1. Take the 100 Days Positivity Challenge : Join Here
    Dismiss Notice

Is it ok to transfer all saving to india when exchange rate is high?

Discussion in 'Money Matters' started by ProudIndian, Jan 24, 2012.

  1. ProudIndian

    ProudIndian Gold IL'ite

    Messages:
    458
    Likes Received:
    425
    Trophy Points:
    123
    Gender:
    Female
    Hello All

    I have few questios about money transfer. Since these days Rupee exchange rate is high my friends are suggesting me to tranfer all saving to India. Since indian banks give high interest rate on savings a/c is it ok to transfer ALL OUR savings to India?

    Is it easy to transfer back in U.S. if we decide to buy property in America?

    Do we have to pay any taxes in u.s. for interest earned in india?

    Some one was suggesting me transfer now when exchange rate in high for dollar and bring it back when exchange rate is lower. It is ok?

    All views are apreciated. Thanks in advance.
     
    Loading...

  2. Pranjjal

    Pranjjal Gold IL'ite

    Messages:
    489
    Likes Received:
    477
    Trophy Points:
    123
    Gender:
    Female
    You r little late because rate came down. It was a good opportunity when Rupee touched 54 against dollar but still the rate is good. If u want ur money back to US again then you need to transfer it to NRE account and the interest u earned on NRE account capital is not taxable in India however Is the interest earned on this account taxable in the US? and should you need to declare this account information to the IRS while filing taxes If so, what are the forms that you need to fill out for this?
    The answer to this is Yes, you should include the income on your U.S. Tax return. If the balance of the account exceeds $10,000 at any time during the year, you should complete Form TD F 90-22.1 and check "yes" at the bottom of Schedule B to Form 1040. There is a $10,000 penalty for failing to file Form TD F 90-22.1.

    It is better to transfer funds to India if you want to invest them in India like in Real estate,MFs,Stocks,Bonds,Gold,to pay off ur loan etc etc etc
    Or if you don't want to bring back that money to US then it is advisable to transfer it to NRO account but then the interest earned on that fund is taxable in India.
     
  3. Pranjjal

    Pranjjal Gold IL'ite

    Messages:
    489
    Likes Received:
    477
    Trophy Points:
    123
    Gender:
    Female
    If you consider the financial year Jan 2010-Dec 2011 then the rupee fell approximately 18%. As an NRI, you stand to gain or lose, depending on what you are planning to do with your dollars. If you had sent your dollars to India in last financial year with a plan to remit the money back to the US by the end of 2011, your returns will be lower by 18% simply on account of rupee depreciation.
    For instance, Well to understand this better if in the month of Dec 2010 you had transferred $10k USD in an NRO bank deposit in India that gave a 7% interest, you would have remitted around Rs 4,50,000 as Rupee was 45.3.
    Now, at the end of the year, your deposit would have grown to Rs 4,84,710 and again TDS which is 30% to NRI is not considered here But if you remit this money back to the US, at the exchange rate of Rs max 53.5 as per rate of Dec 2011, you would be remitting just USD $9000. So your gain of 7% from interest on your deposit would have got wiped out by the depreciation of the rupee. So think what will you end up with.


    On the other hand, if you are planning to send money to India now, you will get more rupees for every dollar. But one never know what will be the rate when one wants to remit it.

    But if you will consider the investments in Equity,Mfs India from long term perspective say with a time horizon more than 5 yrs then probably equity as an asset class is the best bet to wealth creation.
    If you talk about Gold investments fascinating story. It always raise my eyebrows what a fascinating returns !!
    Gold price in dollars moved up 15% during the last one year. But the price in rupees jumped more than 30% but then again one need to sell gold at right point of time otherwise these gains remain notional as it is unpredictable again. I personally feel Gold should be in everyone's portfolio and one's portfolio should be diversified.
    So If u want to invest in India then it is better to transfer or u don't need to remit it immediately then only it is beneficial again the wired transfer charges for currency transfer should be taken into consideration.
     
    1 person likes this.
  4. ProudIndian

    ProudIndian Gold IL'ite

    Messages:
    458
    Likes Received:
    425
    Trophy Points:
    123
    Gender:
    Female
    Thank you so much Pranjal. Where can I get tax for TD F 90-22.1? I just transferred some money above $10,000 in Jan 2012. I will do my taxes in March 2012. Do I have to declare in this year's tax in March 2012.

    I have plan to buy property in India in coming 1 or 2 years. I have already started looking for it.
     
  5. Ballereena

    Ballereena Bronze IL'ite

    Messages:
    113
    Likes Received:
    14
    Trophy Points:
    33
    Gender:
    Female
    Nice thread ProudIndian, thanks for starting this thread.
    It is a very nice Idea to transfer money now to india if you have plans of buying something/ investing in the near future. But I am not sure if say after 5 years of buying a real estate in India you want to sell off and bring the money back to US what will be the difficulties we have to face in that scenario?

    If some one can shed some light on that scenario I would greatly appeciate.
     
  6. ProudIndian

    ProudIndian Gold IL'ite

    Messages:
    458
    Likes Received:
    425
    Trophy Points:
    123
    Gender:
    Female
    Ballereena You can talk about this to your indian bank if you have NRE a/c. They can guide you about procedure. there might be some charges, limitations for transfer from india to u.s. But many people do that I know. ITs not that difficult.
     
  7. Pranjjal

    Pranjjal Gold IL'ite

    Messages:
    489
    Likes Received:
    477
    Trophy Points:
    123
    Gender:
    Female
    Yes NRI can sell their properties and bring money back in USA.

    But In which account must the sales proceeds be credited?

    There are two scenarios that may arise here:

    1. Sale of property purchased as a resident Indian

    If I was in India and purchased a property and now I am an NRI then the sale proceeds(the money u got) in such cases would have to be credited in the Non Resident Ordinary (NRO) Account.

    2. Sale of property purchased as a non-resident Indian

    If I purchased a property when my status is NRI,
    If the property was purchased out of rupee resources, that is, income earned in rupees, or the home loan is repaid by a relative who is a resident of India, the amount must be credited in the NRO account.

    In all other cases, there are limits to repatriation that are discussed in the next question.

    What are the rules for repatriation of sale proceeds of property sold in India?

    If the property was purchased while you were a resident of India, then the sale proceeds must be credited to the NRO account. You can repatriate up to USD 1 million per calendar year from your NRO Account (including all other capital transactions), provided you have paid all taxes due.

    Now, if the property was purchased while you were a non-resident, you can repatriate the proceeds outside India provided that you fulfill certain conditions:

    1. You should have purchased the property in accordance with the foreign exchange laws prevalent at the time you bought the property

    2. The amount to be repatriated will follow these limits:

    a. If you purchased by remitting foreign exchange to India through normal banking channels, then the repatriation cannot exceed the amount that you remitted.

    b. If you purchased using funds in the Foreign Currency Non Resident (FCNR) Account, then the repatriation cannot exceed the amount paid through this account.

    c. If you purchased using funds lying in your Non Resident External (NRE) Account, then the repatriation cannot exceed the foreign exchange equivalent, as on date of purchase, of the amount paid through NRE Account.

    d. If you purchased a property by taking a home loan, then repatriation cannot exceed the amount of loan repayment that has been done using foreign inward remittances or debit to NRE/FCNR Accounts.

    e. If you purchased the property using balance in your NRO account, then the sale proceeds must be credited to your NRO account and you can repatriate to the extent of USD 1 million (including all other capital account transactions).

    And only 2 residential properties you can sell and remit the money out of India.

    And Again keep in mind you need to pay capital gains tax on the sale of property which is 20%
    As an NRI, you will be subject to a TDS of 20 per cent on the capital gains.
     
  8. Pranjjal

    Pranjjal Gold IL'ite

    Messages:
    489
    Likes Received:
    477
    Trophy Points:
    123
    Gender:
    Female
    This is not my profession but my Interest. So please verify. Rules may change or I may miss some pt. However I am trying to give right information.
     
  9. Pranjjal

    Pranjjal Gold IL'ite

    Messages:
    489
    Likes Received:
    477
    Trophy Points:
    123
    Gender:
    Female
    In USA the period Jan-Dec is considered as a financial year. Now We US residents are going to file the tax for the period of Jan 2010-Dec 2011. Since u transferred this amount in the month of Jan 2012 you don't need to declare it now. And In which account you deposited this amount if NRE then u do not need to worry about the taxes in India.
     
  10. Ballereena

    Ballereena Bronze IL'ite

    Messages:
    113
    Likes Received:
    14
    Trophy Points:
    33
    Gender:
    Female
    Thanks so much Pranjjal for the detailed explanation about repatriation now I get a clear picture of it.

    Thanks a lot ProudIndian I will talk to the citibank where I hold my NRE account for current rules and regulations.
     

Share This Page