How to transfer Indian income to the US for an NRI?

Many NRIs, PIOs (Persons of Indian Origin) and even American Indians are interested in bringing money earned in India to the US. Indian income ,This scenario mostly arises when people have the immovable property back in India or they have inherited assets in India. This NRIs will try to bring the money associated with these assets to the USA by liquidating the assets.

NRIs or PIOs or American Indians who are interested in bringing such Indian income to the USA have to follow certain procedures. This usually depends on the methods by which the income has been acquired in India such as either by selling of property, an inheritance or gift or by making investments into certain financial instruments.

Selling of property in India by an NRI

 NRIs or PIOs are allowed to sell residential or commercial property in India but not agricultural land or farmland. According to the laws, NRIs are also allowed to bring Indian income earned from the sale of a maximum of two residential properties. The NRI who is selling his property and wants to bring his Indian income to the USA must have an NRO Account i.e. Non-resident ordinary Account.

In case of an NRI selling a property in India, the proceeds of the sale must be credited to the NRO account of the individual. If an NRI is selling a property after three years of the purchase of property then it is a long-term capital gain and a long-term capital gain tax of 20% would be levied on this. There is a limit of $1million which can be transferred from India to the US in a particular calendar year.

To begin the transfer of money from India to the US, the NRI has to obtain a certificate from a Chartered Accountant in India. The Chartered Accountant will issue a ‘Form 15CB’ obtained from the website of the Indian Government’s tax department. This certificate is proof that the money which is being transferred from India to the US has been earned by legal means and also all taxes have been paid. In addition to this, the NRI also has to fill another form online i.e. ‘Form 15CA’. This form is submitted online and a system-generated receipt has to be obtained by the NRI. Form 15CB and this receipt have to be deposited in the bank which has the NRO Account along with an additional ‘Form A2’ and a foreign exchange form.

Inheritance or gift received

The property which has been inherited in India is exempt from any gift tax. However, the amount which is obtained from the sale of inherited property is the capital gains and is taxed depending on the specified tax rates.

NRIs that are selling their inherited property and bringing that Indian income into the US must fill up two forms i.e. ‘Form 3520’ and ‘Form 8938’. Form 3520 has to be signed by NRIs along with their tax returns if they are inheriting any property in India.  This helps in validating the trail of the receipts by the NRI and also checks the basis of his inheritance.

Form 8938 has to be filled by all the USA residents, citizens and green card holders for reporting about their financial assets if the aggregate asset is more than $50,000 in case of single taxpayers and $100,000 for couple taxpayers.

Investments made in financial instruments

Another method by which NRIs can bring money from India to the US is by investing in financial instruments like debt investments and equity investment. For making debt investments, NRIs can invest in NRO Account or NRE fixed deposit account. NRIs can also invest in FCNR deposits which yield high returns and the interest income obtained from FNCR deposits is tax-exempted in nature. NRIs can also invest in direct equities or equity mutual funds.

For the transfer of this income earned in India, the NRI needs to fill the Form 15CB and Form 15CA and proceed with the repatriation procedure.

Hence, the procedure for the transfer of funds from India to the US is not a complicated process and can be carried out smoothly by the help of some expert professionals like CAs.