sold in India is NOT allowed. So you would have to pay tax in India and you can only transfer after tax money to UK.
3. We do not have UK office. You would have to contact our India office if you have any question. The contact details are available in “Contact Us”. Thanks.
Dear Mr. Jigar Patel,
I find your blog comments very informative, to the point, and knowledgeable. I shall be grateful if you could enlighten me on the following problem.
My cousin migrated to USA 4 years back, and got a green card two years back. Prior to migration, she was working in India and had her savings invested in fixed deposit and PPF account. Now, she desires to transfer these savings to US.
A. What will be the implications of this transfer for US Income Tax liability. More specifically,
1. Will she have to pay income tax on a part, or the whole of her savings transferred from India?
2. Will she have to pay the US income tax on the interest income in India on this amount for the past 4/2 years?
B. What will be the procedure for effecting this transfer?
Regards
Vipul
A1. Tax liability would be only on the interest income.
A2. Interest accrue daily so needs to be reported annually. Also, she may also need to include the account in FBAR.
B. A CA certificate in form 15CB, online filing of form 15CA would be required for transfer after June 1, 2015. I suggest you contact your CA. Thanks.
I am an Indian resident having two sons – one settled in Australia as an Australian citizen, second settled in U.S. and is a U.S. citizen. I am getting old and want that the house I own should be transferred into their names so that they do not have problems after my death. To be very frank I am not in favour of WILL since it requires PROBATE from the court which might be time consuming. Pls advise as to how can I transfer this
property into their names. Do they need to come over to India to get the property transferred into their names and is it possible to get it trasnferred in both sons’ names.
Your advise will be highly appeciated. Thanks
CLSehgal
I still believer WILL would be the cost effective way to transfer the property. Also, it stays in your name till end. You may also give gift of property to them but you would need to pay the stamp duty. While they may register with POA but I would recommend that you do that when they are physically present in India. Thanks.
Sir, your comments and guidance are crisp and of excellent value to all. I request you to kindly clarify whether there are any restrictions for my sending money to my son in the US as gift for the purpose of buying a property for him in the US. How much can I send and what is the procedure. Regards, Chockalingam
You can send $250,000 per year per person. The limit was $125,000 and was revised to $250,000. However, a notification for $250,000 may not be issued yet so bank would only transfer $125,000. Please contact your bank and they will guide you better. Thanks.
Thank you so much for the quick response, Mr.Jigar Patel.
Regards, Chockalingam
Hello,
I found this very informative.
I have another situation where I am a citizen of USA and planning to file for US Green card for my parents. Once approved, they plan to sell their properties in India and come to USA and buy properties here in USA. I am confused as to what is the most tax efficient way to do this. Your advice will tremendously help.
Thanks,
Ashish
Your parents would not be able to save capital gain on sale of Indian property by buying property in India. Please elaborate on your requirement and your confusion for give you proper advice. Thanks.
Dear Sir,
Your article was very informative. Thanks.
For our small export business, we participate in international trade shows. You are to make payments in advance to participate. Often, you delay the decision of participation till the last date. This makes almost compulsory to make the payment at a short notice and use of international credit card becomes handy. However, our CA warns us against such transactions sighting FEMA regulation against such use.
My query is that yes, we did not go through the bank of this transaction. But none the less the credit card company will be reporting this international transaction in their books. So, in effect, there was no intention of covertly using the international currency. Do you think that we are some how violating the FEMA rules by making payments through international credit card?
Your sending a response on my email will be appreciated, since I do not access your website that frequently.
Thanks.
Haren Shah
Thanks.
As per new Finance Act, any payment to a non-resident or foreign company (whether taxable or not) needs to be accompanied by 15CB/15CA. While you may still use your credit card for personal purpose – travel, etc., for business expense, I would suggest you follow your CA’s guidance and proper banking channels. Thanks.
Dear Jigar,
1. I had transferred funds to my father’s domestic account from my NRE account as loan to buy a new house in Karnataka.
2. Now my father wants to return the funds by liquidating one of his other house.
3. He will transfer the funds to my NRO account, from where I want it back into my NRE account. Will I incur any kind of tax if he is just repaying the loan back to me ?
1. You may credit the funds directly to your NRE account provided your loan comply with the conditions (duration, purpose, relationship, 0% interest, etc.) of loan on Repatriable basis. If not, the money can only be credited in the NRO account.
2. Tax is only levied on income. So if you receive any income (e.g. interest), it would be taxable. The repayment of principal is not taxable. Please contact your CA. Thanks.
Hi, I have been working in Dubai for around past 1 year. I did not convert any of my bank accounts to NRI/NRO/NRE etc and kept them as it is, i.e. savings, because I did not know about NRE/NRO etc. I transfer my money from Dubai to my India savings accounts on regular basis through normal currency exchangers. Is there any thing wrong in doing so?
Your early reply will be highly appreciated. Thanks.
As you are an NRI, you are only allowed NRO or NRE account. Regular savings accounts is for RESIDENT’s only. When your residential status change from Resident to NRI, you are required to inform your bank and other institutions of your change of status. The bank would re-designate your regular savings account as NRO. You may have the same account number and you may continue using your old cheque book but the account needs to be NRO. I would think it is wrong not to communicate your change of status to bank. Thanks.
Hello,
I have a question, we have a small proprietor business in India, one of friend and his other friends who are all US citizen wish to provide funds to our business around $100,000 for an ownership share. What legal and tax rules in India we should take into consideration for this proposal? What rules would they be aware of from US point of view? Can you help or highlight the rules??
Their investments in your business would be considered as an FDI and related rules/regulations and provisions are to be complied with. Also, the structure of business, nature of activity also are important. I would suggest you to contact your CA for the same. Thanks.
Dear Sir,
Thank you for Providing such a nice platform to share our problems.
I have 2 Questions,
I have my home which is transferred from my grand parents WILL. My Brother and Sister also in part of that, They left their stack on mutual agreements, I have all deeds regarding that, My Name also Transferred on Ele Bill, Corporation Bill, and other govt departments, but its still not transferred on Society. As Society don’t have a Chairman and Secretary, And Those claimed that they are, are not actual holder of that position, as they never selected by other soc members, and never passed any resolutions. in this case, if i want to sell my property,. How Can i sell ? and How to transferred my name in Society ?
Please Guide,
Regards,
Sachiket Shah
I am sorry but this is an internal issue. If you can find a buyer who is ready to buy knowing this situation, that is great. If not, you would have to follow up and get your name in the Society’s records. You may also want to have a NOC from society. Thanks.
I hv been going through yr comment list and was impressed with your prompt replies to queries. I too hv a question. My brother is an NRI who is planning to sell a property in India, for which he will receive payment in indian rupees to be deposited in his nro account in India. Apparently there is a new notification to the effect that forms 15 ca/cb will be required even for payments made to NRI’s in indian rupees. If this is true, could you give me a link for this notification?
Thanks and regards
There is no new notification in case of NRI selling property as it is a taxable transfer and TDS and 15CB/15CA will be applicable. Thanks.
Sir,
My resident status changed to NRI after receiving 4 months of Indian Salary income durign FY 2014-15.
I have rental income for remainign 8 months in India from a property let-out and jointly owned by me & spouse.
So when I file my IT return before Aug 31 this year for FY 2014-15, how shoudl I calculate my taxable income?
Taxable Income = Salary from employer for 4 months in FY + 0.5 * Rental Income ( Rest 0.5 to be declared in Spouse IT Return) + Income from NRO Bank FDs.
Have no dividend income, MF returns income.
Is my understanding correct?
Regards, Venkat
Your taxable income would depend on your residential status. For NRI, any income sourced in India is taxable. So, I would assume your understanding is correct. However, I would suggest you to contact your CA. Thanks.
Dear Jigar,
Nice to read ur blog. Its impressive.
My bro is working at The US since last two years.
He is transfering funds to India thru his SB account and
we have not changed the account to NRI/NRO account.
Is it necessity to convert his account to NRI/NRO ?
From his remitance, interest income is taxable at India ?
He wants to invest in some property in India from the remitance, as
he is planning to return back after two year or so ..
Any procedure and tax implication ? whats the best way ?
Thanking you,
Yes. Banks should be informed of change of status within reasonable time and 2 years is more than reasonable. Interest income of funds with any Indian bank accrues in India and is taxable in India. The bank would deduct 30.9% TDS on the interest on NRO. The interest on NRE is taxfree in India. While he is allowed to invest in property in India, I would advise to invest through NRE, if possible and as allowed by RBI under FEMA. The tax is only on the gain i.e. when he will sell the property. Thanks.
Hello Mr. Jigar,
I have a unique situation, I had provided financial help to a friend many years back, this was off the books and the amount was not that significant 25k INR. Over the past decade my friend had great success in his business. He wants to help(gift) me out buying a house in the US (I am a US resident). The amount is 155000 USD. The US gift tax is exempted to the doner upto 5.43 Million. However, I am not sure whether it is applicable to non US doner. Additionally, will there be any tax implications for him towards Indian Tax dept and how do I need to work this out in the US for my tax purposes.
Kindly advise.
Additionally how do I go about rendering your expert services for my US tax filing. I also have a LLC being taxed as a S corp, does your firm handle this setup.
Appreciate all the help.
Many Thanks.
1. As per RBI, gift can not be given to non-residents. As per Income tax, any gift from non-residents is taxable in India. As per IRS, there is no gift tax on foreign gift. Thansk.
2. While we support in gathering information for filing your tax return, we do not file the return. Thanks.
Hi,
I would like to understand if there are any complications in transferring money from your salaried account in Europe to your Indian account.
Can I use this money to invest in India (say for eg real estate). If yes, how would the profit be taxed. Could I transfer money later back to my european account in case of a valid reason (eg buying a house)
There is no complication in transferring money from your EU account to NRE account in India. I would suggest you follow RBI rules for transferring money and for investments. If you want to transfer the money back to your home country, I would suggest you invest in India on repatriable basis so when you sell your investments, the proceeds can be directly credited into NRE account. Contact us if you need any help. Thanks.
Hello Mr. Jigar,
I am in a very complicated situation. I worked in India from 1st April to 30th Sept 2014, left company and then started working in USA from 13th Oct 2014. I am filling tax in US as resident alien (I applied for extension and will file in July) and my employer is already deducting tax at source.
My employer in India also deducted tax at source. I don’t have any income source in India. So would my taxable income in India be just what I earned in India or my earnings in India + my earnings in US till 31st March 2015?
And should I declare my Indian income in usa (I think because this is first time I came to US, so they won’t bother about my income in India)?
As you have moved to the USA for the first time in October 2014 and assuming you do not have a greencard or citizenship, Your status in USA would be non-resident based on substantial presence test. In that case, you would file your tax return 1040NR and only report your US income. However, you would be considered as an Ordinary resident of India and may have to report global income. I would suggest you to contact your CA or US based CPA for calculating income and filing taxes. Thanks.
Hello Jigar… I hold the status of a shared purchaser with my father and mother (separately) during the purchase of two adjacent apartments in India in 2008. This was when I was in service and I had no capital investment for the purchase. My mother is a housewife and my father was the sole investor for both the properties. In the meantime I migrated to Australia in 2013 and is now a resident in Australia. The two apartments are getting sold in July 2015 as decided by my parents. I am going to travel to India soon for the settlement. I am not going to accept any sale proceeds as my father is retired and aged and they need the money. How can I protect my tax on sale proceeds/capital gains since my name is appearing on the sale deeds on purchase of the apartment in 2008. My global income is now taxable in Australia. Grateful to receive your feedback and whom should I approach? Many thanks
As per Indian income tax laws, person who invested money owns the property, unless it was considered as gift. I suggest you check with your CA how you will file your taxes. If it becomes part of your income in India, you may have to disclose and pay tax in Australia. Thanks.
Hello,
Can you please help clarifying the below. Thanks in anticipation of your response.
I have an account in Indian Bank and I have opened Multiple fixed deposits under that account.
Should I report under below scenarios.
1) The amount in each fixed account is less than $10000 but if I were to add all the fixed deposits it would be over 10000.
2) The Maturity value would be over 10000 but the deposited value is less than 10000.
3) Based on previous questions, Should I file amended FBAR returns for previous years
Regards
Kiran Mocharla
1. Yes
2. Current value of investments (Dec 31, 2014) will be considered.
3. Please consult your CPA. Thanks.
Dear Mr. Jigar
Firstly, I am impressed with your knowledge and promptness in assisting people.
Thank you!
I am a NRI, US citizen. I have funds in a NRO account from selling agricultural land which was inherited. The land was inherited to my mother and siblings. I understand that I need forms 15 CB/15CA to successfully transfer to a NRE account. What are the tax implications in USA?
What forms do I need to fill out?
Thank you for your time.
You would need to pay tax in USA as if you sold land in USA. You would need to convert the sale proceeds and cost price in USD and then calculate gain and tax accordingly. Thanks.
Dear Sir,
Can funds from a normal saving accounts be transfered to SB NRE account ?
The normal SB account was opened with lack of knowledge and fixed deposits were made out of it as residential individuals,which is attracting tax as per indian IT act.But the proceeds in the normal SB account have come purely from SB NRE account.
what documents to be submitted to the banker?
Pls help
Please inform bank of your change in residential status to NRO and then you may transfer to NRE account after certain procedures – 15CB/15CA. Please contact your bank and your CA. Thanks.
Hi Jigar
I see you’ve not missed even a single comment. You’ve replied to each one of them. Hats off to you for your dedication..
We are purchasing a year old company. This is for a small venture we are trying to float. I’m writing to understand the costs involved in purchasing it. Even if you give me ballpark figure, it will be great.
Thanks
The cost of purchase would be the value that you would pay to buy the company. Let us know if you need any help with valuation and/or RBI compliance. Thanks.
Dear Sir,
I had opened an NRO FD by transferring money from my NRE account in 2011 when NRO FD interest was much higher than NRE FD. FD is yet to mature. I would like to know if I can transfer the amount upon maturity back to my NRE account, keeping in mind that the principal towards NRO FD was from my NRE account.
Regards,
Antony
Yes, you are allowed to transfer the funds into NRE account. If you are lucky, your bank would do it without 15CB/15CA. If not, please consult your CA or us for the same. Thanks.
Hi
I have a question for you if you can help me out it would be great.
I am a Canadian citizen. After my dad’s death In India because he never had a will one of the property is dividing between my Brother, my Mom and I. I am not Interested in my Share and I would like to give my share to my brother who is living in India. Can I send a power of Attorney to my brother from Canada that I am letting him have my Share? Is there a chance that by gifting any one of us can get hit with Tax? What will be the process to take care of this without too much of hassle? I would appreciate any help. Thanks in advance. Anaya
It would be considered as a gift and as the property is an immovable property, it needs to be registered. You/your brother would also have to pay the stamp duty for registering gift of immovable property. There is no gift tax in India for gift to brother. Thanks.
Hello Mr. Patel,
This is really good information. Even I have one question,
I am a NRI residing in USA. I am planning to rent my flat in India for approx 30k/months. This flat is still on EMI from Indian bank and my spouse(NRI) is co-owner. This would be my second
1. Do the renter have to apply for TAN and deduct TDS (30%) on the rent amount?
2. Does the rental income slab of 180000 apply for me and my spouse?
3. If the renter does not deduct TDS, can I pay the 30% amount at the end of year while filling tax returns?
Thank you in advance.
1. Yes
2. No, it is for residents.
3. It is your responsibility to tell that you are an NRI. It is the responsibility of the renter to deduct TDS. Thanks.
Dear Mr.Patel,
I was a Green Card holder in the US and had a bank account in a US bank jointly with my wife. The only income we had was our (tax paid) salaries. We returned to India and surrendered our Green Card. I am an Indian citizen. Our account remains open in the US but there is no income for more than 5 years now. With India signing the FATCA treaty with the US, do we have to report this in our tax filing this year.
Thank you
Gopal
As a resident, you are required to report your foreign assets and income to the Income Tax department. It has nothing to do with FATCA. Thanks.
I inherited a property along with my brother a year and a half ago. I will be selling my share to my brother over the next year. We have an attorney to complete the sale and I will then have to transfer the sum to the US. My question is what documentation do I need to show this as an inheritance in the US?The price will be at fair market value as my brother plans to keep the property. I am an NRi.
You would need to provide a copy of the WILL and a valuation certificate when you inherited property. The fair market value on the date of inheritance would become your cost as per US tax laws. The documents for sale of your share would also be required. Thanks.
Dear Jigar,
Im a citizen of US and my parents are in India. I also have an NRE & NRO Account in an Indian Bank. My Parents live here. Kindly advice me on Tax implications and fesibilty for me and my dad, as I want to Gift my Dad an amount of Rs. 1 Cr for his personal investments.
Thank you in avdance .
I would assume your parents are living in India and are not US resident, greencard holder or citizen. While you can give gift of Rs. 1 Cr to them, you would also need to inform IRS of the gift as it is above the $14,000 threshold. There is no tax to your parents on gift received in India. Thanks.
Can I file IT Return for AY 2012 – 13 now?
You can only do that manually. However, you would also submit a request to issue notice u/s. 148. This gets technical so I would suggest you talk to your CA. Thanks.
Dear Sir,
I have a question regarding my tax liabilities in India and before I ask the same below is a bit of background/pretext.
I was employed by an Indian Company during FY 2014-15 and I traveled to Germany twice, first trip was from 14th June 2014 to 10th Oct 2014 and the second trip was from 7th February 2015 to 11th April 2015. The nature of my first trip was deputation work contract and I was getting my Indian salary in my home account plus the per-diem. However for my second trip my payroll was transferred and I received my salary in Germany on which I paid the taxes as per the local laws and no Indian salary during this time.
I’ve now resigned from this company and came to Germany once again to start a new job on 1st June 2015 for an indefinite time-frame.
The form 16 given to me by my previous employer for FY 2014-15 doesn’t accounts any of these travels and shows a tax refund of around 15k INR.
My question is do I need to declare this additional salary that I received in Germany (during 7th Feb and 31st March) while filing the ITR?
If yes then can i get some benefits under the double tax agreement between Germany and India?
Thanks in advance for your response !
Regards
Puneet
Your residential status for 2014-15 is Ordinary Resident and as a result, your global income is taxable in India. However, you may get a credit for any tax you paid in Germany. As German tax is usually higher, you would not have to pay any additional tax in India. I would suggest you to contact your CA who will review your agreement and DTAA between India and Germany and guide you better. Thanks.
Dear Jigar,
Many thanks for your your very informative blog.
I am not an NRI and working out of Hong Kong. I have a local bank account and have recently transferred a sum of USD 30,000 to one of my relatives NRI account in India as a interest free loan. Is it likely that either him or me would attract tax on the transaction.
There is a good likelihood that my employment here will get extended by 6 months making the total no. of days that I spend here in this FY greater than 182 days.
Thanks for your advise.
Swapnil
The tax is on income and not transfer. Thanks.
One of friend is working in UK, residence of USA, wanted to do investment in real estate business in India. What is procedure and complaince for the same?
Friend is transferring money from UK.Transferring the money FROM UK TO India for an investment purpose do cause any taxation at UK.
Friend can purchase the real estate commercial/residential purpose.
Can you guide on the same?
NRIs are not allowed to invest in real estate business. Thanks.
Hi Jigar
I have a PPF account that was opened when I was working in India. I moved to US about 15 years ago and became US citizen about 2 years ago. I had kept PPF account active by making contributions every year. Not realizing that PPF is for Indian citizens only, I contributed to PPF even after becoming US citizen. My questions:
1. Contributing to PPF after US Citizenship- will this be a problem? How to fix it?
2. What are my options with my PPF account? Do I have to close? Can I just leave as it is and keep getting interest?
3. If I want to bring 50% of the money to US, do I pay Indian income tax? Do I pay US income tax?
4. What are the options to invest 50% of money in India?
I would appreciate your advice!
You may continue maintaining PPF account provided you opened it while you are an Indian resident. However, you must close the account on maturity. As you opened your PPF while you were working in India, it is okay. However, on the maturity, you are not allowed to renew/extend. There are many avenues to invest in India. Please contact us if you need our guidance for the same. Thanks.
Dear Sir,
I am a foreign citizen living in India since last few years and Resident and ordinary Resident for India tax purposes. I have 401k in US which was started while i worked in US. Under new tax laws of 2015, do I need to declare this 401k in India or are foreign nationals who are residents (for tax purposes) not required to do it?
Thanks and Regards,
Sumit
The law applies to residents. Citizenship may not matter. You may start reporting 401k as foreign asset in the tax return you file. Thanks.
will 401k be treated as income generating even if i have not vested any part of it. will notional gains be liable for tax?
India does not tax on notional gain so it won’t be liable to tax. However, I would think the 401k investments as income generating assets – capital gain, interest, dividend, etc. However, they are taxed on withdrawal as per US tax laws. Also, while employer’s contribution may not be vested, your contribution is already vested. Please note the reporting is applicable if you are an Indian resident. If you live in USA and file your tax return as NRI, you may not have to declare your foreign assets. Thanks.
Pls see the new ITR2 form. The note below section on FA at the bottom says that if assets didn’t generate income in filing year then they need not be reported. 401k isn’t resulting in any income till money is withdrawn and is taxed at that pt of time. Given this, should 401k be reported or it isn’t required?
I would think 401k investments generate income – capital gain, interest or dividends, only that it is taxfree in USA and you are not allowed to withdraw. Thanks.
Sir, Please help me on this query. If I am Indian Resident, then interest or dividend accrued in 401k will be taxable in India or not. I have not withdrawn any money from 401k
I think you may continue to hold but if you sell, you would need to report to the income tax department. Withdrawal may not be important. Thanks.
Hello Jigar,
After I became ROR, does any interest, dividend, and capital gain from selling Mutual Fund A and Buying Mutual fund B within 401k, Traditional IRA, and Roth IRA account are taxable in India? Please note, I have not withdrawn money from my 401k or IRA accounts.
Thanks,
Ritesh
I would think so as India taxes on capital gain. In USA, it is exempt until withdrawal under a specific section of IRS code, similar to interest on NRE account, which is exempt in India but a US resident would report and pay tax on the same in India. Thanks.
Hi sir,
My friend is transferring money from US to my savings account since 2009. I haven’t filed any tax returns till now. I want to know
1. Is I am taxable for the money I get it from my friend.
Yes. It will be taxable for you as it will be considered a gift from non relative. Thanks.
Thanks sir,
What should I do now sir??, I have no clue regarding this.
I haven’t filed tax return till now.. can you please give me advice or help me out.
I suggest you contact your CA. Thanks.
Dear Sir,
This is Saravanakumar from Sulur, Coimbatore. Myself and my family stays in a home, which is in my wife’s name. We have borrowed money from SBI housing loans, I am also a co applicant in that and I am showing my home loan for my TDS.
I also own a house in my name in Coimbatore city, which out does not have adequate water supply. So a family can not stay. Hence, I have let it out for Office space. I am getting my rests only through ECS and cheques. I have disclosed my income from Rent in this Financial year.
My question is that, after some time, if the Offices vacate from my house, I cannot have any income from rent. At that time will IT department acknowledge that?
Also, If I get another flat for my own use and can I say I have aoccupied two houses? One in the city level for the kids to approach their college and schools easily,, and another in the rural side, where we can stay in week ends?
With great thanks
S A Saravanakumar
You and your wife are two separate individuals for incometax in India. One house is owned by your wife and another by you so it is okay. Please note only one house can be claimed by you and your wife (two properties) as a self occupied property. While you (individually) may have two houses but the Income tax dept would ask you to choose which one you want to claim as a self occupied. Please consult with your CA about how to report your houses. Thanks.
Hi Jigar,
I am writing this to you having found that your blog is the only place which has comprehensive guidance on the matter I am asking. I am confused and looking for guidance regarding the black money / foreign assets disclosure scheme
1. I had a bank account in the UK in 2005 while a student and from my return to India since 2006, I have been using this account to accept payments from my foreign clients (started as a freelance analyst while a student there) and also paying international suppliers using paypal. I have no other foreign asset
2. The profit was brought back to India and was declared since 2006 in Indian tax return. However, foreign nature of the income was not mentioned.
Under the new development of black money act, can you advise what are my options now. I am interested to comply but not sure about the process.
I shall be very grateful for your kindness which you have shown in your replies to many queries
Thanks
Abhay
I would think that as you have been declaring the profit in India as income, I would not think it is black money. However, I would recommend you to declare your bank account to the Income Tax department. Please consult your CA about how to declare your transactions and/or accounts. Thanks.
Hello there.
This is for my uncle who is an Indian citizen living is Australia. He owns a house in Bangalore and his brother is willing to purchase it and his share would be around 17 lakhs. He has an NRO account. He is having only Passport copy and OCI card.
Do he need to take a pan card for the registration?
how much tax should he pay for the amount received?
could you please advice me whats the best to be done.
Thank you for you time.
Have a nice day..
with regards
Glen
PAN card would be required for registering the property, paying income tax, filing income tax return, remitting money from India to AUS or for any investments (in equity or MF or otherwise). I would recommend to get the PAN card. Capital gain would be calculated on the transfer of asset and tax is to be calculated based on the capital gain. Please contact your CA. Thanks.
Please see if you can help me on this query on compliance window/ Black money law.
Good Afternoon Mr. Patel,
Please see if you can help me on this query.
As a US citizen & OCI holder I acquired 4 bank accounts while working & living in US from 1993-2006. All bank accounts were acquired out of income not chargeable to tax in India & hence are fully explainable(As per FAQ 24).
I have already declared FA & FI for AY2014-15.
Now I am RESIDENT in India since 2008. I failed to report(nonwilful) interest income generated from those 4 bank accounts in my Indian tax returns. I have reported this interest income to IRS in my US tax returns.
How can I take part in Compliance window to report my undisclosed income( may I repeat undisclosed income only). Undisclosed income is only 1% of asset values(Market value). Probably you would understand my dilemma that 60%(tax & penalty) on Rs. 1(undisclosed income) v/s 60%(tax & penalty) on Rs. 99( Market value of explainable asset). Compliance window keeps talking about asset value(sum of all deposits from day one when account was opened) & does not talk about unreported income.
I am all confused & perplexed. What to report & what not to report.
If I can not report this undisclosed income thru compliance window then what other choices do I have to report? Would I judged against BML or ITA when this gets noticed by AO say in AY 2019-20.
Honestly I want to report my undisclosed income but due to TIME BAR limitations I can not do that under ITA act for previous years.
Your advise would be highly appreciated.
Regards.
Pancham
Looks like I am really in a tricky & scary situation as far as my undisclosed income & it’s declaration thru compliance window.
Hoping for the best.
Regards.
Pancham
I don’t think it is tricky. Please check with you CA. Thanks.
1. As you have transferred to India in 2008, I would think you would be Not Ordinary Resident and you may not have to report your foreign income for 2-3 years.
2. The reporting requirement of foreign assets is new – just 2-3 years only. You may want to revise your old returns. I don’t think you need to get tense about the new law. I suggest you contact your CA and discuss how you want to report your income and/or assets. Your amount of investment/income may also be considered for making a decision. Thanks.
I have a query. i was in USA for a fellowship program during 2005-06 for a periord of 2 years. during that retirement contribution was deducted from my salary & an account was open there for the same in my name. I’ll get this fund after retirement.
now i’m in India. Do i need to mention this in my ITR 2015-16. If yes where & how?
As it is your asset, you would report as a foreign asset in your ITR. Thanks.
I am US citizen on OCI employed in India for last 7 years. Will be moving back to US in Sept. What will my resident status in India be for 2015-2016 financial year? Thanks for your guidance.
As you are leaving for employment, if you stay in India for 182+ days during Apr-Mar, you would be resident. Else, non-resident. Thanks.
Thanks. But came across articles saying that even if I had stayed less than 182 days but if i had been in India more than 365 days in pass 4 years, i would be resident.
Does the employment exception you state apply to only Indian citizens or also for US citizens on OCI. Kindly confirm.
For US citizens, the exception applies if you are on a visit to India. So if you can establish that you were on a temporary stay/visit to India and now you are going back to your home country, you may also use 182 days requirement for residential status. Thanks.
Dear Mr.Patel
My son studied in Oxford university after that he get a job in DUBAI. There he want a residence cum food where he has to pay 74000 AED. Which I had to send directly to the co where he has to pay the amount. Let me know how to transfer fund and the tax implications in india
AED 74000 is a lot of money so please be careful and make enough inquiries before sending the money. That being said, you can give gift of upto USD $250,000 to your son every year under Liberalized Remittance Scheme of RBI. Thanks.
HI SIR
I WNAT TO GIFT Rs.350000 BY CASH TO MY SON IT IS POSSIBLE AS PER IT RULES ?
I would assume “Cash” means bank cheque. It is allowed. You can also give him cash “currency”, provided you have that much official amount in your hand (e.g. withdrawn from bank). Thanks.
Rs.350000 CASH GIFT TO MY SON BY GIFT DEAD SO I WANT TO KNOW WHICH AMOUNT STAMP PAPER REQUIRED FOR MAKE THIS Rs.350000 CASH GIFT DEAD ?
There is no stamp duty required for gift of cash/cheque. It can be done in a letter also. Thanks.
Hi Naresh,
Great info. I have a question. I am an US Citizen and do have an OCI and I have an NRO/NRE account in India and would like to repatriate the rental income that is deposited in my NRO account.
– Checked with CA and he mentioned that he cannot issue 15CA/CB due to section 195 as rental income might be included in that and mentioned that you can go to bank and ask them to directly transfer from NRO to NRE and if I want can give a CA certificate but not 15CA/CB.
– The bank says the otherway and wants 15CA/15CB + CA statement. This is very confusing.
– RBI has the following information on their website.
Can NRI / PIO rent out the residential / commercial property purchased out of foreign exchange / rupee funds?
Ans. Yes, NRI/PIO can rent out the property without the approval of the Reserve Bank. The rent received can be credited to NRO / NRE account or remitted abroad. Powers have been delegated to the Authorised Dealers to allow repatriation of current income like rent, dividend, pension, interest, etc. of NRIs/PIO who do not maintain an NRO account in India based on an appropriate certification by a Chartered Accountant, certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid/provided for.
QUESTION : What is the exact process, would really appreciate if you can outline the steps as CA/Bank/RBI are not very clear in this scenario which i am US Citizen with OCI and need to repatriate rental income and please make a note that the TDS is deducted by the tenant and I am paying taxes in India and also in US for this rental income every year and I want to repatriate the left over money after taxes paid and this NRO account has the rental income only there is no other money in this account.
You would need a CA certificate in Form 15CB and efile form 15CA for remitting funds to USA. If your CA does not agree, you may tell your CA to convince your bank to remit the funds without the forms. If not, ask him to issue the 15CB/15CA. Thanks.
Dear Naresh Bhai,
Thanks a bunch for this info. This was very helpful. Would you able to point me to the RBI rules on their website so that I can send the info to the CA for his reading.
It is not an RBI rule but income tax act. A new section 195(6) was introduced that require 15CB/15CA for all payments from June 1, 2015. I am surprised that your CA does not know. You can also google the same. Thanks.
Sirs,
My brother is a retired Doctor in the United Kingdom, where he is a citizen for the past 37 years. He lives there with his wife. His two daughters were born while they were in India, but both are now UK citizens.
One of his daughters (Thanuja) had a residential building in Bangalore. Recently this was sold by my brother who had a power of attorney to do so from his daughter.
Now he wants the sales proceeds to be transferred to his daughter’s account in the UK. But he is afraid whether any gift tax or any other tax will have to be paid.
My brother is an income tax assessee in UK, but Thanuja (his daughter) is not. She is a single parent of a boy aged 16 and does not have any income and lives on my brother’s support.
My brother was thinking of gifting the sales proceeds of his daughter’ property in Bangalore to me. I am then to give it as a gift to my brother’s daughter who lives in the UK and who is a UK citizen.
Kindly let me know whether this is possible without much Tax liability.
Or else, kindly advise as to what is to be done so that my brother’s daughter will get the sales proceeds transferred to her account without being subjected to much tax liability.
Thanks and regards.
Vikraman.K
13.08.’15
1. As the residential building was owned by Thanuja, it is her money and she is required to pay tax and file tax return reporting sale of property. I would assume TDS would be deducted as the seller is a non-resident.
2. As the money is hers, the money should be deposited in her NRO bank account and after CA certificate in form 15CB and filing form 15CA, the money can be remitted to her account in UK. This would be best way to transfer funds to her.
3. Gifting to you and then to her is channeling funds to avoid compliance and is not legal.
4. Also, RBI does not allow remittance of gift from your account to your brother’s daughter as you are not her relative as per FEMA laws. Thanks.
please send contact details
It is on the top of the page. Thanks.
Dear Jigar,
I am an aspirant candidate who is in the process of Immigration to Canada. I have filed my application under Express Entry and am awaiting the Draw to pick me up based on my CRS-428.
I have a query related to the Funds.
I am the PA and my dependents are my spouse and my 2 year old kid. As per CIC-guidelines I am required to carry 18K+ CAD say 20K (for sake of simplifying) as settlement-funds on my first landing. I know that I can carry them in the form of Cash/Traveller’s cheque/Bank-draft. I am also aware that any-funds brought along with yourself at the time of 1st landing qualifies as Settlement-funds and you don’t have to pay any Taxes to the Canadian Government on these funds. Till here everything is clear.
Let us assume a scenario: I carry 30K CAD as settlement funds with me. My first landing happens, I declare the funds, they check my Cash/TC/Draft and I am allowed in the country. I become a PR of Canada.
Now, Apart from these funds, I still have money back in India, which is invested in the form of Mutual-funds and Bank-Fixed-Deposits. This money may be to the tune of 150K CAD, which I finally intend to bring to Canada and utilize it to purchase a house, etc. Now, the questions:
1. Is there any time limit within which I should bring in the my balance – 150K CAD into Canada to avoid paying any Taxes on it? I am interested in knowing this, since many of my Fixed-deposits are locked for a period of 4-5 years, and I would have to withdraw them pre-matured. I am looking to maximize my gains and avoid any taxations in Canada.
2. Is there a way where in I can declare my balance –150K CAD, at the time of landing, or may be later (similar to Goods to follow – list Form-B4) where in I can prove that these funds belong to me and are currently invested in a Locked instrument, and I shall bring them in Canada after a couple of years? Would I be taxed in Canada on that?
3. What is the maximum duration within which you are expected to get your balance-funds in Canada to avoid any Tax-circles?
4. Any suggestions/advice from your experiences on how to handle your funds which you want to bring in Canada….but not all at a time.
I know these are way too many questions….but I am extremely nervous, since I don’t want to end-up paying Taxes on my hard earned-money that I have saved all my life.
Please help me. I am from Ahmedabad, Maninagar, but am an NRI since 2008 in the Middle-East. I would love to discuss this in detail with you to get associated with you as my Tax-consultant or Adviser. If you are okay, I shall drop you an email inquiry or call you if are fine with it.
Thanks in advance,
Cheers,
Dhaval Shah
I suggest you contact an immigration tax consultant in Canada for your question. I can help and provide guidance for your funds in India as an NRI. Thanks.
Dear Jigar,
Thanks a lot for your quick response.
Would you mind suggesting or recommending any of your acquaintances for Immigration Tax consultancy regarding Canada-Immigration. I would contact them.
Thanks,
Dhaval
Sorry, we do not recommend or take responsibility for any Canadian CPA. Thanks.
Hi Dhaval,
I also have similar situation as yours, I am also in Ahmedabad, let me know please if you got your ans.
Please confirm :
I am Canadian Citizen and filling taxes in Canada . I am getting Tax residency certificate from Canada. Further I have stayed more time in last 5 years in India so I am resident for tax purpose. Please confirm if I am exempted to declare canadain income as per Article 4 of DTAA agreement .
If you have been staying in India since last 5 years and are an Ordinary resident for tax purpose, your global income would be taxable. However, if you have paid tax on the Canadian income in Canada, you will be able to claim the tax paid as foreign tax credit under DTAA. Thanks.
Dear Jigar,
I have been in the US for the last 15 years. I invested in real estate property in Bangalore though my Uncle (my mom’s sisters’ husband) and in his name. I paid all the money required for purchase, registration etc. and have all the records of money transferred to his account in Bangalore.
Now, he is no more and the property went to his living wife, my aunt.
There is no dispute for the property, but I want to know how to get it transferred to my name.
Your advise in this matter would be highly appreciated.
Thank you so much,
Sujatha
1. You would need to determine the nature when you transfer the funds to your uncle’s name. If gift, as you are not a “relative” under Income Tax Act to your uncle, any gift from you is considered as a gift from non-relative. You uncle is required to include the gift amount as income in his income tax return.
2. Any gift of immovable property needs to be registered and appropriate stamp duty needs to be paid for the same.
3. Your aunt is not a relative of you under FEMA (she is a relative under Income Tax act). So she is not allowed to gift any money to you. Your mother is her relative so she may gift to her.
4. Please contact us if you have any question or need our help in this. Thanks.
Dear Jigar ,
I am thankful to you for the information that you are providing which is helpful for many like me,
I would briefly give you my background.
I retired from teaching in India in Nov 2008 and came to the US and filed for my GC. I started receiving my pension in India only around Dec of 2013.I do not have NRE/ NRO account and was filing my taxes as per Indian IT regulations. I was not aware about the Fbar/ 8983. I have my PPF still active and I contribute accordingly every year, I have been shown as dependent on my son for the last 4 years and I do not work in US.How can I now rectify this.I do not have any annual assets of$10,000 the threshold for Fbar/ 8983 either. I have some money lying in FD in my Bank in India how can I get it , since my OCI is in progress. My son also does not have any account in India. Kindly help me. Thank you in advance.
1. As you are an NRI, your resident savings bank accounts need to be changed to NRO.
2. You/your son can file an amended return to rectify the error. Please consult your CPA.
3. Once funds are in NRO account, you may transfer the funds to USA after submitting CA certificate in Form 15CB and filing Form 15CA. Thanks.
Dear Jigar,
Thank you for your immediate response and for this wonderful information. In connection to the above question … my query
1. Should I continue depositing money in my PPF account to save on taxes.
2. What are the other ways I can save on Taxes in US if I am not entitled to deposit in PPF in India. Under Indian taxation I am entitled for 80DDB since I am a cancer patient will this concession be allowed for me.
Can I consult you for all my tax filing in US I am in Virginia and if so what all documents from India are needed to file my amended taxes in US.Thank you
1. Any investments you make in India will only save your Indian tax. You would not get any benefit in your US taxes. An NRI can invest in PPF (provided PPF account was opened as resident and not renewed after becoming NRI). NRI can also invest in Life Insurance as well as tax savings mutual funds to save tax in India. Thanks.
2. We support your foreign compliance by providing you the information that you need to report your Indian assets and income. However, you would need to do yourself or have a US CPA for filing and other requirements. Thanks.
Hi Jigar,
I am really glad that I came across your blog. I will be really grateful if you could help me with some suggestions about how to tackle the problem.
A few years back I went to the USA ( intra company transfer ) and worked for a few months on the project, I then came back and went to UK for another project for a short period of time. I was mostly a resident in India. I did pay all the taxes in USA and UK but didn’t show the same in India( was not aware of this). After coming back I didn’t close my foreign accounts and still had some money there. I haven’t declared this in any of the IT returns. Now I am worried about the black money act. I am not really sure how to proceed with this as different CA’s are advising me different things. I will be really grateful for your help. Many thanks.
As an Ordinary Resident, you are required to report your global income and pay tax on it. As you had paid tax in USA, you would not have to pay any tax in India. You may want to revise your return but it may unnecessarily complicate your assessment. Anyway, if the amount is not major, I would just close the account and forget about it. I would request you to seek guidance from your CA for the same. Thanks.
Dear Mr. Jigar,
I am a resident Indian.I have a friend in USA. That person has made a proposal
to me to invest around USD 50000 in USA in the initial stage for futures
trading in commodities (crude oil,gold,S & P 500 index, euro currency,
British pounds, Yen, Canadian dollar etc. He says that the trades would be done
on a daily basis with no positions held overnight. He will hold a limited
Power of Attorney to only trade the account. I would be having total control
of the funds.
My queries are:
1. Can I do this business? Is it legal ? Do I need prior RBI approval or can I
make the investment under the Liberalised Remittance Scheme (LRS)
with a ceiling of USD 250000 ?
2. What would be the tax implications ? Would it be speculation income in the
my hands ?
3. The friend will take 50 % share in profits. Would this be deductible in my
hands while computing my income?
4. Will I need to file US tax return ?
Could you please illuminate me on this matter for which I thank you in advance.
1. RBI does not allow residents to to forex trading or any margin trading. So while you are allowed to invest, you may not be allowed to do certain things.
2. As you are a resident in India, any income in USA would be taxable in India.
3. I doubt that unless you show it as a business and claim expense. However, please note that your business should be legal as allowed by RBI.
4. Yes, you would need to file a tax return in USA as well. Thanks.
Sir, we are a company in India. we are planning to open an account in USA under straits financial llc for the purpose of hedging. I want to know if we will transfer funds from India to our hedging account maintained by straits financial llc in USA, then Simply by filing Form 15CA,CB we can remit or there is other formalities that we should do like obtaining TRC from straits financial etc before remiting.
You can also hedge in India. I am not sure why you need to establish a company in USA for the same. Also, hedging is allowed as per RBI. You have to be very careful as to what you want to hedge and how. Please consult your CA. Thanks.
Sir i am not establishing a company in USA. I have just opened an account with straits financial,USA for the purpose of hedging.
My query is how much we can remit in a year $2.5 lac per annum without RBI approval. correct?
Q2. I have to pay tax in USA and file return in USA, then i will able to take credit of tax paid in USA in Indian income tax return. Correct?
1. I am not clear about what you plan to do. For hedging, there is no $250,000 limit except up to the value of import or export or foreign currency loans. $250,000 is the limit under LRS for remittance outside India – for investment and other purposes. If you plan to trade (not hedge) in forex, it is not allowed for residents by RBI.
2. As you are an Indian resident, your global income is taxable in India. If you have paid any tax on any income, while you have to include it in your return, you can claim credit for the tax paid in foreign country. Thanks.
Dear Mr. Jigar Patel:
Excellent blog and outstanding support and service being rendered! Thank you.
My wife and I are U.S.citizens holding OCI cards. We both moved to India in June 2012. After searching the web and looking at various tax documents and calculators, I have determined that for FY2014-15, I am a RNOR and my wife is ROR (I am happy to send you my calculation spreadsheet).
I am therefore filing an ITR1 (like I did for the last two years). However I believe I need to file an ITR2 for my wife. In the TR_FA section I am including bank account information on accounts that my wife is a joint account holder (she has no individual accounts). Is this required? Because she is a joint account holder and I am the primary account holder in RNOR status is it possible we don’t declare it this year but declare next year?
Secondly do we have to declare her 401K and IRA accounts? These were established during her employment well before our return to India in 2012. In any case the money in these accounts is not accessible until we turn 59.5. We are in our early 40snow.
Thank you for your advice.
Kind Regards,
Ravi
You need to declare 401k, IRA and all bank accounts where she is a owner. I too have a 401k and as I am an Ordinary Resident, I too need to declare the account to the income tax department when I file my taxes. Thanks.
Two follow up questions on your reply on the 401k query.
1. 401ks are trusts, so we were not able to report them till this year where provisions have been made for foreign trusts. Is this the correct interpretation ?
2. Are accruals in 401,taxed for RORs or is tax only at disbursal after 59.5 ?
1. I am not sure if 401k are trusts as you are the owner, beneficiary, manager, and trustee. I would consider it more like EPF or PPF.
2. I think tax on disbursement/withdrawal is as per US tax laws. As per India tax laws, dividend, interest and capital gain is to be included. Thanks.
401k are specifically designated as trusts by the IRA, in fact the trust formation has stringent conditions. And I am not the trustee, the financial institution is and the US Govt. published a list of formally approved trustees. Settlor is the employer. I am just the beneficiary.
Section 20 of the DTAA recognizes private pensions and the US IRS now recognizes IRAs as private pensions (did not do so earlier). This section of the DTAA specifically provides for taxation when pension is disbursed. In other words taxation is on withdrawal and not on accrual in the 401K/IRA. So as per DTAA taxation event is withdrawal for both USA and India. So why should one treat accrual as income ? Does not the DTAA override other provisions ?
I would not think 401k is a pension account as I have a 401k account and also a pension credit with my former employer. I am not aware of any notification or categorization of 401k account as pension. Please provide the official link. Thanks.
Dear Sir,
I am being transferred from our India office to US subsidiary office along with my family with 2 daughters. Apart from better salary package, I see it as an opportunity for my children with respect to their education.
I have 2 flats in Mumbai and is worth about 3 Crores and FD’s, PPF & Other investment to the tune of 1 Crore. Apart from this, in future, I would inherit property to the tune of 1 Crore from my parents.
I am travelling on L1 VISA and do have option to get it transferred to Green Card. I am tempted to go for Green Card as it would offer cheaper education for my daughters. I am also of the view that I would like to retire & come back to India after a period of 8-10 years.
I would be putting my flats for rent.
Questions:
(1) In the above said scenario, what should I know about the taxations in US and India?
(2) What would be the best scenario so as to be taxed at the minimum?
(3) I plan to pay for my parents expenses in India by transfer of money from US or from accruals from FD’s or Rent receivables in India. Which would be a better option?
Would appreciate your reply.
Thanks
Best Regards
SP
1-2. Please accept that you would need to pay tax in USA of your Indian income. Also, you would be required to report all your financial assets to IRS. This is even if you are on L1. While you may be a non-resident for 2015 depending on when you leave but from 2016, you would be a resident of USA, even on your L1.
3. All three option would not reduce your income. Only when you reduce your income, your tax is less. I would suggest, if possible, to gift a property or amount that will generate income (rent/interest) to your parents and save tax. You may receive it as inheritance later. Thanks.
Dear Sir
I was an NRI from Nov 2006 to Dec 2013. The number of days I visited India during this period is less than 700 days. So my current status is RNOR and it will change to RI in FY 2016.
I have one account still open abroad which doesnot earn any interest and I have proof of NRI salary income for these funds.
Do I still need to declare this foreign account in form 6 as per the undisclosed income act before end date of 30th Sep 2015 ?
Please advise.
Thank you very much in advance.
Best Regards
Shailey
No. Only Ordinary residents are required to pay tax on foreign income and declare foreign assets. Also, I don’t think it is your black money as you have already paid tax on the same in foreign country. Thanks.
Hi, I’m a US Citizen residing in India for the past 5 years. I need help with reporting US Bank interest income in ITR2. Since i have paid the tax on that income in US, i’m hoping that the DTAA article 11 (between US and India) would apply for calculating the tax on that income in India at 15% rather than the normal 30% rate on bank interest. But, schedules OS & SI wouldn’t allow me to enter the foreign interest income at special tax rate of 15% (fields aren’t editable) if i’m a (tax-) resident in India. Appreciate your help. Thanks.
You would need to claim the benefit / relief under DTAA i.e. section 90/90A and reduce your tax payable. Thanks.
Mr.Jigar Patel –
1. My son has returned to India around 2 years back.
2. His USA interest income plus the income on his property put together does not attract any tax in USA.
3. Since his USA interest income + rental income – standard deduction – rental expenses(mortgage interest, property taxes, maintenance) – his rental loss being carried from previous years – his capital losses ( 3000 per year) from previous years leaves his total income below taxable limit ( infact does not leave any net income).
4. This year when he shows his USA income in Indian taxes ( since his status will be not RNOR but Ordinary Citizen this year onwards) will he have to pay taxes for his interest and rental income in India ?
If Yes, this will be bit unfair and perplexing. Please clarify and help ?
Rgds
NRAO
1. Yes. As an Ordinary resident, his global income would be taxable and he would need to report all his US income in India. He may not get the standard deduction or rental expense as India has its own basic exemption limit (250,000) and deduction from rent (30%).
2. It won’t be unfair as you would not pay the tax on the same income. However, if you have not paid any taxes, you may have to pay the tax as per the laws of the country of your residence. Thanks.
Dear Mr Jigar,
I am a NRI, living in France. I did masters in France starting from Sept 2012. I was awarded scholarship from my French University which included full tuition fee waiver and 7000 Euro as interest fee loan. This loan used to credit monthly in my domestic Indian account. I have converted this account into NRO account this year. I have to repay this loan as my Masters in now over. I contacted my bank in India and they suggested to open NRE account which i did. They are suggesting me to first transfer this loan money from NRO to NRE account and then transfer the sum to my university from NRE account. Ill be really thankful to you if you can please clear my doubts –
1 Since this 7000 Euro is related to education, do i need to fill form 15s(exception list). ? I do not understand why i can not transfer this sum directly from NRO account as my bank suggested to open NRE account then transfer.
2. I need you suggestion as to decide if i should repay this loan from my Indian account(NRO) in which this amount used to credit or should i repay the amount back from my French account(i am going to start earning soon). Since there is lot of form filling/ CA involvement etc is needed if i repay the amount from NRO-NRE channel, i am thinking to repay the amount from my French earnings. I hope there wont be any tax complications because of the education loan i used to get in my Indian account.
Kindly help. I am looking forward to your valuable suggestion.
Thanks
1. You need to clarify if you are transferring EUR 7000 for tuition fees or for repayment of loan. Any transfer of NRO account that is not included in specified list would require CA certificate and documentation.
2. If you can repay from your French account, that would be easier. Thanks.
Thanks a lot for your reply. Your blog is really helpful and congratulations to you for such a nice effort.
Dear Sir,
I paid an amount from my NRE account to a local Indian account of a builder to buy a property. However the work hasn’t started yet and I wish to have the money credited back. As i can’t have the amount credited back to my NRE account, I am thinking to open and NRO account and deposit the money into the NRO account. Is this the right approach and will I have to pay any tax on that amount considering that its the same amount that I paid him.
Thanks for your help in advance.
Who said you can’t. The refund amount on the property booking paid out of NRE account is allowed to be directly credited to the same NRE account. Only if you receive some additional money (as interest/compensation), it will be taxable and can only be credited to NRO account. Thanks.
Hello Mr Patel,
I am An NRI based in Dubai since last 25 years,I have a sizeable FCNR Deposit in USD with Axis Bank Which on maturity I will like to transfer to Fedral Bank keeping it in USD ,However Axis Bank says transfer of USD not possible Inter bank in India From One FCNR Account to Another.Can You please confirm the same
Rgds & thanks in advance
I sincerely doubt that. I know a bank who has transferred funds in FCNR account to another bank. They may not want to loose your sizable amount. I suggest you try but if Axis bank is ready to transfer, I suggest you to transfer to your Dubai account in USD and transfer it back to Federal bank in India in USD. I know it will be expensive but won’t be more than $100, worth the peace of mind. Thanks.
Hello,
My father aged 75 is about to receive monies from a sale of an office – this is a distress sale – loss as builder has taken a long time to complete and give possession.
However, my parents being old and alone, and me being away from India – they do not wish to keep the funds in their account.
From what some bankers have told us, I should open both an NRE and NRO account.
My father can transfer the funds into my NRO account – and I can then place on FD with interest being transferred to their account. However, got to know TDS on NRO account is 30%.
Please could you guide us re: Income Tax issues as this is a loss as well as how to save the 30% TDS. Can the amount be transferred from my parents account to my NRO and then to NRE via the form 15CA / 15 CB. All I want is to safeguard this money for them, transfer interest regularly in their account and transfer money via internet banking whenever an emergency arises.
Thank you.
I would suggest to keep money in their name only and invest so there is no tax. Even if you keep money in NRE, you may have to pay tax in your home country as well as compliance and reporting requirements, if any. Let me know if you need help with investments to generate tax free income. Thanks.
Dear sir
i am working in Abu dhabi and i have axis bank residence account any every month my company transfer my monry to my account so i have to pay tax ?
I would suggest your company to pay you in Abudhabi and then you transfer the funds to your Axis bank account. If your company is transferring funds to your account in India, it may be regarded as income received in India and may be taxable, unnecessarily complicating the matter. Thanks.
Dear Sir
thanks for your comment. but last two years my company pay me on same account , but i never receive any information from anywhere. and my company can not give me my pay in here it is direct transfer from company head office Korea to Ahmadabad.
I think you can change your bank account and inform the company of the same. The company will transfer the funds into your new account. Thanks.
Dear Gigar ji,
I got my NRI status about 2-3 years back but I did not change my residential to NRI in my saving bank accounts in 3 banks.
I am on dependent on my daughters here in USA. I am not working in US and have no personal income.
I would like to know whether I need to open 3 NRO/ NRE accounts or I need to close some accounts. Whether these requirements are time bound?
You are required to inform change in residential status within reasonable period. The reasonable period is not defined but I would consider 1 month or at maximum 6 months as reasonable period. You just tell the banks you have resident account that now you are living in USA and they would re-designate your account as NRO. You may also continue to use the same account number and cheque book. Thanks.
Dear Jigar,
Thank you very much for your prompt response, but I am sorry to convey my thanks lately.
Apart from above, I have some more doubts. Actually, I am not knowing much about Form 8938 and FBAR. I have read these terms in your blogs.
As informed you in my blog dated Sep 13th, I am dependent on my daughters,not having any income in USA as not doing any work being old( now 76yrs)
On the other hand in India I have some income such as pension, bank interest etc etc.I have not disclosed such income in USA. . In India I am regularly filing Incometax Returns.
What I am required to do now to avoid any complications in future.
2ndly is there any time or date prescribed for completing such requirements.
Thank you very much in advance.
R.S.
I suggest you to evaluate one of disclosure program – Overseas Voluntary Disclosure ot Streamlined Compliance and contact an experienced CPA in USA for the same. Thanks.
sir,
thanks for clarifying many of my doubts. still i need a clarification.
in india nre deposit interest is reported in the tax return and is exempted.
is it compulsory to add this indian deposit interest income to usa income at usa
while submitting usa tax return?? is there any way to get exemption from
paying tax on account of this indian nre deposit interest income?
Yes, you have to report your NRE interest income in USA and pay tax on the same. There is no exemption. The Indian government has given exemption as they want foreign exchange. There is no benefit of NRE interest to USA and as a result no exemption available to US resident for interest on NRE accounts. Thanks.
Dear Jigarji,
My cousin was in US for past several years and has return to India during the FY 2014-15. His residential status in India is RNOR under Income Tax. Even after returning he controls a LLC in USA for his sole proprietorship business in USA. Whether income from such LLC will be taxable in India in his hands? What about applicability of section 44AA and 44AB? He has already filed ITR 2 in India.
Regards
JR
As his residential status is RNOR, any business income controlled from India would be taxable in India. Ofcourse, he can claim the DTAA benefit and would be able to take the credit for taxes paid in USA. About tax audit requirements, there is not much clarity but I think 44AA/AB would be applicable as income is taxable in India as Business income. Thanks.
Sir,
A family member returned from his stay abroad which was since 1986 to 1997 (was NRI for entire period). In your opinion, for how long his status was as RNOR?
Usually untill 1999, max upto 1999-2000 if the person returned late in the year 1997. Thanks.
Sir,
Many thanks for your response. Apparently, at the time of his return which was towards the end of 97, one could have the RNOR status for upto nine years (as interpreted then) which was changed to two years following the 2003 amendment. The question is whether he could have RNOR status till 2003?
You would need to check and interpret the law for the respective year. If the 1997 law states your status was RNOR till 2003, you would have RNOR status until 2003. Thanks.
Respected Sir,
I am senior citizen with GC since last 5 year and on current trip here to dispose flat in mumbai and would like to know implication here and in usa. I am dependent on my daughter there in usa .I mean implication tax wise and also on citizenship issue.What is current repatriation rule for transferring money? I shall greatly appreciate your valuable advice.
yogesh bhatt
I suggest you contact your immigration lawyer for citizenship issue. If you sell a flat, the buyer deduct TDS, CA issues certificate in Form 15CB, you file form 15CA to income tax department, apply to bank with the required documents, you are allowed to transfer funds to USA. Also, you would need to file a tax return in India and also in USA. Thanks.
Sir,
While filing a declaration under the compliance window in form6 can I deduct loans credited to my account from sum total of all deposits under section 5 of the act ??
You need to first evaluate whether you need to file/declare under compliance window. Thanks.
Hi, I am working in NZ with a Resident Visa for the past 18 months. I have been transferring about $1000 every month to my Savings account in India. The amount transferred to my SB ac in ICICI is again transferred to my Mothers account and some to my HDFC SB account to cover my Home Loan deduction.
Kindly suggest in the following :
1) Should I be converting my bank accounts to NRE or NRO in india.
2) Is the money transferred taxable, as i am not investing the money and it is for loan repayment for the house in my name where my parents stay now and for their day to day expenses and they do not have any other source of income.
Thanks.
1. As an NRI, you are not allowed to have a resident account. Your resident account needs to be re-designated as NRO.
2. Transfer of money from your one account to your another account is not income and is not taxable. Any transfer to your mother’s account is to be considered as a gift and recommended to have a gift letter for the same. Thanks.
sir,
My cousin had returned to India during June 2005. She migrated to US during the year 1991 after some time she become US citizen. For 1st 5 years she never visited India. There after she stated to visit India for holidays say 3 weeks each year. Since 2005 she become resident in India. How long she could be RNOR. Would she be require to declare her investment in social security? and income from apartment bought in 2012 on mortgage?
Thanks.
Rao
Thanks
She would be RNOR for max. of 3 years. Your cousin may not need to declare investments in Social security. Actually, I don’t think there is any investment in social security except years of service and social security is deducted from the income. Any income in USA needs to be reported and included as income in India. If she is paying interest, she may be able to deduct the same. Thanks.
Hi!…i had a query.I am a US resident alien for many years now and i opened a nre/nro account in india.I have got funds (i.e. a LOAN for 5 years, amounting to $300k) transferred to the nre/nro account from a friend/relative in Hongkong.
Do i need to declare that loan to IRS in USA and pay any taxes/interest on it??
Kindly guide me on the steps to be taken so that i do not face any hassles and if at all possibly nil taxes/interest….
Thank you soo much for having this wonderful blog and helping us out!
1. You would need to declare your funds in bank account as it is in your name.
2. If you are paying interest, you may want to show the same. Thanks.
Hi Jigar, blog is a great initiative.
We have been residents of India for several years now but had kept our IRAs (from 401k) and a brokerage account. So for these years the dividends, interest and gains were not disclosed in India though all taxes paid in US.
We are confused, do these come under black money act for 60 % penalty ? The sources are explained. Do we only pay on the gains ? or on te whole balance though it is explained income ?
Thanks
Jai
I would not consider it as a black money. However, I would suggest you to keep the cost of original investment and report the balance as income when you sell. e.g. your investment $1000, dividend and interest $100, sale value $1500. Your cost would still be $1000 and not $1100 and you would report $500 as income when you sell, there is no unreported income. Ofcourse, the year is different but it can be explained. Thanks.
Dear Sir,
I am holding NRI Status as i am residing in qatar from last 3 year. As per Fema act , NRI can’t buy agricultural land in india . Now situation is , My mother has agricultural land who is staying india .She is sick now a days , want to transfer or make registry of land on my name.
is it possible to transfer that land on my Name ?
Please clarify
Thanks
Kumar.
Gift of Agricultural land to NRI is not allowed. You may be able to own the agricultural land only through inheritance. I would suggest you to ask your mother to prepare her WILL and register the same. Thanks.
My husband. a US citizen worked in Bangalore for 4 years, had a bank account there. Now he is back in US. In addition to some money, he has 2 Tax saver accounts there which will mature in 2018. When he was returning back, he had told them that he is going back to US. However his account classification was not changed and he was told that his salary account will change to savings if no salary is deposited for a few months and he can continue keeping his savings account. Now question is are we allowed to keep bank account as savings and if not what the procedure to change and what it should be change to NRE or NRO. He does not have any plan to visit India in near future, so how do we proceed and what forms we need?
Your answer will be really appreciated.
If you inform the bank of your change in residential status, your bank would re-designate your resident account as NRO. You may open an NRE account with the same bank. Please contact your bank for the forms and procedures. Thanks.
The bank is saying you have to close tax saver deposit as it cannot be re designated. But at time deposits were booked, it was told that tax saver deposit cannot be prematurely closed and will not be affected if resident status changes.
NRIs are not allowed to have 5 year tax saving FD. However, residents can. I also think tax saver FDs can not be prematurely withdrawn. And if you do, you may lose the tax benefit. I suggest you to contact your bank tell them that the residential status is now changed to NRI and then do as they say. Thanks.
Hello Mr. Jigar,
1st of all thanks for the detailed information via this blog. I have a few queries regarding sale of property in India.
Me & My wife bought an apartment in India in 2006 when we were Indian resident and lived in it till we relocated to USA in 2013 on L1 visa, now we have been residing in US and are planning to sell the property in India, with the intention of repatriating the funds from the same.
On the India front, I understand the capital gains will be taxed @ 20%, & for US taxation since this was our primary residence for 2 out of the last 5 years (http://www.irs.gov/publications/p523/ar02.html#en_US_2014_publink1000200611) , there should be not tax on gains up to USD 2,50,000/-. Would you be willing to comment if this understanding is correct?
What would be the procedure/clearances required to repatriate the amount out of india to US?
Can I defer the India capital gains tax if I re-invested all the gains in India for another property – in this case there should be no capital gains in India – but can I still use the US exclusion rule to not pay any US capital gains tax? In future if I sell the new property in India, then US will tax the gains and so will India but I can offset Indian portion against the US portion due to DTAA.
Thanks,
Krishnan
Even if you sell the property now and pay tax in India, you are allowed to offset taxes paid in India against US taxes. There is no need to go one additional step and buying another property and keep it for minimum 3 years (a requirement in India to save tax.) Thanks.
Hello please can you advice me i have a resident demat and trading account, mutual fund and life insurance i bought while i was resident. I inherited shares that are in the resident demat account. I am a nri us citizen now how do i sell everything. In resident account or non pins demat and trading account. Will i be taxed. These are all longterm. Can i liquidate in my resident account and then transfer to nro. Do i need to update my pan card to my nri status and married name
Thank you for you help
I would suggest you to do everything legally as it would help you to eitehr invest in India or remit funds outside India and also clear your accounts with Income Tax Department as well as IRS for reporting of assets, income and filing tax returns. So, hold all shares as NRI, transfer funds to NRO account, pay tax, report inheritance to IRS, file tax return in India, file forms and comply with requirements in USA, file tax return in USA, get CA certificate in form 15CB, file form 15CA, transfer funds to NRE or your country of residence. Please contact your CA or us if you need our help. Thanks.
Dear sir,
Me and my wife jointly own house in London and In this financial year my wife will be resident Indian while i will remain non resident.
we are having rental income from London property and we are paying tax on it in UK.
I want to know as we are paying tax in UK for rental income do my wife need to file ITR in india to show this rental income. She don’t have any other income source except this. We are not repatriating any rental income from UK, as we are using it to pay for our mortgage in UK.
Thank you in advance for your time and advise.
Anil
Please check if your wife would be Ordinary Resident (OR) or Not Ordinary Resident (NOR). Only if your or your wife’s residential status is OR, you would need to file the tax return and report foreign income. Thanks.
Dear Sir, I’m an NRI, I just sold a property in India that I ad for more than 10 years. The buyer deducted the TDS. If I invest the amount I got (after TDS) in a residential property will they refund the TDS?
Yes, depending on how much you invest. Thanks.
I am a student studying abroad. I left in September 2014. Accordingly, I had to open a bank account here. I am in receipt of a scholarship from the University. I read that all NRIs are allowed to open bank accounts in foreign countries without having to declare it. But the new Undisclosed Foreign Income and Assets has me confused. For this last financial year, am I a resident or an NRI? As a foreign student I thought I would be an NRI but FEMA definition has also incorporated an NRIs stay in India totaling to 182 days or more during preceding year. So I am confused. Do I have to give my international student bank account details? Thank you very much in advance for your advice.
As you stayed in India for less than 6 months during the financial year (April – March), you would be considered an NRI and your foreign scholarship income won’t be taxable in India. As per FEMA, a student leaving India for study is considered an NRI from the date of leaving India. Also, FEMA laws regulate accounts and investments; Income Tax laws regulate taxation. Thanks.
Hi,
My dad is an Indian citizen. He passed away recently. My mom is a US citizen.
We are tryng to transfer my father’s assets to my mothers name.
1. What is the best type of account for such assets for a US citizen to minimize tax implications?
2. Is there any law that allows tax free transfer of assets on death?
3. Is the spouse automatically a successor or do I need a will to prov this?
Thanks in advance
shree
1. On inheritance, the money can only be credited to NRO account.
2. Yes, it is not taxable. However, care needs to be taken for proper reporting and collecting documents based on the property for better planning.
3. Without Will, the property is passed to all legal heir i.e. spouse and children equally. It can go to one person only through Will. I suggest you contact your CA.
Please also contact us if you have any question. Thanks.
Dear Mr Patel,
I am a student studying abroad from September 2014. Accordingly, I had to open a bank account here where I am studying. I am in receipt of a scholarship from the University for basic living expenses here so have not transferred any money to my foreign account from India and will not be sending any money to India either.
I read that all NRIs are allowed to open bank accounts in foreign countries without having to declare it. But the new Undisclosed Foreign Income and Assets has me confused. For this last financial year, am I a resident or an NRI? As a foreign student I thought I would be an NRI but FEMA definition has also incorporated an NRIs stay in India totaling to 182 days or more during preceding year. So I am confused.
So my questions are, what would my resident status be while filing tax? Do I have to give my international student bank account details? And do I have to convert my Indian savings and fixed deposit accounts to NRO status?
I would really appreciate your response.
Thank you very much in advance.
As you stayed in India for less than 6 months during the financial year (April – March), you would be considered an NRI and your foreign scholarship income won’t be taxable in India. As per FEMA, a student leaving India for study is considered an NRI from the date of leaving India. Also, FEMA laws regulate accounts and investments; Income Tax laws regulate taxation. As your status is NRI while filing tax return, you won’t be required to report your foreign accounts. Thanks.
Dear Mr Patel,
Thank you so very much for your response.
As I did not know about this and only read about tax laws recently in the news and started hunting for information, my Indian accounts are still resident accounts and not yet NRO accounts. Would that be an issue? All my accounts are joint with a family member who is a resident Indian. I have income from investments in them but they are below the taxable limit.
I have always been filing my own returns because it has been straight forward so I really appreciate your advice at this confusing stage.
Thank you once again.
Please contact your bank about how to change to NRO account. Joint holders are allowed in NRO accounts. Thanks.
Dear Mr. Patel
I am a US citizen, living in India with my wife and kid (all are US citizens) since January 2015. We moved here as my mother in law was serious in hospiltal and is still recovering.
I work for a US company based in NJ, get my pay in USD as well.
My mailing address on my paystubs and W2 are NJ address (friends address to receive any communication). We have no assets in the US – Home or property.
I have visited the US about 5 times till now for about 15 days each time for work.
As I have only visited US for a total of maybe 80 days in the year. How will my taxes work? Do I need to pay taxes in India or just US taxes or both?
Also as I am in India, I have declined Health coverage with my employer and taken private insurance here in India, so do i need to pay a penalty in my tax returns when i file next year.
Also as my wife and kid have never left india, only me, and we file a joint return, how does that impact tax status.
Appologies for so many questions, but we are a bit confused and need some help.
regards
W Braganza
1. As you are a US citizen, you are a US resident for tax purpose and would have to pay tax in USA. As you are also an Indian resident (living in India for 182+ days), you would be considered as a resident in India. However, I would assume your residential status would be “Not Ordinary Resident”.
2. Your income is not taxed twice as you would get credit for the tax paid in another country as per Double Tax Avoidance Agreement (DTAA) between USA and India.
3. In India, there is no joint return and you and your wife both would file tax return separately. Thanks.
Dear Mr. Patel,
I am in process of taking franchisee of a proprietary trading firm, which recruits traders from all over the world, to trade company’s capital. After signing an agreement with them, I will be having rights to recruit traders from Maharashtra region. Those recruited traders will be trading the instruments which are specified by the company. Instruments include 11 major currency pairs (eurusd, usdjpy etc), 5 indices (e-mini, dow jones, nasdaq, dax30, and FTSE), gold, and crude. Though I understand that trading forex is illegal in India, here in this case, these traders will not be trading their own capital; they will be trading company’s capital. In short, they will sending their buy/sell signals through an Expert Adviser (a program developed by company) and they will be getting paid for the profits they have generated at the end of the month.
My query is, is it okay to go ahead with this business? If yes, what kind of registrations do I need?
Your advise is much appreciated. Thanks in advance.
Derivative trading in forex by residents is not allowed by RBI. I would not recommend. Please consult your CA/advisor. Thanks.
Dear All,
I have remitted $ 8,500 for import of goods as an advance payment only after receiving the shipping details from the seller thru Axis Bank (AD).
Post payment I came to know that the seller is fraudulent company and have not shipped any goods. Hence I have not received any goods, do I have to report the same to RBI as there is an outflow of Foreign Exchange against which there is no import of goods.
What supporting document should I create and place it with me for future reference.
Please advice.
Thank you
Regards,
Mayank
I would recommend you to contact Axis bank – forex desk and they will help you in this regard. Thanks.
My son is now a US green Card holder. He made advance payment of Rs.1 crore for a villa in Chennai in 2012, while he was in Chennai then. Since he wanted to settle in USA he requested the builder and they agreed to refund. But, the transaction will be made to his NRO account. Since the transfer of amount from NRO to NRE will have submit 15CA/15CB, I am advised to follow these steps:
1. Son can gift me this amount from his NRO account to my resident SB account.
2. Then I can gift this amount to my son’s USA Bank account.
Is it practicable? Is there any problem in doing so? Will it make any tax payment?
I would recommend transfer of funds from his NRO to US account after submitting 15CB/15CA. The transaction you plan to undertake is not a gift but that of a loan and it is done to circumvent the laws and is not legal. Thanks.
As your son is green card holder he has to report all financial assets details in his 1040 tax return and Fincen114. If he give gift to you then he needs to file US gift tax return. He is also need to report capital gain/loss on sale of villa.
Dear sir,
sir, really you are doing a great job which is sign of your expertise as well as kind heart. Sir my brother is living africa and having nri status since 2007. This year he purchased a house at his own name and transferred fund from african company to nre account india directly as family maintenance in Telegraphic transfer ,it was 5-7 year commission. He has earned this amount by commission income there but don’t have proof of them as he is not so aware and educated about it. I filled his itr as nre status from last 2-3 years only by showing few amount of as exmpted income only . He transferred 4-5 lac 2 years before and now this year 25 lac to purchase residential house.
My CA filled itr showing 7- 8 lac as exempted income this year only.
when i feel it may problem i consult another tax consultant and he revised by showing nil exempted income 00. I got your site address now. So please advise me what should i do to make less to less legal complications ? and is it ok whatever has done by second tax consultant. I will be thankful of you.
1. Any income earned by your brother as an NRI outside India is not an income in India. So question of exempt income does not arise.
2. As the amount is transferred by the company directly, it can be termed as income received in India and may be taxable. I would suggest your brother to open a bank account in Africa and transfer funds to his account first and only transfer to India from his African savings account. If he does not feel safe to have an account in African bank, any country except India is okay so there is not a single doubt of income. Thanks.
Dear Sir,
Thank you for providing this service and for your knowledge in this matter. I have a quick question. I am a Indian Citizen and resident and have not visited US in 5 years. Last time I was there, I opened US Brokerage account with a very small amount of funds and had my daughter who is a US citizen manages the account for trading US stocks only. At that time the account was very small but has grown over the years. Since I only trade stocks, there is no interest earned on the account. I do not file US taxes. My impression is that the direct information exchange from the US to India is only for interest bearing accounts/deposits and the US does not report the account balance to the India IT department. Is this correct? Under the new IGA with US, do US institutions report brokerage accounts to the IRS which in turn share it with the IT department in India and what if any information do they share?
While under FATCA, India will share data since June 30, 2014. I would expect USA to share the data in future. Personally, I would recommend you to report your foreign assets and any income to IT in India and pay tax in India, else, it would be considered as black money. Thanks.
You may gift the investments to your daughter and close the account, but the legality of this needs to be checked. Please consult your CA. Thanks.
How much can be gifted from parents to kids? And what are the tax implications?
Apart from a NRE account what are some of the other ways of transferring the money here to the US? How much? What are the tax implications?
1. Resident parent to resident kid – no limit. Resident parent to NRI kids – $250,000 per year. No gift tax in India. Gift tax of the recipient to be checked based on country of residence of NRI kids
2. NRI can remit upto $1million provided tax, if any, has been paid. There is no tax on transfer but only in income. Thanks.
Hi Jigar,
Its a great experience reading all the queries on your blog. Great work. I am working alone in Singapore for last 1.5 years. My family is still in India. I remit my salary to my Indian NRE account.
1) I transfer money from my NRE account to my wife’s and father’s saving (resident) account monthly for family expenses. Does they need to pay any income tax for that?
2) I have purchased some jewellery for my wife this year Do I need to inform this to IT department?
3) My wife is a resident indian and belongs to farmer family. Can she buy farm land on her name with the money I give it to her?
Thanking you.
regards,
Prashant
1. It is okay. No tax to be paid.
2. No. You would keep the receipt. If and when you sell the jewellery, you would need to calculate the capital gain and pay tax, if any and include it in your income tax return.
3. You are supposed to give money for her maintenance only. A reasonable savings is okay. I am not sure she would have saved enough out of maintenance money in just 1.5 years to buy farm land. Any investments by your wife her would be considered as your investments only. I would not recommend. Thanks.
I am a citizen and ordinary resident of India. I have retained foreign accounts to hold funds that I earned when I was non-resident. I have a question about capital gains on foreign asset sale.
I acquire a foreign asset (stocks, bonds) at $100 on 1 Jan 2012.
I sell it at $120 on 1 Jan 2015.
Should the purchase price be converted to INR at the rates prevailing on the date of purchase, and the sale price be converted to INR at the rates prevailing on the date of sale to calculate the gain, and thereby paying capital gains on the unrealized foreign exchange appreciation on the entire capital?
OR
Can I convert the $20 gain at the exchange rate prevailing on the date of sale?
As you report your cost price and sale price in INR, I would think you would calculated rate on purchase and sale respectively. However, you may get the indexation benefit, which may offset your forex gain. Thanks.
Sir,
A public sector undertaking is paying $2500 to industry trade journal in bhutan whether it will required to furnish the form 15CA & 15CB with reference to the provision of income tax act is there any tax liability on this matter
As payment is more than Rs. 50,000, 15CB/15CA would be required. CBDT has recently issued a new notification on Dec 16 revising requirements for 15CB/15CA from April 1, 2016. Based on the revised guidelines, assuming no change until then, it appears that you may not require 15CB after April 1, 2016 for making this payment. Thanks.
Sir please suggest me that if i have remitted some taxable amount to NRI in india & that too in an indian bank then does this transaction attracts compliance for form 15 CA & Form 15 CB..
Yes, any payment to NRI would require 15CB/15CA. The location of NRI or bank would not matter. Thanks.
Thanks sir, also please suggest me on same issue that TDS applicable u/s 194J has been deducted & deposited. For the purpose NRI, should i adopt the criteria as per sec 6 in IT Act. I have remitted approx 4500/- USD to NRI in his indian a/c. This peron came to India in mid April 2015 and payment was made in July & September respectively. My Tax manager is of view that said person is not covered in the scope of this compliance. Sir please help me out on one more issue. I have remitted some amount to an Organisation (JLL) whose business is spread across the world. Remittance is made to its indian branch. Then would this payment be liable to comply for form 15CA/CB.
Many Thanks
Any payment to NRI is covered under section 195 and you are required to deduct TDS as per its provision. I suggest you contact your CA and seek professional guidance. Thanks.
Dear Jigar,
You are really great and before ,going ahead i want to appreciate your knowledgeable guidance:
My question:
I am a new Canadian citizen. i was doing job in Canada. recently i have purchased a condo property and have taken the mortgage from a Bank with 5 years fixed interest rate. just after buying this property i have to go back to india as i got better job in india, but my citizen son one aged 17 years and another 18 plus will stay and live in same condo in Canada to pursue their school and university studies. My wife is a permanent resident but she will also accompany me and we want to live in india for 5 to 10 years.
Now my question is as i will not have any income in Canada by which i will be able to re pay my mortgage instalment. i want to pay my instalment from my india savings or salary or NRI account.
if, this is possible how i should transfer this amount? i am planning to transfer annually mortgage amount plus strata fees.
In addition to this i have to give maintenance expenses to my kids. The total amount may come up to 2000 dollars a month or 24000 CAD in a year.
please suggest, what will be tax implication in india and Canada.
Thanks
A .mishra
A resident is allowed to transfer upto an equivalent of US $250,000 out of India in a year under LRS – Liberalized Remittance Scheme. I am sure it will more than cover your requirements. Please contact your bank in India to understand the process. Thanks.
Hi Jigar,
1. I am an NRI with a NRI demat account in India. I have sold some shares and the money has gone into my NRO account held jointly with my mother (resident of India).
I am told I need a certificate from a CA (form 15) to be able to transfer the money electronically to my bank overseas.
All my shares were bought approx 10-15 yrs ago and initially were bought in paper form and then transferred to a demat account with ICICI Bank.
A few years ago I transferred the shares to a demat account with a different bank (HDFC). I have only sold shares online (no broker). How can I trace the cost price and date of purchase to prove that my profit is long term capital gains ?
Is it sufficient to show a demat holdings statement from a few years ago listing my shares to prove it is long term gain?
2. My mother withdraws money from our joint NRO account for some expenses. Does she need a Form 15 too? And, can I ask her to bring some of my money from the NRO account as forex as she is planning to visit me soon? If she brings it as her expense money will she still need form 15?
If you could answer these questions I would be very grateful.
Regards,
Shubha
1. Yes, 15CB/15CA will be required. Also, I would recommend you to contact your CA, try to find the cost, calculate capital gain and file your tax return. To prove long term, holding of 12+months is okay.
2. Any withdrawal would not require 15CB/15CA. Only remittance outside India would require 15CB/15CA. Also, as it is your money, any transfer to her is considered as gift. Anyway, a resident is allowed upto $10,000 for any foreign travel (in currency and TC combined) as per FEMA. Thanks.
Hi Sir,
I assume NRE account-principal & interest is non-taxable in India but in USA,Do i need to pay tax for complete interest earned or is there any exemption limit for non-US citizens working in US (work visa not Green card holder ?
Second question, is whole amount held in NRE is completely repartiable or is there any limit applicable ?
I assume no tax need to be paid in US after transfer to US account as this is amount already earned and tax paid in US ,is that correct ?
1. You would need to report all interest in your 1040.
2. NRE account balance is fully repatriable without any limit.
3. Tax is on Income and not on principal. As the principal in NRE account is after-tax money i.e. you have reported to Indian and US government, as required, you would pay tax only on the interest amount. Thanks.
Sir
If I own a sole proprietorship firm in Hong Kong can I Gift my sister 100000$ in India and will that be tax free for her and what all documents will we require for that.
And can we do it legally
Any gift from brother is legal and taxfree in India . However, I would recommend to have a proper gift letter/deed explaining source, PAN of both and properly signed for her records. Thanks.
Dear Mr. Patel,
I am an Indian citizen by birth (and never went out of India). Recently an US company offered me employment such that I will work for them remotely from India. They don’t have any office here in India. They will pay me a fixed amount of $1000 every month as salary. They also sent me W-8BEN form to fill up & sign and revert back to them. I understand that I need to pay taxes in India on this income.
My questions:
1. Can they hire me as employee?
2. Will they deduct any tax from my salary?
3. Is it okay if they wire-transfer my salary directly to my savings A/c here?
4. Is it better to work as freelancer consultant rather than working as their employee?
Thank you,
Partha Mitra
1. I would think they will pay you as a contractor and not employee.
2. I think, they would. Please confirm with the company. You may negotiate to receive “net of tax” payment.
3. Yes.
4. Your income would be taxable. If as a consultant, you mail claim certain expense (e.g. internet, electricity, computer,etc.) as business expense and reduce your tax liability. Bottom line, choose the option that gives you better after tax income. Thanks.
Dear Sir,
Could you please clarify on below queries
1. In India Long term capital gain from Shares,is completely tax exempt even for NRI’s but do i need to pay tax for that long term capital gain in USA ,if so what % tax?
2. I’m NRI (USA) and My mother has some shares in Demat and if she want to gift
those shares to my NRI demat account, do i need to pay any taxes for transfer or only when i sell the shares?
Thanks,.
Skumar.
1. As per your US tax laws in the same manner as if you sold a share in USA. Please consult your CPA.
2. Gift to close relative is tax free. However, RBI limit for gift of shares to NRI would apply. Thanks.
I don’t really have a question.
I just want to congratulate you on this phenomenal blog and your propensity to offer clarity to people around a matter as important as their finances.
I will do everything i can to popularize this forum.
Warm Regards,
Sanket
Thank you. Really appreciate your kind words. Best regards.
Sir, I am a US citizen and opened a demat account with a big bank in India to deposit shares of an Indian company that I bought a number of years ago. They sent the share certificates to the company for verification and apparently the company returned it on grounds of signature mismatch. Since then the shares have been lost and my innumerable emails to the bank have produced no result. Four years have elapsed and the bank does not even take responsibility for this. I have even raised this matter to the higher management.
I know this may not be your area of expertise. Still, can you at least suggest ways how I proceed to get my shares back? Thank you.
1. I would think that you would have photocopy of the shares sent for demat. I suggest you contact the company’s Registrar & Transfer Agent and inquire about obtaining duplicate share certificate. You may need to provide an affidavit on a stamp paper and get it notarized. Once you receive duplicate physical copy, you may send again for demat.
2. Please note that an NRI is allowed to own shares of companies under PIS – Portfolio Investment Scheme of RBI only. So you would need to open NRO-PIS and related NRO-Demat account as the shares were purchased from your India source.
3. We specialize in ALL matters related to NRI investments so this is also covered. Please contact us if you need any help in this. Thanks.
Dear Mr. Patel, I handed over the 90 certificates (100 shares each) to the Bank people without making photocopies. They were signed by me in their presence! Of course I have the full information on the shares in the paper copy of the application. And I did write to the Registrar of the company but they would not even reply.
I think my bank should feel responsible and make all the necessary efforts for returning the shares to me. Sad to say I have come to accept little integrity in the Indian companies.
I would think the Registrar of the company would have all records. You may also be getting communications for AGM or dividend etc. Please follow up with them to get duplicate share certificate. You may also follow up with the bank and complain to the respective person for the same. Please contact us if needed. Thanks.
Dear Sir: My questions is that I have invested in fixed deposits for 3 and 5 years for NRE and also one year and 2 year NREs. Now when I started the money was changed from dollars to Rupees and the exchange rate was 48-54 and now it is 64. So even with a interest rate of 9percent, I am not breaking even but losing money if I cash the money now. The amount possibly is close to $50,000. How do I report this. In my mind there is income but when I repatriate, there is no interest income but loss.
Yes, the income is interest so you would convert the interest in INR into USD as per the exchange rate published by the Dept of US Treasury and report in your 1040. You would also need to file FBAR form as your foreign financial account balance is more than $10,000. Thanks.
I am an NRI returning to India by the end of the year. I would like to know whether I can avoid income tax on my fixed Deposit interest, if I manage to stay out of India for more than 182 days in a financial Year. I am having NRE Fixed deposits maturing after 5 yeas period. Interest Income is more that tax limit permitted limit under tax.
1. As per RBI rules, on your return to India, you are not allowed to maintain NRE account. The balance in NRE account needs to be transferred to your resident account or your RFC (Resident Foreign Currency) account.
2. While income on resident account is taxable, interest on RFC account would be taxable only if you are an Ordinary Resident as per Income Tax Act.
3. As you are an Indian citizen, you would also be considered as resident if you live in India for 60 days in a year and total of 365 days in 4 previous years.
4. In India, there are many avenues to earn tax free income. If you need our help in tax-efficient investments, please contact us. Thanks.
sir, In FY 2012-13 I was abroad for job and salary earned or accrued outside India and they had deducted my tax also and my residential status is RNOR but in that year I have also purchased a plot in India and I have received a letter from department to file a return …. I just wanna know whether I am liable file a return or not
You are liable to file tax return if your income is more than basic exemption level, which I think was Rs. 200,000. Please contact your CA. Thanks.
A US citizen has invested in a Private Limited Company by subscribing to the shares of such a company. Does the company have to do any reporting under the FATCA enactment
FATCA applies to Financial Institutions only so private companies would not have to provide details. However, private companies need to report ownership by NRIs to ROC. So in future, ROC may require reporting or may report to IT department. However, there is no requirement as of now. Thanks.
I’m Indian (not a US resident) & own a sole-member disregarded LLC in Delaware. I’ve EIN but no physical presence in USA i.e. no employees, office, sales & advertisement team in USA. I am generating some income from my online software which works as SAAS business model. We have customers around the world including USA. What are my tax liabilities?
Please consult your CPA for the same. Thanks.
Hi,
First of all thanks for your time and your service.
I have couple of questions
my background:
In US, since 2011 on H1b(work permit)
I have been transferring money to India, to my dad, to my mom SB account, not exceeding 10k/year.
and also i transfer to my account limiting 10k/year for loan EMI purpose.
I have property on loan worth 30 lacs
1) I have known that there is limit of $14000/year as gift to my parents without implying any tax in US. Is it non-taxable for my parents as well in India?
2) with minimum tax implication, how should i transfer $20000 to India and keep it as FD? I dont have problem to keep FD under my parents name.
3) as per FBAR, i should declare accounts with more than $10000 in any time of year, while filling tax in US. Is it possible if i keep on transferring, lets say $9000, to my India Account and i again transfer it to my parents, before i transfer $9000 to my account. such a way any time of year, my account doesn’t exceed $10000 and hence i dont have to disclose in FBAR
Appreciate your views on these.
1. As per US tax laws, there is no gift tax on you for giving gift to anyone upto $14000. So you may give $14000 to your father and $14000 to your mother and any other person. However, as per Indian tax laws, gift tax is on receiver. However, gift from relative (son) is not taxable.
2. If you invest in India in your name, you would need to report income in USA and pay tax on it. While India offers amazing investments to earn tax free return, you would need to pay tax in USA on the same taxfree income in India.
3. All accounts to be reported, if it is more than $10000. If you transfer $9000 and withdraw and transfer again, the maximum balance is still $9000 and you may not report. Thanks.
Hi
I am NRI, staying in US.
As per US tax law, we have to declare principle+interest of NRE account to IRS, which would fetch US tax.
How is it advisable to keep money in NRE, then NRO?
Thanks in advance
Interest would be taxable. There is no tax on Principal. However, you would need to declare the highest balance in FBAR and FATCA form, if applicable. I would suggest to keep money in NRE because of full repatriability and simplify your tax return (no need to calculate foreign tax credit as interest on NRE is exempt from tax in India). Thanks.
I have NRO with SBI.I want to transfer my entire funds to US bank. Please help me with following query
1 If I transfer from SBI India to SBI USA do I still need CA certificate in form 15CB and 15CA
2 I never made a PAN card before.Under what circumstance is PAN number not needed
3. From April 1 ,2016 can one transfer funds without the above forms and CA certificate
Thanks for the reply
1. Yes.
2. PAN is mandatory for transfer of funds outside India.
3. Yes, but I would think that you would still need your PAN. Thanks.
Hi,
I lived in USA for 16 years now and has primary residence in a house I bought in USA. I bought apartment as second home in India 2012 using mortgage loan from LIC Housing Finance. As LIC Housing finance does not issue 1098 for interest paid towards the mortgage loan. Can I deduct the interest paid to LIC Housing Finance from the income I receive in USA?
I also have invested in constructing a building on a inherited property in India from my parents. I funded the construction using credit card loans for which I have been paying interest and finally the property is rented and generating income. Can I deduct the interest paid to the credit card companies be deducted against rental income?
I appreciate your help in advance.
In both the cases, I am meant to ask about interest deduction against US Income.
I would think so for both instances. Please consult your CPA. Thanks.
Hello,
I am US citizen with OCI. I bought a plot in Bangalore 10 years ago funded by US dollars sent to India. I know want to sell it and repatriate that money back to US to invest in a primary residence in USA. Can I repatriate tax free from India as I am investing it ona property again? I read somewhere that if you invest in a property again anywhere, then you can claim tax exemption?
Can you please shed some light on this?
Thanks.
No. The requirement has been changed since last 1.5 years. Now, to save capital gains tax, the property must be located in India. Thanks.
Hi, I am an NRI and acquired an apartment (to be constructed by the builder) when I was still a resident, now have sold it before it was completed.
Is there any restriction for repatriation of such money from NRO account to my overseas account, with money coming from sale of an apartment that was still under construction?
The money will go to NRO account. As long as you have paid the tax on income (or TDS is deducted by buyer), you are allowed to remit the funds outside India. Thanks.
Hello
Thank you for this blog and I appreciate the depth of responses you have provided to all the users. I have a few questions myself and hope you can shed some light on it:
1. I have a bank account in India as a result of life insurance proceeds upon the death of my spouse. I need to know what I should report in US on my taxes.
2. I also have a PPF account in India from a long time ago when I worked in India and have made contributions over the years. I read that the PPF interest can be done in 2 ways, either at the time of withdrawal (closing the account) or annual reporting. Is this correct. Since I have not reported the interest over the years due to lack of knowledge, can I remedy this by reporting in the current tax return or is it better to report the interest when account is closed.
3. I would like to close the PPF account and the Bank account in India as I need the money remitted to the US. The amounts are between 10k to 20k USD. What are my reporting requirements.
4. Generally, I do my own taxes, do I need a Chartered Accountant to do the Form 15CB/15CA?
I appreciate any help you can provide on this.
Thank you!
1. I would think it would be taxfree in USA as well.
2. I would include the interest income as accrued and shown in the PPF statement.
3. You would include PPF in FBAR and 8938, if your total accounts/assets are above the reporting threshold.
4. Only a practicing CA can issue a CA certificate in form 15CB so you would need a CA for the same. For 15CA, you may do it on your own or have CA file on your behalf. Thanks.
Hello Deepak,
Had a question I am struggling with, please answer
I have lived in USA from 2000-2008 and had few stocks in my brokerage account since then. Have recently sold some of the stocks for a profit.
What would the capital gain tax implication(long term) in India? Can I also avail indexation (to account for inflation) benefit? If yes how much to correctly determine my capital gain tax. Will there also be tax implication in USA?
eg.
Bought stock of Microsoft at $25 in Dec2007 and sold it at $50 on Jan2016
Thanking you in advance
regards,
-Sanjeev
1. I would think you would need to file tax return in USA and pay tax in India as the stocks are of US company held with a brokerage in USA and any transaction will be reported to IRS. You may or may not have to pay tax depending on your other income.
2. As you are an Ordinary resident of India, I would think you would have reported the stocks hold in brokerage account as foreign assets.
3. Also, as global would be taxable for you, you would need to include the same in your income tax return in India.
4. I would think you would get the indexation benefit. However, you may not get the rupee depreciation benefit. Please understand, you may get one or other. e.g. your gain is $25 converted @ conversion rate of Rs. 68 (assumed rate when you sold shares) of 1700 OR your gain would be Rs.1440 ($50*66 – $25*40(assumed rate at purchase)*1081/551). I would go with indexation. However, please check with your CA. Thanks.
Dear Sir
I am also facing similar problem. I have shifted to India long back say 15 years ago, but continue to be a US citizen. I am holding some liquid balances with my brokers , who report profit every year and pay taxes in USA. My CA in India is insisting to show all US sourced income in Indian Tax return under respective heads say Capital gains from US under capital gains in India etc. Is he right.
second question is :
This question is deeper:
– whether Standard deduction and personal exemptions claimed in 1040 US return would be available as tax credit or not.
Thanks
1. As you are an Ordinary Resident of India, your global income would be taxable so you would report all your US income in Indian tax return.
2. As you are getting basic exemption, certain deductions and other benefits of exempt income (LTCG on equity, indexation, etc.) as per Indian tax laws, you would not get any standard deduction or personal exemption of USA in India.
3. As you are a US citizen, you would also need to include your Indian income in your US tax return.
4. You would not be taxed twice as you would get credit for tax paid in one country for other country. However, your marginal tax rate would increase as you would pay tax at higher slab and on income that is exempt in one country and not in other. Thanks.
I have found this website very informative and I hope I may receive answers to my queries.
I am a resident Indian and I have started a single member LLC and a Bank Account in WY, USA. It would deal with products manufactured in USA and selling within and outside US?
I have certain questions though:
1) Can I give out loan from India to the LLC as I need money for starting up?
2) I am not intending to transfer my business profits into India ( I will keep them there in US Bank Account, whether LLC or personal savings account). Am I still liable for Indian taxes?
3) As per point no. 2, will I still have to declare the LLC/personal bank accounts of US to Indian tax authorities?
1. I would request to obtain loan in USA or any foreign branch as it would be cheaper.
2. As you are an Ordinary resident of India and a single member owning 100% of ownership, I would think so. However, I would request to consult your CPA/CA.
3. Yes to Indian authorities as you are owning foreign asset (100% share in an LLC). Thanks.
Thanks for your reply. I am intending to invest my own money and give it out as a loan for my LLC. Can I have any way of showing that as a loan and taking it back in instalments?
I am not sure as you are 100% owner and then also wants to give loan. Please check with your CPA in USA. Thanks.
I have moved to india in Jan 10 2015 i was on H1b and than continued with my indian company. So I am filing tax for 10 days stay in 2015 in usa. Should i show my income in india there after under foreign bank and foreign asset.
I don’t think you would need to show/report your Indian income, provided your residential status is “non-resident” for tax purpose in USA.
Hello
I am a US citizen. I have a property in India which I am about to sell. I have held it for more than 3 years, so I as I understand will not have to pay any capital gains if I reinvest the money in another property in India
However, can you tell me if I will have to pay US taxes even though I invest the money to buy another property in India?
Thanks
I would not recommend buying another property or investing in capital gains tax free bonds for US residents as you would need to report your capital gains income in USA and pay tax in USA. If you have paid tax in India, you would get the foreign tax credit. However, if you have not paid any tax, you would need to pay tax in USA. Thanks.
Dear Sir,
How would I have to account for income from India on which TDS has already been deducted, in my US tax returns. My employer will be able to provide my TDS certificate only end of March. Can I still claim tax credit in USA for the TDS deducted in my returns this year? Or would I need to claim credit while filing my US returns next year?
Thanks
Your employer would be issuing TDS certificate on a quarterly basis. You may have to manually calculate your income for the calendar year and the resultant tax/TDS and report accordingly. Thanks.
Dear Jigar Patel
The blog is very informative and thank you for your service. I am a US citizen and had tried to keep my Indian finances to zero to avoid tax issues here in US. My parents recently passed away and now I am dealing with some bank balance and a rental income in my name. It is in NRO account and the bank is deducting TDS. The renter is not deducting any tax as we did not know about this requirement. I will pay the taxes on interest and rent income in India.
How do I claim this in my US return? Is there a standard certificate or information that is provided by the Indian Tax authorities? Is it better to move the money to NRE account to avoid the tax issues? I would still be left with the rental income of Rs10K pm.
Guidance appreciated. Thanks!
You would need to include your income in India in USA. Also, as you have received foreign inheritance, you are required to report that as well. The standard certificate is the TDS certificate that you may use for tax purpose. You may also file for extension and only after filing the tax return in India, accordingly file the tax return in USA and claiming tax credit for taxes paid in India. I would suggest to inform your tenant about your NRI status and TDS provisions. Thanks.
Hello Mr. Naresh
NRIs are supposed to Fill ITR 1 or ITR 2 as it is given that for a person having Foreign assets or Foreign bank account should fill ITR 2. By this logic most of the NRIs should fill ITR 2 as most of them have foreign bank accounts ?
Thanks
NRIs are not required to report foreign bank accounts or assets. Only Ordinary Residents are. Thanks.
Thanks a Lot. My father passed away last year and i am suppossed to get 1Lakh as i was the nominee for his LIC. This 1 Lakh will be taxed ? and under which head ? I am a NRI.
Thanks
Bineet
Any payment on dead of person to nominee is not taxable; so you won’t be taxed on any amount. Thanks.
Many thanks. Congratulations for the good work you are doing helping people.
Regards
Bineet
Dear Jigar,
This time, writing in with a question 🙂
1. I am a Canadian Citizen since 9 months. I have not yet renounced my Indian citizenship. I legally have 2 more years before I need to. In your experience, is there anything I (or my parents) should do right now in terms of better financial management in India/ future inheritance etc, to make any wealth transition simpler? Before it is formally communicated to Indian agencies that i am not an Indian citizen anymore?
2. In the future, both my wife and I stand to gain the usual objects of inheritance – House, Shares, Mutual Funds, cash, Jewelry (typically everything a middle class person inherits). If i seek to liquidate everything, transfer money to Canada, and then route it to my NRE savings account to receive 4% per annum interest – would you advise against that? (Im worried about how I will be able to manage diverse financial objects after inheritance, as a Canadian living physically away from India)
3. What is the best way to inherit a flat/ house? If liquidated, I stand to be taxed on any capital gains. What do you suggest for someone who prefers to liquidate and receive regular income via NRE Savings (even if that is taxed as global income in Canada)
Any suggestions you have are invaluable. My parents are in Ahmedabad for the next 2 years (we are originally from Mumbai) – i will definitely visit you when i am there. We are also in Satellite 🙂
Again – thanks for all that you do to help people out!
Regards,
Sanket
1. There is no much difference of inheritance related rules/procedures between NRI and OCI. However, certain things/procedures (e.g. registered WILL of parents, simplifying assets, etc) are recommended for smooth inheritance.
2. There is no need to convert money to CAD and then to INR. Only bank would make money in conversions. You can transfer funds directly from NRO to NRE account and invest from there. If you need any help in managing your father’s finances or investments, please let us know.
3. If you inherit property, you may have to pay for the capital gains tax. If your father sells the flat and leave money for you, while he would have to pay capital gains tax and inheritance to you would be taxfree.
4. Estate planning and passing down investments and wealth is really important for NRIs as they don’t have much time to close all the affairs. A little planning can go a long way and you won’t take any bad memories for having to deal with / wait to get what is rightfully yours. Thanks.
Thank you very much, Jigar.
Just one clarification – If i inherit a flat, am i liable to pay capital gains tax? Even if i don’t sell it and just keep it/license it out for rent?
Many thanks
(I have passed on your address/ number to my father who will come by to meet you as soon as he can. He is recuperating from Knee Replacement)
Tax is on income. If you don’t sell, there is no income and no tax. So if you inherit a property, the property will be passed on (transferred) to you without any tax. However, when you sell, you would need to pay the tax on the capital gains. Thanks.
Hi I am a US citizen. I want to give hand loan to my relative for interest. My relative is in construction business. What type of Taxation and documentation do I need to do
FEMA allows giving loan on interest only on non-repatriable basis subject to certain conditions related to duration of loan, use of funds, rate of interest, etc. You would need to comply with those conditions. Thanks.
I have one question. I am NRI in USA. I have bought a property (under construction) in India and now I am paying the money whenever I get demand letter from the builder. To pay the money I transfer the money from USA to my NRE accoutn and then transfer online to builder company’s account. Do I need to report this property while filing for US taxes. I have always kept the balance of NRE less than $10000, but I am still submitting FBAR but not sure about this property.
One more question, I become tax resident in 2014, but that year I did not file FBAR, can I submit FBAR for 2014 also now with 2015. Thanks for your help
Only foreign financial accounts and assets are to be reported. So, your property investment is not to be reported. Please note, while you keep balance less than $10000, the highest balance (even for a day when you transfer funds to India) needs to be calculated. Thanks.
Dear Sir,
Both myself & my wife are Senior Citizen from Chennai.
We have ahouse here in joint name.
However,as our income is meagre & as we could not succeed to get Reverse mortgage ( no bank in Chennai entertains }, i had requested my daughter to give us 10lac as gift which i told her when i sell the house with interest besides the amount we would be giving to my two daughters.
Pl educate me how to go about it?
Will the principal & interest earned when i deposit in FD, added to my daughter’s income.
Any minimum period for holding the amt as gift & can i return the gift with interest?
Or should i take the amount as simple Loan to return it later.
We are not IT assesse & not filing returns as the income below taxable limit.
So, after receiving Gift/Loan, should we file IT return & show this amount.
Any other advise?
Thanks
I would suggest to receive gift and invest in your name so income and tax liability will be yours. As your income won’t be much, you won’t have to pay tax. I would also request to make a WILL and indicate to give 10L additional to your daughter who is giving you money. If your income is less than Rs. 250000, there is no requirement to file taxes. You may want to divide the gift amount between you and your wife. Thanks.
Thank you sir.
i’m a US citizen and an OCI. Recently i inherited property in India and i later reported to IRS. Currently i can repatriate the sale proceeds after paying taxes to USA. Will my childern who are US born with OCI, inherit my property in due time (say after 20/30 yrs) enjoy the same repatriation rules? Somewhere i read my kids need RBI permission to repatriate sale proceeds. Is this true. please clarify.
Also can i repatriate the entire sale proceeds of my agriculture property, as it is qualified for zero taxes?
By the way, great service to public Mr. Jigar Patel !!
1. Yes, once you pay tax in India, you are allowed to repatriate the funds to USA.
2. If your children inherit the property legally as allowed under FEMA, and they pay tax on sale of property as per income tax, they would also be allowed to repatriate the proceeds.
3. If you have inherited property legally, you pay tax and repatriate. If no tax, it is also fine and you can repatriate. However, CA certificate in form 15CB and filing of form 15CA would be required. Thanks.
Dear Mr Jigar Patel
Question about cash gift from my brother who wants to send $100000 to me in USA citizen ,am I liable for taxes in usa
No.
I would assume cash gift means gift of amount via bank transfer. Any transfer outside of banking transaction is not allowed. Thanks.
Dear Jigar,
Thank you for providing this service to all inquiries.
I have a few questions.
I am a permanent resident of USA and citizen of India. I am the Karta of an HUF that is located in India but I conduct its business from USA. Can I do the following:
1. Make a Bank account for my India HUF in the city of my residence in USA?
2. Transfer funds from my HUF India account to the HUF account I have set up in USA?
3. Can I as Karta give loans to my daughters from the HUF account?
4. Can I as Karta give a loan to my wife or myself from the HUF account?
5. If a loan is permitted how do I determine what the lowest interest rate is to be determined and by whom?
You advice is much appreciated
1. I am not sure how HUF is recognized by IRS. There is no clear guideline and is subjet to interpretation. I am not sure how you would be able to open an account of HUF in USA.
2. The objective of HUF is to have a separate person in India to reduce tax slab. There is no other purpose. Personally, I would advise you to make full partition of HUF and transfer the funds in the names of co-parceners. It will save you from a lot of complications and make your life easy. Thanks.
Dear Sir,
i am female 60 yrs.
I have recd a letter from ITO asking me to file returns for Asst. years 2011-12 To 2014-15
I had filed returns up to 2010-11
I stopped filing returns as my Total income was less than Taxable income for the above Asst. years.
Even for 2010-11, it was less than taxable income.
Pl educate me, which IT form i should use, whether i can do E-filling, whether i can do in compliance mode or should i do only physically.
Should i use one form for each year?
Or can i send a Simple letter stating my income was less than taxable limit.
They have given me only 10 days time to file.
Thank you sir.
Please check the notice first. Whether they are inquiring or asking you to file. As IT department gathers a lot of information, they want to make sure that people who are supposed to file the tax return are filing the same. If your income in any of those years were less that the basic exemption limit, you would not need to file the tax return and this may just be a inquiry. I would think it is just an inquiry based on certain information in your 26AS (Annual Information Report). They would have given instructions about how to respond. I would think you would be able to resolve online. However, please check with your CA. Thanks.
Hello,
I’m ordinary resident of India and filed a case on US based seller through US based attorney. Attorney said that he had done out of court settlement with seller for amount $ 175,000, now what are legal complications to receive funds in India. Also what are tax liabilities on me.
I would think it would be taxable. However, detailed nature and reasons for settlement needs to be evaluated. Please check with you CA or contact us. Thanks.
Dear sir,
i have inherited amount of rs. 10lakhs from my uncle after his death in USA. Please let me know if it is taxable herein india on inheritance recd.
No. Amount received as inheritance is not taxable. Thanks.
Hi
I am trying to send money from my own NRO account in India to my own account in the US. If the amount being sent is less than 5 Lakhs of rupees, which forms do I need to submit to the bank? Only 15 CAA is enough? Do I need to have a digital signature or I can print it, sign it and submit it?
One follow up question :
Do we need to be physically present in India to transfer this money or process form/s 15CA / 15 CB etc? Or can we do it over email / or online?
Does your firm handle these cases?
Thanks for providing this invaluable advice.
No Physical presence is required. However, you may need to mail the signed 15CA to bank. Yes, we specialize on such transactions. Please contact us via email if you want us to provide the service. Thanks.
1. Yes, I would think so. However, please check with your bank. Sometimes bank would not transfer without 15CB/15CA and you would need to convince them.
2. Digital Signature is not required. You may file the form online, print and sign manually and submit to the bank. Thanks.
I am US Citizen, have long term stocks in India, do I have to report P & L on IRS?
I have stated all accounts in 8938 and FBAR. Do I still pay tax on gain?
Also, how do I file old FBAR which I missed to file?
1. Yes.
2. Yes.
3. Through one of disclosure program – Streamlined Compliance or Voluntary Disclosure. Thanks.
Dear Mr Jigar
I am US citizen by birth..although living in India for all my life and never lived in USA. All my income are from Indian services/business.
Recently found an article that stated I am liable to pay taxes in the US, I am not sure what it means.
Can you please let me know whether any Income Tax Return need to be filed in USA in this regard.
Your response in this regard will great help us.
As you are a US citizen, you are considered a US resident for tax purpose and required to file your tax return in USA. While you would get the credit for the taxes paid in India, you are also required to comply the US tax laws and reporting requirements of your fianancial accounts and assets. Thanks.
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 he is helping me with that money for no interest. I would pay my dad back in 5 years and there is no interest charged by him on this amount.
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? I currently have an NRE account and not NRO.
2. Do I need to declare any taxes in the US on the repatriated amount?
3. Do I need to file anything similar to FINCEN for the amount that is repatriated back to the US?
Please advise.
Thanks,
Kunal
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. 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.
3. Yes, FINCEN requirement will apply for account balance more than $10,000, which would be the case when you credit sale proceeds of your flats. Thanks.
Thanks Jigar. Can you please explain on the declaration of gain/loss in 1040? I never reported to IRS that I have a purchased property in India and pay monthly EMIs. My understanding was we do not have to declare this as it is not a financial asset.
I also never had any aggregated balance of $10,000 in the NRE account. I only pay the EMI through this account. Do I still need to report or file a FINCEN after the sale of properties?
Can you also clarify if the bank will deposit my fathers gift and sale of property into my NRE account or will they deposit the amount directly to the US account?
Many thanks
1. There is no requirement of reporting your investment in real estate. The gain/loss will be calculated in USD based on the exchange rate.
2. After sale of property, your balance will be more than $10,000 and you will be required to report the account and balance in FINCEN. If balance is more than $50,000, FATCA will apply as well as you may also want to report in your Form 8938. Indian banks will report the same to IRS if the amount is above $500000.
3. All local funds would be deposited in NRO account only, unless you bought the property from NRE funds. In that case the cost of the property (amount paid by you from NRE) can be credited back to NRE account. However, all profits and any payment from NRO or local funds will be credited to NRO account only. Once you pay all the taxes, money can be transferred to NRE account. For gift from your father, I would recommend getting money directly to your country. It will be easier if you eventually plan to remit funds to you. Thanks.
Thanks Jigar, appreciate your response and inputs. Can you clarify what you mean by “it will be easier if I eventually remit funds to you”? Do you mean it will be easier to remit funds to NRE account when I pay back the gift amount? Does my dad need to complete any documentation to the Indian banks for them to transfer the money directly to my US account?
Also, am I liable to pay any taxes in the US on the gift received from my dad?
Thanks!
1. It means if you ultimately wants funds in USA, it would be better to transfer funds directly from your father’s resident account in India to your account in USA. Please note, there is no repayment in gift. If there is any repayment, it is a loan and not a gift.
2. Your father may need to file a declaration. Please ask him to contact his bank and understand paperwork and procedures.
3. In USA gift tax is on giver and foreign gifts are not taxable in USA. However, you would just need to make a declaration of any foreign gift received. Thanks.
Jigar,
Thanks so much for your help and guidance here. Can you clarify what you mean by getting money directly to your country? Do you mean it is not needed to transfer to NRO account and then repatriate to the overseas account?
“For gift from your father, I would recommend getting money directly to your country. It will be easier if you eventually plan to remit funds to you. Thanks”
Thanks
Yes, transfer from your father’s resident savings account to your account in your resident country (foreign account). Thanks.
Jigar,
Thanks for patiently answering my questions. I promise this is my last question.
With the revised rules on Form 15CA/CB, do you think my dad needs to file these forms along with a CA certificate to transfer funds from his Indian account to my US account?
Thanks,
Kunal
No.
Greetings from Chandigarh!
I would like to seek some advice please.
I am an OCI card holder having British Nationality. I now reside in India. Can I obtain travel cash card from my NRO account where I get my UK pension and also my house rent in Chandigarh! I am a tax payee in India.
Many Thanks in anticipation.
1. As you live in India, you are considered an Indian resident. As an Indian resident, you are not allowed to have NRO account but can maintain only resident account. Please contact your bank and inform them your change of residential status.
2. Please contact us if you seek any advise on Investments or Taxation. Thanks.
hi,
I am planning to move to canada as PR, I have a huge home loan going on in India, so I want to know how can I transfer funds to pay for that home loan,
Also, Do I need to file income tax returns and claim home loan interest deductions.
same thing applicable to Mutual funds, capital gains, FD Interest income…do I file Indian IT return too along with canada return, how should i go about this.
1. Interest deduction will help only if you have income in India.
2. Please ensure that your residential status is changed to NRI in all your banks, financial institutions, MF, Demat etc.
3. If your Indian income is more than the threshold, you are required to file a tax return in India. India is a tax heaven country where investments can be generate tax free returns, if proper planning was done. Please contact us if you have any question or need our advise. Thanks.
First, thank you for your advice to the public. It is impressive.
My brother and I (both US citizens) inherited a property in India in May 2014.
– We contracted to sell the property in late 2014, and finally concluded the sale in May 2015 (it took several months to conclude).
– TDS of 20.66% was deducted and paid by buyer against our respective PANs.
– We traveled twice to India during the 3 month period before the finalization of sale.
– Both our spouses traveled as they had to also sign a buyer required affidavit of no further interest in the property.
My questions relate to treatment of TDS and allowable expenses for both India and USA taxes.
A. India tax:
1. Can I deduct the cost of travel to India and stay for the 2 trips made? Any limit on the number of trips?
2. Can I deduct the same for my spouse?
B. US taxes:
1. Since the US basis is different from India for the sale, and TDS was paid, what is the best way to address the TDS payment? Is it just a Sch A deduction or can it be taken as a tax credit?
2. Once India tax return is filed, there is likely a refund as the total TDS paid exceeds the 20% capital gains. The refund is expected in another tax year. How does that refund get dealt with based on answer to above?
Thanks for your advice.
Mukesh
A1. No
A2. No
B1. Foreign Tax Credit of only the tax amount and not TDS.
B2. Had you filed your return by July 2015, you would have already received a refund. It is a timing issue and not relevant for taxation of gain. Thanks.
Firstly, congratulations on such a wonderful blog site. I am sure thousands of NRIs have benefited from your posts!
I am OCI based in US with properties in India. One property is joint with NRI brother based in France. He wants to liquidate. I want to avoid taxes on sale (long term held land). Can I invest in residential flat and avail of Indian sections of exemptions and do a 1031 exchange transaction under US tax provisions and avoid tax in US as well?
Would want to talk to you if you have any experience in this – value of prop is approx 6Cr total, 50% is my share. Thanks.
1. If you invest in residential flat in India, you may claim the benefit. I am not sure if you can do 1031 exchange as I think the requirement is of selling primary residence or buying a property in USA, which are not allowed as exemption in India.
2. Please contact us to set up call for any consulting. Thanks.
I am an NRI currently living in US. I plan to remit money to India through banking channels into my NRE account which will then be given as interest free loan to my parents. My parents will be utlising the money for their maintenance/buying shares/buying property. Are there any rules I need to be aware of
There are certain restrictions about giving money on loan on repatriable basis to close relatives. They are mainly related to term (1-3) years, interest (no interest), relative (close relative defined), use of funds (used for business not for investments), etc. Thanks.
Hi,
I want to know the tax implications in the following situations:
1.NRI sending around Rs 3lacs every month to his father”s account in India, the NRI is on a STUDENT VISA ,has started working in the USA for the last two months.
2.If the above money is transferred to an NRI a/c opened in India would it be taxable,is there any limit on the transfer or any restriction on the usage of such money?
Thanks in advance.
1. No tax
2. No tax. No limit and No restrictions on usage.
As a general rule, there is no limit or restriction on usage (exps) of money coming into India. Thanks.
Jigarbhai kem chho, I want to transfer money from SBI NRI branch Vadodara NRE account to USA my bank account under 10Lakhs. what’s the procedure and fees.
SBI asked me to file 15CB/15CA with Chartered accountant as I am not in India right now so, I have to do online. but why CA is must for file this 15CB/15CA .
For transfer out of NRE account, no 15CB/15CA is required. Only for taxable transfer out of NRO account, 15CB/15CA would be required. Thanks.
Hello Jigar,
While researching on the internet I stumbled upon your site. Your knowledge is impressive and I appreciate you responding to questions.
I am US citizen (OCI card holder) and own a flat in India. The yearly maintenance fee (about Rs. 75,000) is due. Can I make this payment from my US Bank account (Chase Bank) to the builder? Or, is there any legal restriction on this type of transaction?
Thanks.
Yes, you can. You may pay from your NRO, NRE, FCNR or inward transfer (US bank). Thanks.
Hi Jigar,
Fantastic blog, refreshingly transparent, honest and straightforward.
I am planning to move to US in late 2016/early 2017 on L1 initially. Before I relocate, need some advice on how I should consolidate my assets, ( bank accounts, MF, provident funds, etc) so that I can easily fill FBAR, pay my taxes and have adequate supporting documentation handy.
2. Which is the best month to relocate from India/US tax alignment perspective?
3. Are MFs bought in India taxed in US, even if not sold?
4. What kind of documents from India are reqd for US tax filing ( bank statements or IT returns etc).
thanks and best
Latika
1. If you want a detailed analysis and consulting, please contact us.
2. Your stay in India needs to be less than 182 days so anytime before September 30, 2016 would be okay from Indian taxation perspective. From US perspective, any time after June 30, 2016.
3. Yes. They are taxed as PFIC/
4. You would need to report all of your Indian income, Indian financial accounts and Indian financial assets. Thanks.
Hi, I hold a US Passport. I intend to apply for a greencard for my father aged 68. Father is the highest tax bracket in India and his business and other income exceeds 50 lacs. After he procures a green card, would his Indian income also be taxed in USA?
Yes. But, he would get credit for the tax paid in India. As he is self employed, he may also need to pay the Self Employment tax of about 15% (Social security+Medicare as employer and employee). Thanks.
Hi Jigar,
I need an advice on 401K withdrawal. I was on dependent visa and left USA in 2014 after my spouse death. I filed income tax for financial year 2014 as advised by his company there. It took some time for 401K to get transferred to my name and then in 2015 I withdrew it after submitting W-8BEN form. Agent did not hold any taxes and I received all the money. Last month I received 1042-S form from Fidelity with “Income Code as 15”. I am not sure what to do with this form. Am I supposed to file income tax in USA or in India for this income. Kindly advise.
US tax laws are complicated and I would suggest you contact your CPA in USA who helped in getting the money as there may be income tax as well as estate tax issues. The proceeds may be taxable and it would depend on the amount of 401k as well as what you did with the money, whether invested in USA or rolled over to IRA or brought back to India. Thanks.
Dear sir
I am indian with a spanish passport, residing in spain with my business activity.
A few years ago i purchased two resedential properties in india for which i am paying from my nre account.
I file my tax returns in india on my indian earning.
Now according to the automatic data sharing agreement between india and spain which comes into effect from year 2017 will all the information be shared between the two tax offices, meaning about the properties i possess and the money in my nre or nro account.
Could you kindly inform me from when information will be shared and if only information of bank accounts or property will be shared.
Also we r made to understand here that we need not disclose any information to the spanish tax authorities if the amount in the accounts in india does not exceed 50,000 euros.
i would appreciate if you could be kind enough to answer my queries.
Finally if the deposit amount in my indian account does not exceed 50,000 will still the indian authorities still share the details with the spanish authorities.
Thanking you in anticipation and must say this blog is the most informative i have come accross.
Look forward to hearing from you
Carlos
1. Only Financial accounts/assets details will be shared. The real estate details are not currently being shared.
2. While sharing will start from 2017, the effective date is Dec. 31, 2015 i.e. information as on Dec 31, 2015 and following years will be shared. Countries will have 2 years to get the systems and mechanism ready for collecting and updating data and records.
3. $50,000 limit is for US based NRIs. For NRIs of other countries, there is no threshold and all accounts even $100 will be reported to Income Tax department and shared with the respective government. Thanks.
Dear Sir,
I need information regarding the repatriation from NRO deposit account. whether repatriation is applicable in NRO account in any condition like current income principle or previous years income. And what limit of repatriation can be made through the NRO account.
What requirement will be demanded regarding repatriation from NRO account by AD-1 dealer.
All current income and previous savings/sale of assets from NRO account upto $1million can be transferred to NRE or your foreign account. Please contact your bank. Thanks.
Dear Mr. Patel
I greatly appreciate your response to my questions and want to thank you indeed.
Probably sooner than later i would need to open a business in india and assure u of my patronage to your esteemed company.
Thanking you
Carlos
Thank you and really appreciate. We look forward to hearing from you and provide our award winning service to you. Thank you.
Dear Mr. Patel
Im a indian citizen residing in spain, if i decide to resettle in india, and convert my non resident accounts to resident status accounts, and pay tax on the income i make in india. Will the indian tax authorities still pass the data of my indian resident accounts to the spanish authorities as per the automatic transfer data agreement.
Thanking you in anticipation.
Would you be also considered as a Spanish resident as per tax laws of Spain? If yes, you would need to provide the info to the banks and tax authorities would report to Spanish authorities. However, if you won’t be considered as a tax resident of Spain or any other country, you would make declarations accordingly and your data won’t be reported. If you are not a Spanish Resident, you won’t have any tax liability in Spain and reporting of income by Indian authorities to Spanish Authorities would not increase your tax liability. You may have to reply them. Also, once you become an Indian resident and are not considered a Spanish resident, it is key to update your records and make certain changes in your investments and holdings. Thanks.
Dear Mr. Jigar,
Me and my wife reside in the USA on a Green card.
My wife is due a gift from her brother, who resides in Dubai.
Can she receive the funds into her NRE account in India, so it can be invested into an FD.
what would we need to do as far as paper work to ensure that everything is in order.
1. Paper need to be filed here in the USA for IRS
2. Does she need an affidavit ? If so can the affidavit be done in India or Dubai ?
your kind advice would be appreciated.
Regards
ANil
1. Yes, she is allowed to take gift. Please make sure it is a gift and not a loan i.e. you pay back to your wife’s brother directly or indirectly. You need to report the gift to IRS. Also, as money will be credited in NRE account in India, depending on the gift amount, she would also need to file FBAR or FATCA form 8938 with your tax return in USA.
2. I would recommend having a gift letter or deed to document the gift. Thanks.
Whether in india a “student bank account” can receive inward remittance of foreign currency from a Non resident Indian?
If yes what is the limit set for the inward remittance.
If no then what accounts are legally available to receive foreign currency
Yes, but it would be considered as a gift and any transfer from non-relative would be included in the student’s income and he would need to pay the tax. Thanks.
Thank you sir for your reply, but is there a limit for receiving NEFT transfers from foreign exchange houses as the case I m dealing with where this person ‘X’ who is a student received NEFT transfer from various foreign exchange houses worth Rs. 55,66,621 in 8 months.
To answer your question, there is no limit in receiving the amount. e.g. if you are selling a product or services, it can be in crores and relative may give gift of such a big amount. However, you need to determine the nature of transfer i.e. why various foreign exchange houses would transfer so much money in so little time. Rs. 55L in 8 months is a big amount. Only after the nature is determined, the related FEMA rules and/or taxability can be determined. Please note that banks and RBI tracks foreign inflows and outflows and you may get in inquiry or question or asked to provide an explanation for the credits. Thanks.
Thank you Sir,
I went through FEMA provisions and found violations under regulations issued by R.B.I. under Section 47. There is something fishy about the transactions but once again thank you for your kind reply.
Where should I file my returns ?
For last financial year I stay in India from April 2015 till July 2015.
I am in US since Aug 2015. According to Indian law I am a NRI since I stay less than 180 days in last financial year. I also do not qualify as US resident since I stay less than 180 days in US financial year (Jan – Dec).
How do I pay my taxes considering my Indian income (rental income, bank interest and income before moving to US) and US income.
Thanks.
1. Please check your status as unless you left India for employment, as you have lived in India for 60 days during 2015-16 and 365+ days during 2010-2015, your status can be “Resident”.
2. Assuming you are a non-resident for both India and USA, you would still need to pay tax in respective countries for the income earned there. So for any Indian income, you would pay tax in India and for any US income, you would pay tax in USA and if you have income in both countries, you would file tax return in both countries. Thanks.
I am a US citizen of Indian origin. I am also OCI card holder. I have been staying in India since 2006.
I am RESIDENT for tax purposes in both countries. I am RESIDENT of US because of US nationality. At the same time I am RESIDENT of India because of stay of more than 183 days in India every year.
With no salary income, I understand that my interest income accrued/earned in India is taxable in India.
My query is with regards to Indo US DTAA while keeping my dual TAX RESIDENT status in both countries in mind;
– Is my US salary income (Very little) taxable in India? I go to US to work for few weeks.
– Is my US interest income taxable in India?
– Is my US employer’s contribution to my retirement plan in US is taxable in India?
Hoping to hear from you.
Regards.
Pancham
1. Yes. As you are an Ordinary Resident, your US salary income will be taxable in India. You are also required to report your US bank accounts and other assets in your income tax return. If not, they can be termed as “black money” i.e. unreported income/assets.
2. Yes
3. Yes. I would think so. However, it would be difficult to know as the salary information in USA would not include the contribution. Thanks.
Dear Sir,
I wanted to open a NRO account with my sister,who is an OCI, as first applicant and me,an Indian resident on march with Axis Bank. I gave a cheque of 2.00 lc as initial deposit. Few days back I was told that this account can not be opened jointly as per new rule of RBI. 2nd applicant may function as LOA or POA. And , converted the initial deposit to pay order in my sister’s name, who does not have any such account in INDIA.
I approached the bank many a times to pay the amount to me when you have not opened the account but they are delaying saying it needs discussion with operation etc.
Wouid you kindly advice me what should I do to get back the money. My sister opened a NRE account on the same day and deposited mony after going back from India. Thanking You,
Yours faithfully,
suddhasattwa mookherji.
I think NRO account can be opened with resident close relatives. Also, I am not sure if the account is opened or not. If opened, deposit the money in the account and then have your sister to write a cheque to you and deposit the same in your account. If money is in payorder, can you deposit in the same NRO account? If yes, write a cheque to your account. If not, try to convince the bank. If that doesn’t work, try to remove your name as joint holder and then deposit in NRO account and as your sister to write a cheque to you. I hope this helps. Thanks.
Hi,
I purchased a pre-launch property in Delhi in 2012. Due to some issues, the launch was put on hold and the contract was redrawn and resigned in mid 2013. I just learnt that I am supposed to cut TDS against installment payments (made between May 2012 to date). I have the following questions –
1. Do I have to file TDS for installments made before June 2013?
2. Is the service tax included in the calculation of TDS? For instance, if I paid 5 lakhs in installments and 50 thousand is service tax, will TDS @ 1% be calculated as 5,000 or 4,500?
3. I filed the TDS for the latest installment (Apr ’16), and the system prompted that I may be sent a demand if the filing date is after payment date. What are the late payment charges? I was not aware of the concept of TDS for individual buyers, and haven’t been contacted by ITD yet.
Moreover do I have to calculate the late charges and include it in my payments or just make the TDS payments and wait for the ITD to reach out to me?
4. Lastly, my father is the joint owner, to facilitate handling the account in my absence. Can I just pay the entire TDS amount through my PAN, or does the payment has to be split between the two PANs?
Thanks a lot!
1. No.
2. 1% on gross payment.
3. Interest @ 1% per month will apply. Also you may be subject to late filing of TDS return @ Rs. 200/day. While interest you will have to pay, you may fight for the late filing of return penalty, when you receive the notice.
4. TDS apply to each payment so if your father is paying, he needs to deduct; if you are paying, you need to deduct TDS.
I suggest you to contact your builder and/or your CA to get proper advice. Thanks.
Thanks a lot for your response!
I got in touch with my builder, and he asked me to deduct all past payments as a single TDS filing during the next instalment. Is that ok to do? When the payments were made in instalments?
Thanks again!
I explained you the requirement. It would be your decision what you want to do. Thanks.
Dear Sir,
Your blog and posts are very much informative. Please Guide us on the following situation.
One of our client is a foreign citizen holding NRO a/c with Indian bank. He is having handsome amount as dividend in that A/c which he shows exempted in his returns in India.. Now he wants to remit the funds to his foreign bank A/c for which bank asks him to file form 15CA/15CB as applicable as per revised rules.Is he required to file only form 15CA part D or 15CB is required ?
Also what will be the RBI purpose code in 15CA Part D in this situation?
Thanks in Advance
Regards
CA Aditi J.
While technically, forms 15CB and 15CA are not required, bank generally insist for the same. Please try to convince the bank to remit funds without 15CB/15CA. If you can’t convince the bank, you would need to provide the same. Good luck. Thanks.
Thank you so much for your valuable feedback..
Hello Mr Patel. Interesting and also very pragmatic blog.I am an intermediary individual in a transaction between two parties (Hongkong & Dubai). As the mediator a commission is being paid in USD. I’m a green card holder in USA, and hold OCI status. Is it convenient and straightforward to get the inward remittance to my US Checking account or my Indian Bank NRO account? I am not having a business account anywhere. Seller is asking for my bank info to remit commission. What are your thoughts? I am ok with paying tax on the income in any country as needed. Any precautionary steps I need to consider or be aware of? Thanks in advance for sharing your views.
I would suggest to give your US account for crediting your income. As a US resident, your global income would be taxable so you whether you receive money in USA or India, you would have to pay tax in USA. However, crediting money in your NRO account India may complicate the taxation as India taxes income that is accrued or received in India. Thanks.
Mr. Patel, thanks! I called ICICI bank and they suggest it is better to remit the funds in NRE account as there is no tax. I am confused with their response, because that is considered part of my annual income. They suggested anybody can remit foreign currency (USD in this case) in my NRE account, and it is better to deposit in India.
After listening to them, I was thinking of splitting it equally between USA checking and ICICI NRE-SB accounts. Is there something I can do to reduce taxable income as I do not own business nor business accounts anywhere? Thanks again, kindly!
Your bank only cares about whether any credit in the account is allowed or not and as per FEMA rules, NRE account can be credited with the foreign funds. However, they would not know if you would have any income tax issues. As per Indian tax laws, income accrued or received in India may be taxable in India. As a US resident, you would be paying income tax in USA. So to simplify your issues and remove any complications/grey area, I would still insist that you transfer all funds to your US account and then do a wire transfer to NRE account. I think the bank charges for wire transfer from USA to India would be the same whether you transfer full or part of funds. Also, you may be able to negotiate better exchange rate with the bank if you transfer bigger amount. Thanks.
Hi Jigar,
My brother who is NRI & stay in US transferred some money to me (not via NRE/NRO account). Now how can I return this money back to him. any documentation required.
Thanks
As a brother, you are allowed to gift the funds to your NRI brother. You can transfer funds from your account to his US bank account. Please contact your bank and understand the procedures. Thanks.
Dear Mr.Patel,
I’m an NRI from Mauritius and holding some property in India and I also have 2 accounts NRO & NRE at Standard Chartered Bank .Last year when I sold one of my apartment I deposit the amount into my NRO account & already filled & paid tax as per accountant . Then I requested the bank to transfer my fund deposited into NRO to NRE so that I may repatriate the same to my country .The bank requested my to submit 15CA &15 CB form. I hired an accountant there and same has been submitted to the bank after several days the bank ask me to rectify the 15 CA/CB form as he found some mismatch but the account denied said everything are ok & he would not make any amendment . In the other hand bank refused to process with my request & they return me all the doc.
I’m totally stuck in mid way & don;t know what to do .Nobody are ready to cooperate.
1.Can u suggest what should I do ?
2. Now I wish to sold out all my properties there ,pay all the tax as per Indian law & repatriate all my monies to Mauritian account. Can you help me to find a reliable accountant or yourself who can do my pending & rest of my transaction ?
Awaiting your prompt reply.
Regards
E.Deelawor
1. Please understand the mismatch. You may ask the bank person to contact your CA and explain the same and ask them to solve the difference. If you still can’t get the funds transferred, let us know.
2. Please contact us at jigar@nareshco.com. Thanks.
Dear Sir,
I am an NRI for last 15 years and working in different countries, being transfered every 3 or 5 years. Can I use my NRO amount to buy property in any country such as USA or UK.
Thanks, sivaji
The funds need to be in NRE account to be repatriated fully. While you can transfer the funds out, there may be some restrictions. Thanks.
I’m a US citizen, living in India for the last few years. I have a plot of land, which I intend to give for development into a commercial complex or apartment complex by a real estate builder. Now I have come to know of the requirements of having to pay capital gain tax in the year when the joint development agreement with the builder is signed and registered.
Now the question is that while I’m needed to pay taxes by Indian tax law, despite the fact that there is no actual income received, is this the same case with US tax law ?
Are these deemed capital gains taxable in USA ?
Let me rephrase if the above is difficult to understand:
If the land owner gives a plot of land for development of apartments to a developer(builder), then as per Indian tax laws the land owner has to pay the taxes on deemed capital gains on the land transferred to the developer(builder) for development. These taxes have to be paid for the financial year in which the development agreement is entered into.
Note that at this stage there is no money paid by the developer to the landlord i.e. no actual income to the land lord, but still the landlord is expected to pay the taxes on “deemed capital gains”.
Infact, it is just an accrual, but the landlord needs to pay the taxes as if it is an actual.
http://www.legalserviceindia.com/article/l305-Capital-Gains-Tax-&-Joint-Development-Agreement.html
Note that there is no “actual income”,nothing would have been paid to me nor deposited into my bank account.
Now the question is “is that the same case with USA tax laws” ? After paying taxes in India for the said ‘deemed’ capital gains, do I have to show the same in my USA tax returns for the relevant financial year ?
1. The key would be the terms of agreement. There is no deemed capital gain. If you have transferred the rights, then only a question of capital gain arises. In development agreement, you may have given the rights in exchange of newer / better property i.e. reinvestment of amount received and no money exchange. I could also be possible that you gave the property to develop without transferring the rights for something in exchange. Terms of agreement would prevail.
2. I would suggest you to contact your CPA for taxation of capital gain in India. Thanks.
Mr.Jigar Patel
Thank you. Can you please explain further ?
1. What do you mean by ” transferred the rights” ?
2. If the agreement clearly states that “The developer will only receive permission/posession of the land for the purpose of taking up activities for completing the construction. There is no transfer of title happening as part of the agreement until the construction is totally complete, the developer will get title to his share of the land and constructed area, only after the completion of the construction. ”
Will the capital gain tax have to be paid ( in the financial year when the agreement is signed) despite the above clause in the agreement ?
Rgds
Dewan
1. Did you transfer the ownership rights?
2. I don’t think so. However, whole agreement is to be reviewed in detail. Thanks.
Mr.Jigar Patel
From my knowledge ,when it comes to capital gains, selling of property in India is the same for income tax purposes as if the property were located in the United States.
To report capital gains on your tax return you normally are required to fill Schedule D (Form 1040).
However, as a cash basis taxpayer(most individuals are cash basis taxpayers). you don’t need to report income on your tax return if you don’t receive payments during the tax year.
Now in the context of the original question of this thread, the landlord has not received any “income” nor has he received the developed property yet( since construction is not complete yet, and typically it takes 1 to 2 years for a big construction to complete). But as per the Indian Income Tax rules he is expected to pay captial gain tax.
From a USA perspective:
Scenario 1. JDA(Joint Development Agreement) gives transfer of title : Should the landlord declare the income ( which he has not received as cash or chek NOR the developed property has been received by the landlord yet ( construction is not complete)) i.e. fill Schedule D (Form 1040) ?
Scenario 2:. JDA(Joint Development Agreement) doest not transfer title : Should the landlord declare the income ( which he has not received as cash or chek NOR the developed property has been received by the landlord yet ( construction is not complete)) i.e. fill Schedule D (Form 1040) ? ?
Scenario 3: In either of the scenarios above, is there a need at all to declare – fill Schedule D (Form 1040) since the landlord is a “cash basis taxpayer”
Please give you opinion.
Thanks a lot in advance.
Kia
i m 64 yrs old, retired not filing income tax returns since income is less than Rs.3 lacs
My building has gone for redevelopment and i will get the new flat by end 2017
My daughter in law n son are applying for permanent residence in New Zealand they wish that we settle with them but I have not yet decided
I am the sole owner of the house and my son is the nominee. I wish to sell the house
and buy a smaller house in India and send the balance amount to my son in New Zealand
Could u please advise the tax implications and how do I remit the money to him
Reading the above replies i m confident I will receive a satisfactory reply. I m a resident of Chembur, Mumbai. Do u hv an office in Mumbai.
Thanks n regards
Joyce DCunha
You would need to pay tax on the sale of property. Once done, you are allowed to gift upto $250,000 per year to your son. There is no tax on transfer. Tax is only on the income on sale of the property.
We are based in Ahmedabad, India and serve clients from all over the world having home town all over India. We do not have any office in Mumbai. Thanks.
Thank u very much for yr reply
Regret I just read it today
Thankso again
Joyce Dcunha
Very informative. Thank you Mr. Jigar Patel.
Have a couple of questions based on your replies.
1. Should a person on RNOR status report their 401K or 403B while filing taxes in India?
2. You suggested to Jai (October 8, 2015) to keep the “cost of original investment”, so as to calculate gain/income at time of sale. Would the “cost of original investment” be at the time the person attains a Resident tax status in India or the original date of purchase while in the US.
Regards, Jay.
1. Not required. The requirement is only for Ordinary residents.
2. Cost of original investment would be the cost when the asset was acquired (date of purchase). Thanks.
Dear Jigar,
For NRO to NRE transfer I need proof of “Source of funds”. This should be for past how many years?
I have details of all credits to NRO in last 4 years, all valid deposits without any tax liability, but do not have prior to that.
Thanks – Naresh Gupta – USA
It would depend on your bank and your CA. The question would be whether you have paid taxes or filed tax returns or not. currently, the IT department website, you can view previous tax returns too. Thanks.
Dear sir,
i buy a agri land in my mother name , PAYMENT MADE by my NRE account, it is taxable sir pls clarify me
An NRI can not buy agricultural land. An NRI can not buy any property in someone else’s name i.e. no benami transaction allowed. Also, a resident is not allowed to borrow from an NRI and invest the amount in an agricultural property. It is illegal, against the law and is not allowed. Don’t do it. The taxability is the secondary matter and comes into picture only at the time of sale. Also, if you acquired property in contravention of FEMA, you are not allowed to remit (transfer) the funds out of India. Thanks.
SIR I REGISTERED THE DOCUMENT IN MY MOTHER NAME SHE IS RESIDENT, I BUY HER NAME FOR ” A GIFT” . ALSO PAYMENT MADE FROM MY ” NRE ” ACCOUNT .PLS CLARIFY ME SIR
It is a genuine gift only if your mother is not giving the proceeds from sale of agricultural property as gift to you or giving the property or keeping the proceeds aside specifically for giving it to you as inheritance. Thanks.
I am a us citizen and had to return to India due to some reasons. and I might go back but not anything finalized. My 2yr rnor status about to end. I have nre FDs in rupees. Do I must need to ask bank to convert them to residance FDs or if I can wait till maturity? In case I keep these as it is and continue stay in india, do I also have to pay tax on interest in India.
My 2nd part of question is regarding tax residance – if it makes any difference by a trip to USA for few days for looking job and come back.
Regards
It appears that you are a “resident” under FEMA. The RNOR status is under Income Tax Act and not under FEMA. As you are a resident under FEMA, you are not allowed to keep NRE account but must convert to resident saving account and pay tax on the interest. A trip to USA would not matter. You must leave India with an intention to stay out of India for uncertain period. Thanks.
I have a property(plot) that I bought in 2000 for 1.5 lac. I am planning to sell it now for ~70 lacs. I have been an NRI since 1999. If I sell this property, I understand that I have to pay taxes of ~20% over the profit. However If I sell this property, immediately reinvest(buy a new property for 70lacs), hold it for 3 years, sell for 90 lacs(approximately), should I only pay taxes for 90-70 lac profit? Can I repatriate the whole 90lac to US$ without double taxation? Please advice.
To answer your question, yes, as per only Indian tax laws, you would only pat tax on the 20L (90-70) in India and able to repatriate the 90L after payment of tax to USA. However, making investment or taxation decision based on only tax laws of one country could be very dangerous for NRIs.
My advise would depend on whether you plan to report your Indian capital gain in your US tax return to IRS. I think you should as the bank in which you would deposit the money would report to IRS of the balance in your account. In that case, if you have paid your taxes in India, you would not pay taxes in USA because of DTAA. However, if you have not paid any tax in India, you may have to pay tax in USA. Thanks.
Thanks for your reply. Let us say if I sell the property in India and buy another property the same year(to avoid indian tax), Do I still have to report this sale in my US tax return(and pay taxes on the gain)? What are the steps that I need to follow.
Thanks again
Yes. As you earned capital gain income in 2016, you need to report the same in both income tax return – in India and in USA. In India, you would get the deduction for buying another property. However, you may not get the deduction in your US return. Please check with your CPA. Thanks.
Hi,
Thanks you very much for this blog, clarifying our doubts regarding NRI repatriation.
I am a resident of USA for employment reasons.
I have deposit of around INR 64 Lacs in savings and Fixed Deposits in a nationalized bank in India in my NRO account. These were earned while I was in India.
Want to repatriate the entire amount to USA. Have paid taxes at the rate of 30% for the interest of these deposits for several years.
My questions are:
1. Can I repatriate the entire amount to USA without any new tax in India?
2. Would I need to pay any tax in USA if I repatriate this amount INR 64 Lacs (i.e. from my own NRO account)?
3. Can I repatriate without forms 15 CA and CB etc? The reason for repatriation is, want to buy a home in USA.
Actually the bank has offered a simple form to repatriate the entire amount.
Want to check for the tax implications and form 15 CA/CB requirement.
Thanks a lot for your help.
Thanks,
Hari
1. Yes
2. No tax on remittance. I would assume that you have been reporting the amount and income in FBAR/FATCA.
3. While you can try, I think bank would ask for the same and if you can’t convince the bank, you would need to contact your CA and provide the same. Thanks.
hi,
jigar patel, i am 59 years old Indian resident. In 2014 i buy a agriland from vendor. I pay the money through my son’s NRE account directly the vendor. It is taxable. Clarify me.
Reply
It would depend on the land and where it is located. Just because money was paid from NRE, it would not change the taxation. Actually, if you bought the property for your purpose, it may be okay. However, if it was bought for your son, it is not allowed as NRIs are not allowed to buy agricultural land. I would hope you have taken certain precautions for the same. Thanks.
Hi Jigar,
I would like to transfer around Rs 4 lakh every year in my son NRO account as gift. However the Bank official are not allowing me to deposit money in NRO account of my son. They say only rent and business income can be deposited in NRO account. However as per Master Circular on Non-Resident Ordinary Rupee (NRO) Account issued by RBI i can deposit gift in my son NRO account.
I need some clarification
1)Can i give gift of Rs 4 lakh to my son every year who is an NRI.
2)Can this gift me deposited in NRO account. If yes then what should i tell bank Official to accept the deposit
3)If my son wants to take the money in his own country can he do so and what is the limit.
Thanks
1. Yes
2. Yes
3. While your son can remit the money, I think it would be better and easier to gift the amount from your bank account to your sons’s foreign account. Thanks.
Can 15 CB be revised??
Unfortunately, you may not revise 15CB in sole/by itself. However, 15CA can be revoked/cancelled. So if 15CA is cancelled, 15CB is also cancelled and then you can issue an updated 15CB and submit revised 15CA with the acknowledgement number of revised 15CB. Thanks.
Hello Mr. Patel
I am a NRI living in Dubai. I had invested some funds some years back in my local accounts in India when I was absolutely not aware that I am not supposed to. The investments are in form of FD’s in my local bank accounts (opened while I was a resident in India), Mutuals Funds and Post Office. I wish to close these accounts as I understand that being a NRI it is not right for me to maintain local accounts in India.
My question here is, can I transfer these funds to a NRO account.
If I can transfer what is the procedure and what kind of assistance would I require.
Many thanks and appreciate your reply.
Yes, you can transfer local funds into NRO account. Just deposit the cheque. No procedure for NRO credit. The forms and detailed procedures if you want to credit/deposit the funds in NRE account. Thanks.
I gave my 1 Acre land (which was bought by me on AY 2003-04) to JDA on AY 2011-12 to a developer. I was allotted 12 flats (Along with UDS) for my share of land. I started selling my share of flats 6 each a year in AY 2013-14 and 2014-15.
My cost of Acquisition of 1 Acre land (4840 Sq Yards) in AY 2003-04: Rs. 03 Lakhs.
As per JDA in 2011-12 : I was allotted to 360 Sq Yards of Undivided Share of Land (UDS) with 12 flats (4800 Sq ft of builtup area).
In the year AY 2013-14, I sold 6 flats – 60 Sy of UDS and 2400 of builtup area for a sale consideration of Rs. 3 Crores.
Please help me out with Capital Gains calculation for AYs 2011-12 and 2013-14.
Unfortunately, I may not be able to calculate the capital gain unless I review the details of your agreements with the developer. I suggest you contact your CA for the same. Thanks.
Dear Sir
I am not fully aware of FEMA rules and RBI guidelines regarding inward remittances I work as local agent for iron ore and other minerals in Odisha for domestic
sale and receive commission from miners and sellers from time to time. I never filed
Income Tax as my income never exceeded more than exemption limit.
Last year i got a contact with Canada based outsourcing company which acts as an intermediary for big Chinese buyers and outsource mineral and metals for them. I have been asked to represent them in Odisha for metal and mineral sourcing.
As per our talk they will pay me USD2 to USd3/Mt as commission and their order will be frequent and quantity will be 25000Metric Tons to 50,000Metric tons per month. Low grade iron ores , Sponge iron or HBI are their import items.
So hopefully I can get Lucrative commission in every 2 months after each transaction done.
I need to know the following matter .
1) If i receive more than USD100,000/ commission per month or approximate amount should i need RBI permission?
2) When I will be paid what purpose code i should mention to the sender company
as per RBI guidelines.Because RBI master circular says receiver should provide
Purpose code to the sender for Bank TT.
3) What tax will be levied on my receiving amount immediately by bank or IT authority?
4) Is there any provision to deduct certain percentage which can be reversible when i will file the IT at the end of the financial year?
5) Should I take the commission in normal Bank account or RFC domestic account?
6) Is it obligatory to present ICC IMFPA signed with my paymaster to my bank?
7) How i can avail your consultancy with regards to financial matter as i am based in Odisha?
Your valuable guidance will help me a lot as I do not find suitable consultant around my town.
Many Thanks in advance.
with best Regards
Abdul Dayan
1. No permission for RBI for money coming in as it will be in the nature of an income, on which you would pay the income tax.
2. Purpose code would be commission income or any description that closely relate to the nature of income you would be getting.
3. No immediate tax. You would prepare your accounts and pay tax on the income (after deducting expenses) for the year.
4. Don’t understand your question.
5. It depends on whether you want to keep money in INR or in foreign currency (RFC). RFC does not pay much interest. You may invest your income in INR and earn higher return.
6. Don’t know about ICC IMFPA.
7. We provide consulting over phone and email to many NRIs around the world and based in various cities across India. Please contact us if any consulting required. Thanks.
Dear Mr. Jigar Patel,
I am an IT professional working for a US IT MNC and have a number of employer RSU’s that vest periodically in my US Brokerage account. The vested amount is declared as perquisites in Form 16 for which India tax is paid and declaration made under Schedule FA. Upon sale of the RSU’s, Capital Gains tax is also paid in India, and the proceeds are wired to my bank account in India after converting from USD to INR.
I also have a US Bank account that was setup while working in the US nearly 20 years ago and this account is declared under schedule FA, and the interest income has been added to my total income and taxed accordingly as per IT laws.
I wanted to check with you if it is permissible to wire the RSU sale proceeds in USD to my disclosed US bank account for my personal use (e.g. for child education expenses in US) without going through unnecessary currency rate fluctuations in bringing the proceeds to India and wiring it back out again to the US ? Do you forsee any complications or issues ?
Please advise. Look forward to your early response.
Thanks & regards,
Narayan
Yes, you may credit the RSU sale proceeds to your US bank and as you would be declaring your income in Indian tax return and bank account in schedule FA, it would be okay.
I have my 401k in USA which I have kept for my daughter’s education after 10 years. I have been reporting any dividend, capital gain, interest income in 401k in my IT return in India as well as the 401k balance in the foreign assets schedule. Thanks.
Thank you very much for the prompt clarification … very useful !
Hi Jigar
I am an Australian citizen holding an OCI. I have been residing in Australia for the last 8 yrs. Prior to that I was in the Middle East. I have held Fixed Rupee NRI deposits for the last 10 years+ incl AUD & USD FCNR. All these deposits were sourced with funds from the Middle East. I did not have the need to declare these overseas funds in Australia when I file my normal taxes for salary, until now. The State Bank of India & HDFC have repeatedly asked me for my Australian Tax File Number which I have refused so far based on privacy issues. I am wanting to know where do I go from here to avoid further implications & how do I go about not having to pay tax in Australia on my overseas Bank interest which may come to light with the information sharing across countries?
If you want to or are holding the FDs in your name, the data will be shared. As Australian resident would need to pay tax on global income, you are required to disclose and report the same as your income and pay tax in India. Only when the investments are not hold in your name, you may not report the same to the tax department. You may gift the money to your parents in India and invest in their name. However, the investments would be in INR and may be taxable. If you need help with tax or investment planning, please contact us. Thanks.
Hello,
Firstly I would like to pass along my thanks for having a resourceful website and guiding others. I an writing to get some guidance on an investment opportunity that has come my way. Currently, I am a US green card holder with NRO and NRE accounts and file taxes in US and India. I have an opportunity to invest around $100,000 dollars on a extended family business. Hoping to get your thoughts on process/complication of not repatriating the profit (when it gets there) on a regular basis and/or part of the capital (if necessary). Curious to understand if there are any advantages in establishing an LLC to manage or if its better to do it via by NRE/NRO accounts. Your guidance will be extremely helpful. Thanks!
FEMA rules need to be followed and would depend on whether you are investing as a capital or giving a loan and/or if investing on a repatriation or non-repatriation basis. If as capital, rules relating to FDI may apply. Also, there are restrictions on the loan / deposits received by the company and use of funds. I suggest you contact your CA and seek professional guidance for the same. Thanks.
Hello Sir,
Question is related to FATCA-
I and my wife have a joint account and both are earning so do we need to report IRS FATCA if the total amount is more than $50K means Bank need to report my details to IRS?
Two questions:
1. Whether you are required to report to IRS: No if you are doing MFJ where limit is $100,000
2. Whether Indian bank will report to IT and then ultimately to IRS: Yes.
I would advise you to include the account and info in the FBAR and include the interest income in your 1040. Thanks.
Hello Jigar Patel Sir
The fact is that while there is nothing to hide from our side, the pain and harassment which the Income Tax folks put you through is best avoided. It looks like those people who honestly report their income and pay their taxes are the ones who are harassed the most.
1. What are the healthy and best practices to avoid a IT scritiny ?
2. In the light of the increased IT scrutiny over financial transactions, what is the best form of money transfer between own accounts and to others accounts.
3. Is it true that transactions of more than 10 lakhs are all subject to IT scrutiny ?
4. Are there any best practices related to writing checks ? Can we write a commment at the bottom of the check describing the purpose of the chek ?
4. There are many rents, salaries for property maintenance, payments for repairs which are dealt with in cash. I’m being told that cash payments of less than 20 thousand rupees are legal and valid. Is that true ? If YES, how should these transactions be booked ? Any vouchers should be used ?
5. What is some authority either domestic or abroad question the authenticity of such transactions ?
Sincerely
NRao
1. Report all the income and transactions as required honestly and fully.
2. Follow all Income tax and FEMA laws. Don’t transfer without understanding the effect or to circumvent the laws.
3. No. Cash deposit of Rs. 10L in a savings account is known to IT. If it is genuine, IT may not inquire.
4. No need but you need to keep the same for your records and explain when any inquiry.
5. Insist for cheque payments. Yes, you may spend / pay upto 20000 in cash. However, usually, the person getting the cash is not reporting it as sales so it may be off the books and then you would only have to show that you spent for your personal purpose. Any official payments, please insist for getting the receipt from the receiver, which is required.
6. If you are claiming it as an expense or as a part of your improvement, the vouchers / documentary evidence would be required. Thanks.
Thank you for the wonderful service and advice. NRI living in US for 16 years, bought a property in 2000 for 50,000INR(Fifty thousands) through a Demand Draft sent from US to India and converted to rupees. Now in 2016, if the property is sold for 65,00,000INR(Sixty five lakhs), then is it true that only the amount that was deposited from US can only be repatriated, nothing more(in this case just 50,000INR to USD equivalent). If this is not the case, then does the money after sale have to deposited and kept in NRO account for a period of time(10 years) before it can be repatriated to US? Thanks for the advice.
As an NRI, you are allowed to transfer upto $1million per year out of NRO account from sale of property. So, you can transfer full amount (65L less any taxes) after a CA certificate and completing certain procedures within few days after sale of property to USA. Thanks.
I sold a home in Haryana and wish to repatriate proceeds of sale back to US. This house was purchased mostly from funds from US through NRE account. I am now a resident of India and have closed the NRE and NRO accounts.
My questions are:
– Is it still possible to repatriate funds to US without NRO and NRE account in India
– is there a time limit after the sale of the house within which I have to notify RBI or repatriate the funds?
Thanks.
Sagar
1. It is good that you have closed your NRE/NREO accounts as being an Indian resident, you are not allowed to have NRO/NRE account.
2. As a resident, you are allowed to invest upto $250,000 per year outside India under LRS – Liberalized Remittance Scheme of RBI.
3. There is no time limit for remittance of funds. Thanks.
Jigar sir,
Thank you for all your articles/blogs. I bumped into it just today and have gained so much info. Had a few q, would appreciate your inputs.
Am a US citizen, Bought a flat in India in 2008 with money being sent from the US. Now selling the unit by paying required taxes in india. Will go through the repatriation process of 15 ca/cb and get the money back to the US.
Q1) What forms do I need to fill out as part of US tax filing next year? Only 1040?
Q2) I have read your articles where it states that such repatriated amount needs to be shown for LTCG on my US tax filing. However, the computation in india is a bit different. We use base price (off of year of purchase) and compute the indexed price (based off of what GOI publishes, multiplier) and then come up with the CMP and eventually show profits/losses. I am not aware of such thing in the US. In that case how would one show these numbers. A loss in india (based on Indexed price computation) could end up in profits in US filing if actual numbers are used.
3) Is there a way I can use the 15 ca/cb forms or some other form from Indian side to simply feed into my US return rather than complicating all of this?
4) I have also read in one of your posts/comments that only 2 Real estate transactions are permitted for repatriation. What happens if you have more than 2?
Please help.
Thanks
RP
1. For IRS, you would file 1040 and any related forms and schedules – for calculating of capital gain or foreign interest income or foreign accounts, etc. I think you would also file the FBAR form.
2. For USA, you would calculate the gain in USD (Sale $ – Purchase $). There is no indexation but the rupee depreciation would help and reduce your gain.
3. No. You may use it as a base but can’t use Indian tax forms for US tax compliance.
4. The limit of 2 Residential property is for investments on repatriable basis i.e. sale proceeds can be directly credited to NRE account. For other (more than 2), the sale proceeds would be credited to NRO and then you would be able to remit the funds upto US $1 million per year only. There is no restrictions on number of properties. You can own 20 or even 100 properties. The restrictions is on number of properties on repatriable basis as there is a limit for remittance of funds from NRO account. Thanks.
Hello Jigar,
Thanks for all great information that you share here. I had a question related to TDS on a resale of an apartment. I’m an NRI living in the US since 2006 and bought an apartment for 70 lakhs in early 2016 and now selling it for 75 lakhs. I have taken home loan of 60L to buy the 70L apartment and essentially this investment resulted in a capital loss considering the registration charges, bank interest paid etc.
Does the potential buyer need to deduct 1% of TDS of 5L (75-70L) on this purchase? Can I approach IT for IT TDS exempt certificate so that buyer need not deduct TDS?
Please advise.
Thanks,
Sai
1% TDS is for resident sellers. As you are an NRI, the potential buyer needs to deduct TDS @ 20.6%. You may approach the Income Tax department and get a lower or no deduction certificate. Thanks.
Dear Sir,
I’m 59 years old. Live in tamilnadu. I am a cloth manufacturer. Now I am going to buy a agriculture land in tamilnadu. The property of value is 100 lacs. In 2010 I take unsecured loan Rs.12 lacs from my wife’s brother for my business activity. He is a NRI.
Kindly advice me there is any problem if i buy a agriculture land.
There is no problem if you buy this property in your personal name from personal funds. However, you can not use any loan from NRI for buying agricultural property or your business can not be related to buying agricultural property or plantation. Thanks.
Hi,
I am US citizen since 2004.I moved to US in 1998.I was practicing physician in India.Until 1998 I was filling my income tax return in India After that I was not filing any return in India since my income was not taxable.I had my own individual PPF a/c,HUF PPF a/c,HUF PPF created by my father.My wife has her own PPF a/c.I sold my apt in 2005 and kept money in India in different bank FD and renewing FD when get matured.. I did not show any income in US from India.I have around 5o lakhs in PPF and FD.How to transfer money from India to US? How much penalty do I have to pay.Can I transfer without tax or with minimal penalty if my brother or sister give me a gift ?I’m coming ti India in Dec 2016.Can I meet you personally in Dec?
1. An NRI is not allowed to have a PPF account. However, he may continue holding the account if account was created as a resident but he may not renew. As you left India in 1998 and as PPF account has maturity of 15 years and 5 years thereafter, you would have renewed the account as an NRI, which is not allowed.
2. For transfer, you would need to contact your bank and CA for the same.
3. Penalty would depend on the non-compliance.
4. Yes, you may meet us in December. Please contact to set up the meeting. Thanks.
hi Sir,
Im NRI living in usa and have some investment in US listed company shares…Now as im in US paying long term capital gain tax as 15% to IRS..
My question is when i move to India and sell any US shares in profit (after 1-year
holding ) as Long tem capital gain..
what will be tax implication to IRS as non-resident alien (residing in India) ?
what will be taxability in India as resident Indian ?
Thanks..
1. The IRS tax rate would be the same as the securities are listed in the USA and source of capital gain is USA.
2. It would be taxable in India as long term capital gain @ 20.6% as you would not pay STT. However, you would get the credit for tax paid in USA. To save the Indian tax, I would recommend to sell the shares while your residential status as per Income Tax law is NRI or “Not Ordinary Resident” as foreign sourced income is not taxable to them. Thanks.
Hi Jigar
I am an NRI and have been out of India for employment since April 2012 and have been less than 60 days in India in all FYs 12-13, 13-14, 14-15, 15-16 and more than 60 but less than 182 days in FY 16-17. I just returned to India on 25th October and do not plan to return abroad. My questions are:
1. I only have an NRE & an NRO savings account. When do I need to convert these to resident Indian accounts? I approached the Bank and they asked me to come after completing 182 days in India OR ELSE they want me to declare that I’ll be in India for more than 182 days this FY, which will be factually incorrect. Please advise what shall I do?
2. I plan to join a company from 1st Dec. When they pay me Salary, how much TDS the need to deduct and do they need to pay me as an NRI or resident Indian?
3. When I file my returns for FY 16-17, will it be under NRI status or Resident status?
1. As you have permanently returned to India, you need to inform the bank of the same within a reasonable period. I would think reasonable period would be 30-60 days. If the bank requires you to come after 182 days, I would recommend you get a documentary evidence for the same.
2. The TDS on salary is same for resident and NRIs.
3. There are 2 requirements for the definition of a resident under Income tax Act. 1) 182+ days or 2) 60 days ina year and 365 days in 4 preceding years. As you do not qualify in either, your status would be NRI under Income tax Act. Thanks.
Dear Sir – Thank you for providing such great information.
My father has been suffering from Parkinsons and the resultant issues with walking, body balance, body trembling, hallucinations. It has been more than 3 years since he has been diagnosed with Parkinsons.
Since November 2015 there has been a lot of money spent on his medical treatment, medicines, physiotherapy and domestic support staff. From my research, there are genuine valid deductions available to him from Income tax perspective.
1. Can my father claim deductions under all 3 of the below IT provisions ?
Deduction u/s 80DDB in respect of medical treatment – Treatment for Parkinsons
Deduction u/s 80 U in respect of disability – “Loco-Motor Disability’
Deduction u/s 17(2) in rest of Medical Reimbursement
2. What is the documentation which we need to gather, to claim deduction under the below 3 sections for 2017/2018 fy ?
3. As per hear say o ne of the documents required is a certificate from Neuro Physician. Does the Neuro Physician needs to be mandatorily a governament doctor ? Or will it suffice if the doctor is also from a private hospital where my father is taking treatment on a regular basis ?
The below link has some information, but it is confusing and also not sure if it is verified information and accurate.
https://blog.cleartax.in/how-to-get-a-certificate-for-claiming-deduction-under-section-80ddb/
Please help.
As this is not a routine deduction, a detailed review of the documents and docotor’s certificate and the conditions specified in the deduction/exemption sections needs to be required. Please consult your CA for the same. Thanks.
Hi Jigar,
I am an Indian citizen resident in Australia. I plan to seek Australian citizenship and wish to clarify how this affects my demat account in India. My demat account is currently linked to a NRO account, jointly held with my mother, who is an Indian citizen resident there. I also have an NRE account at the same bank. Before I apply for foreign citizenship do I need to first close down these accounts? How can I continue to invest in shares as a foreign citizen?
I am trying to get my tax returns filed through my CA in India. He had previously advised that I did not need to file returns as I do not have taxable income however I realised last year that it is still a requirement to file your returns. It seems to be taking a long time to file the returns – is there a complication to this process? I do not have any income other than bank interest and dividends from shares. I have a PPF account that has matured however the bank insists I must be present in person to withdraw the funds and close this account. Is this right?
Am I liable to substantial penalties for not having filed tax returns? If so, I would like to pay them and move ahead but am a bit stuck as I am not getting much information from my CA.
Once the returns are filed I want to sell my shares and transfer the money to Australia. Can I do this via the NRE account? The value is approx. 55000 AUD. Is there a tax/legal problem if I transfer the entire amount and then close the bank accounts?
Please bear with me for asking so many questions at once!
Many thanks.
Shubha
1. Citizenship is an immigration related issue and does not affect your investments or taxation in India. You may continue holding and investing in India through your NRO PIS account.
2. As an NRO account holder, TDS would have been deducted. So while you may not have a taxable income, as you are having investments and TDS deducted, you may file the tax return and claim the refund of tax deducted by bank.
3. As per Indian tax laws, you need to file the tax return within 2 years. So you may not file the tax return prior to FY 2014-15 unless you receive a notice from the IT department. If your income is less than 250,000, you are not required to file tax return.
4. Requirement of physical presence for withdrawal of PPF account is a subjective and would depend on the branch/bank/PO. I don’t think it is a requirement.
5. Yes, you can sell the shares, pay taxes (if any), credit the bank account, remit the funds and close the account. However, you would need a CA certificate for the transfer and I would recommend filing of income tax return, even if your income is less than 250,000. Thanks.
Dear Jigar,
Thanks so much for your prompt reply. I may write to you again with some follow up questions but just wanted to say thanks and best wishes for the new year.
Regards,
Shubha
Hello Sir,
I worked from Jan 2000 to October 2011 in USA on H1b and EAD. Moved back to India in October 2011 and lived till December 9th 2016 due to my daughter’s education purpose. I returned to USA on Dec 10th using H1B visa. I have bought couple of properties, opened FD accounts, mutual fund accounts, and have savings, NRO and NRE accounts. All the investments were funded by NRE/NRO accounts. I have not filed my taxes at all (basically my interest income was less than 250,000) from during my stay in India. My bank asked me to fill FATCA/CRS form. just couple of questions.
1. Do I need to close all my savings accounts, bonds, mutual-funds or other investments since I came to USA?
2. Do I need to file taxes during my stay (Oct. 2011 to Dec 10th 2016) if I exceed income of 250,000?
3. Since it’s been a week in USA, Should I say “No” to Residence for Tax Purposes in the FATCA form?
4. How can I get your appointment to discuss my situation so that I can comply with Tax laws in India and USA?
Thanks
1. It appears that you informed the bank that you are still an NRI from 2011-2016, even if you were a resident in India.
2. I would think that you would have reported the interest on NRE as exempt income, which is in violation of RBI and IT laws. Yes, you would need to file tax return if your income is more than 250,000.
3. You can have only one residential status – either resident or NRI. You would need to have consistency in reporting to bank, MF, and any other investments. If you report that you are a US residence, your financial information from July 1, 2014 may be shared with the IRS. You would need to decide how you represent yourself as you may not maintain your NRE account if you declare yourself as a resident (i.e. not a resident of USA).
4. Please email or call me to schedule the meeting. The information is available in Contact Us section. Thanks.
Dear sir,
Currently I reside in US on H1B Visa and have been there for last 8years and have following questions
1) Can I get a license for pawn brokers shop either by myself or in joint with my parents for an proprietorship firm ?
2) If I cannot get license then what is the best way to give that money to my parents for use in the business and then be able to bring it back to USA ?
3) Can I purchase an agricultural land on my name or my wife’s name ? I recently heard that NRI’s cannot purchase. Not sure as mywife & I are still citizen of India. Also what happens to the agriculture land I purchased 2 years back ?
Appreciate your response.
1. I don’t think an NRI can invest in a business that is involved in money lending i.e. pawn broking.
2. An NRI is also not allowed to lend his parents on a repatriable basis for business that is involved in money lending.
3. An NRI can not buy agricultural land. Citizenship is an immigration issue and would not matter except that an OCI would have an additional requirement to sell the agricultural property to an Indian resident who is also an Indian Citizen.
4. If you have purchased an agricultural land as an NRI two years ago, it would be in contravention of FEMA laws and you could be penalized for the same. And, you may not be able to remit the same funds outside India. Thanks.
Thank you so much for the quick response
I have follow up question
1) Can I lend to them on non-repatriable basis ?
2) Can I give them as a gift and get it back as gift ?
3) For the land what are the options to come out clean
If I would like to get your service what is the best way to get it started
1. A resident is not allowed to take loan on repatriable or non-repatriable basis from NRI and use the borrowed funds for re-lending or for agricultural property.
2. Gift and re-gift is not a genuine gift but a loan.
3. The only way to come out clean for holding agricultural land would be to get RBI permission. If not, there is no clean option. I would suggest to sell as soon as possible.
4. Please contact us to enrich from our services. Thanks.
Iam residing in USA since October 2014. Am on H4, so i dont have any income here except that i hold joint bank with my husband.
I have not updated my bank accounts in India to NRI status. I have FD and mutual fund investment close to 6.5 lacs. So this triggers FBAR disclosure in US.
How would FATCA affect my investment? My investment in India is way below triggering sharing information by tax officials. Should i change my residential status?
What would be tax implication if i transfer money from my resident savings account to my in laws account and use the same for NRI housing loan payment? As my mother inlaw is co applicant in the loan with my spouse? Is it fine channelizing my money this way so that my financial holding will fall below 10000$
1. You would be filing US tax return jointly with your husband as “Married filing jointly” as US resident. Also, as you are in USA since 2014, you are an NRI and US resident.
2. FBAR threshold is $10000 so you would be very close about FBAR disclosure. You may want to withdraw or spend or gift some money to be under the radar.
3. You have to change the residential status as it is the right thing. By not changing, you are in violation of FEMA laws.
4. You would need to determine the nature of money transfer – whether gift, loan or income and follow FEMA rules for the same. You may also want to be aware of the Benami transaction when investing in other person’s name. Thanks.
Hello Sir,
I am an Indian citizen living in the US since 2008. My wife and I have a lot of credit card debt in the US, this is due to doing balance transfers on these credit cards to pay off a home loan in India. Meanwhile my wife has inherited gold from her mother. We would like to sell her jewels in India and repatriate around 25000 USD from India. I can read a lot of articles that talk about repatriating proceeds from India by sale of property but none from sale of gold jewelry. Can you please let me know if this is permissible. Request you to also explain to us if there are any potential issues that we need to watch out for. Finally, can the jeweler deposit money directly into my NRO account? From what I can glean, it looks like that we will have to submit form 15CA along with 15CB and we will not be taxed. Please help me with my dire situation.
Your wife will be able to sell the gold, pay any income tax on capital gain from selling the gold and transfer the funds to US account. The money can be credited in NRO account. However, as the transaction is taxable (sale of asset resulting in capital gain, which could be taxable), a CA certificate would be required. While there is no tax on transfer from NRO to NRE account, tax is on the sale of gold. Please consult your bank and CA. Please ensure that you have documentary evidence of inheritance of gold as well as sale of gold. Thanks.
Good morning Sir !
I am in confused state related to my tax ..
I was working in India in 2014-2015 .. In that financial year I received six salaries .
My salary was 75k per month and post TDS my employer gave me around 67-78k.
The company underwent financial trouble and our salries were delayed and till december I received six salries only. Then in January 2015 I got a job in UAE where I am currently working. I never received any form 16 by my company in India so I did not file tax return for that year. Now after just some days back I have recived a mail from Income tax department asking for a reason for not filing tax return ..
As per my 26AS no tax has been deposited by my employer to income tax department but was deducted from my salary. When I moved to UAE I lost touch with my company and didnt file the return ….
What should I do ???
As you were an Ordinary Resident of India and your income was more than Rs. 250,000, you are required to file your tax return. Also, your global income i.e. your UAE salary would also be taxable as you global income is taxable for Ordinary Residents. Please contact your CA and file your return. Thanks.
Hi Jigar,
When a CA asks for a capital gain/loss statement for a financial year, what does this refer to? Is this a statement issued by say a depository? Or is it simply a calculation worked out by the individual regarding cap gain/loss? If one does not have a record of the original cost price of the asset (shares) but have held them for almost ten years, how could one prepare this statement?
Any thoughts would be appreciated.
Thanks,
Shubha
1. You would need to have some basis or evidence. If you don’t remember, you can request the copy of transaction from your broker for previous years to know the cost and date of purchase.
2. IF you can prove the shares were owned for 10+ years and sold on exchange after paying STT and is exempt from tax, you may use your best estimate of the cost and day as the LTCG is exempt but you need to prove (demat statement) that you have been holding the shares for that long period of time. Thanks.
Hi Sir,
I need to know regarding taxation on sale of shares. I have held shares of some companies for more than 30 years now. I have recently dematerialized the same and thinking of selling it off. The total amount is above 1 Crore now. I know about the Long Term Capitals Gain where we don’t need to pay tax if the stock is held more than a year without selling as we already pay the STT on selling the same. But is there a limit or cap for the amount for LTCG ? Or is the entire amount I sell off tax free as STT will be paid as part of the transaction. Please let me know.
Thanks,
Thoman
There is no limit or cap on the amount of long term capital gain. As long as STT has been paid, the capital gain would be tax free. Thanks.
If I transfer the amount from my above sale of share to my son’s account, will gift tax be applicable. If so, what will be the tax rate applicable to my son. Or will that amount be completely tax free for my son as well. Please advice.
There is no gift tax in India to your or your son. However, if your son is an NRI, you would also need to check the gift tax laws of his resident country. Thanks.
Thanks a lot Sir for your valuable opinion.
Returning NRI R