Sunday, 12 May 2013

Repatriation of home sale funds from India - Article in The Hindu

We live in an age where many youngsters go abroad for higher studies or job and have already settled down in other countries. Many of them are citizens of another country and have only family/ancestral ties to their homeland – India.
The other side of this situation is that the aging parents who are still in India must fend for themselves and find it easier to live in gated communities or in senior citizen homes to have easier access to immediate medical care, companionship, safety and help with errands.
As a result, many of the older generation are selling off independent homes and moving into such gated communities/senior homes. It goes without saying that a substantial portion of sale proceeds is willed to their Non-resident Indians (NRI) children. 
Sometimes, ancestral property is also received by NRIs by way of partition deeds or gifts from parents or grandparents and they prefer to sell the property and repatriate the funds.

Most NRIs who have settled down abroad would like to repatriate these funds from sale proceeds. It may be of use for the education of their children or to buy a property in their adopted homeland.
Additionally, with most countries tightening up on foreign investments and related reporting, it has become a hassle to maintain accounts and property here and then report the same to tax authorities in both countries.
Residents of the U.S. especially face this dilemma as they are required to report every year details of their foreign financials assets held in excess of certain prescribed dollar limits.
Thus, it is essential to be aware of the formalities involved in repatriating funds abroad from India as such repatriation leads to movement of forex and is governed by RBI and FEMA regulations.
General permission is available to the NRIs or Person of Indian Origins to repatriate the sale proceeds of immovable property inherited from a person resident in India.
The NRIs/PIO may repatriate an amount not exceeding USD one million, per financial year, on production of documentary evidence in support of acquisition / inheritance of assets, an undertaking by the remitter and certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes.
The sale proceeds of immovable property acquired by way of gift/inheritance should be credited to NRO account only. From the balance in the NRO account, NRI/PIO may remit up to USD one million, per financial year, subject to the satisfaction of Authorized Dealer and payment of applicable taxes.
The capital gains tax is also payable in their country of residence though they can avail credit for the taxes paid in India.
Breaking ties with the homeland is never an easy task, no matter how green the grass may be on the other side. Questions of inheritance, sale and repatriation of funds only add to the confusion.
G. Karthikeyan,
Chartered Accountant.

Tuesday, 7 May 2013

Street-smart shopkeeper!

Business Talk!

A shopkeeper was dismayed when a brand new business much like his own opened up next door and erected a huge sign which read 'BEST DEALS.' He was horrified when another competitor opened up on his right, and announced its arrival with an even larger sign, reading 'LOWEST PRICES.' 

The shopkeeper panicked, until he got an idea. He put the biggest sign of all over his own shop. It read: 'MAIN ENTRANCE'