USA has been the preferred immigration destination for Indian nationals for decades. For many years Indian professionals have been bridging the talent gap in the United States. The affinity of Indians towards the US education system and the availability of high paying jobs has led to oversubscription and unavailability of various work visa categories. As a result, many Indians have turned to residency by investment or EB5 Visa Program offered by the United States Government to secure their future in the United States. The EB5 visa program requires a minimum investment of $800,000. The investment is locked in for a period of 5 to 7 years and may result in a green card in less than 3 years.
Many Indian families use the Liberalized Remittance Scheme or LRS administered by the Reserve Bank of India (RBI). LRS allows Indian residents to transfer funds up to a permissible limit for qualifying investments every financial year. RBI changes the remittance limits from time to time. Therefore, it is important for Indian residents applying for EB5 Visa to check with their accountants about the latest permissible limits and qualifying investments. At present, permissible investment amount under LRS is $250,000 per financial year. Effective October 1, 2020, the Indian government imposed Tax Collected at Source or TCS of 5% on all outward remittances other than remittance for education under LRS. TCS can be adjusted against tax payments to the Income Tax Department at the time of filing income tax returns.
The budget passed on February 1, 2023, proposed an increase in the Tax Collected at Source from 5% to 20% barring a few exceptions. The increase will be effective from July 1, 2023. The TCS on a $800,000 investment will increase from $40,000 (INR 32,00,000 approx.) to $160,000 (INR 1,28,00,000 approx.). For many investors it will result in undue hardship due to lack of financial liquidity to pay TCS or their tax returns not justifying tax offset allowed under TCS rules. The upcoming end of financial year on March 31, 2023 has boosted the number of EB5 remittances out of India as Indian residents are able to remit $250,000 in March and $250,000 again from April thru June prior to higher TCS becoming effective on July 1, 2023.
By,
Abhinav Lohia
Director, Global Business Development
Golden Gate Global
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