Guidance on investing Indian money in India and reducing tax liability in US

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Topic Author
ssn
Posts: 14
Joined: Sat Jan 25, 2020 10:15 pm

Guidance on investing Indian money in India and reducing tax liability in US

Post by ssn »

One can argue that this post belongs to non-US investment however I think it is valid in both the forums.

Before moving to US, I was working full time in India for number of years and hence have stocks, CDs etc. in Indian banks.

After moving to US, I am still maintaining them but I do not like the US tax liability part. I do my best
to show the interests, dividends from India in US tax return. However I would like to minimize it (who wouldn't?).
The trouble is I do not know how to achieve this? Unfortunately, I do not have close relatives back in India
to whom I can transfer my stocks, CDs. Selling & disposing everything is an option but bringing that money here will
involve lot of paper work. Plus, because of weak rupee I will not get much in dollar amount. And lastly, I think it
is just another diversification (non-US market) which is good to have.

So is there any way I can reduce my tax liability from global income? Any guidance will be really appreciated.

Thanks,
- ssn
annu
Posts: 965
Joined: Mon Nov 04, 2019 7:55 pm

Re: Guidance on investing Indian money in India and reducing tax liability in US

Post by annu »

Even when you buy international index fund, you have to pay foreign tax, so diversification comes at a cost especially when its international.
I am not sure how complicated it is, but if you pay taxes in India, you can use that to avoid paying taxes in US(you only pay if it is lower then what tax is in US).
I will like to minimize my income tax in US, but unfortunately I cannot legally beyond what is allowed, I can declare myself to be sovereign citizen, and just stop paying taxes :o , but seriously, on income you will need to pay taxes somewhere, India or US.
By the way I own emerging market funds, they have upto 3% india.....so you have US based options as well, where you will still be able to invest in India.

Most of the banks have option to wire or do ach/swift transfer, maybe talking to CPA will help. Many people move money internationally, there are many services who let you do that, having one of them linked to your account in India, and you can then use the service to money to US. A quick search showed below
https://www.compareremit.com/money-tran ... -transfer/

Looks like in a year you can transfer upto $250k....
rr2
Posts: 1039
Joined: Wed Nov 19, 2008 10:04 pm

Re: Guidance on investing Indian money in India and reducing tax liability in US

Post by rr2 »

If the amount in USD is not much (as you mentioned) in both absolute terms and as a fraction of your assets, make your life simple and just transfer it all to the US after selling it. Less paperwork hassles makes it worth it.
kambyvk
Posts: 18
Joined: Wed Mar 06, 2019 11:47 am

Re: Guidance on investing Indian money in India and reducing tax liability in US

Post by kambyvk »

India and US have a Double Taxation Avoidance Agreement (DTAA). This protects you from having to pay taxes in both countries on the same item. Therefore, while you must declare your worldwide income in your US return, you can claim credit for taxes paid in India on certain items in your US return. Since the tax rates on most items in India are higher than in the US, you should have little/no additional tax liability in the US for your India holdings, which appear to be mainly stocks and CDs. In terms of timing, since the tax filing date in India is 3 months later than US, you may have to amend your US return after the India return is final, which can become a pain if it becomes an annual exercise. This pain, and not any addl. taxation in the US, should drive your decision to liquidate+move your assets to the US.

Your situation is much better than having assets in US and living in India! Then you get hit with the higher differential tax rate in India on the same items that have already been taxed in the US.
Topic Author
ssn
Posts: 14
Joined: Sat Jan 25, 2020 10:15 pm

Re: Guidance on investing Indian money in India and reducing tax liability in US

Post by ssn »

Thank you all.

The Liberalised Remittance Scheme (LRS) mentioned in https://www.compareremit.com/money-tran ... -transfer/ is interesting.
It seems that if LRS is relatively straight forward then getting money in US is preferable.

-ssn
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