Paying for real estate purchase in India.

[Softie]

Hi,
I'm planning to buy some property in India and want to finance it by sending money from US. I don't have an NRE account. I'm thinking of sending money through wire transfer to my father's account in India and he'll withdraw it and pay for the property. Since the purchase of propery involves the not so easily avoidable black money, he'll have to withdraw cash. Will there be any tax consequences for withdrawing a lot of money in cash for which he cannot legally account for later?
What is the best method to finance such purchases in India?

Thanks in advance,
Softie.

[RAJESH H DHRUVA]

Dear Softie,
1. If the purchase is in your name the amount should be paid from your NRE account.
2. Setting an NRE account from abroad is not very difficult.
3. Yes, tax authorities may question reasons and objective for cash drawings of a large amount.
4. Banks in India are required to submit details of single cash withdrals exceeding INR 50,000 to Tax authorities.

Best wishes
RAJEHS H DHRUVA

[murari]

Rajesh and all members,

Recently I withdrawn 15 lakhs (3 x 5 lakhs) from my NRO account towards cash payment for purchasing property in India. Bank people(ICICI Bank) didn't questioned so far. I am planning to sell another property where I may receive cash portion. So my question is can I deposit this cash(up to 15 lakhs, which I withdrawn one year back) into my NRO account ?

Your input will be highly appreciated.

Murari

. Yes, tax authorities may question reasons and objective for cash drawings of a large amount.
4. Banks in India are required to submit details of single cash withdrals exceeding INR 50,000 to Tax authorities.

Best wishes
RAJEHS H DHRUVA[/quote]

[tejasvee]

Depositing back to any Indian bank in cash, exceeding Rs.50000 per day will need PAN number.

You can deposit up to Rs.50000 for a few days to get the money into your account. However, if the account is an NRE account, they won't accept Indian currrency deposits, unless you show the source linking to foreign currency earlier.

[RAJESH H DHRUVA]

Dear Murari,
1. Holding cash on hand is a dicey issue, particularly in case of Non Resident Indian.
2. In any case, cash on hand above Rs. 15 lacs together with immovable properties and jewellery will attract Wealth Tax.
3. Ideally such amount should not be deposited after such long period as any prudent NRI would not keep such large amount in his home / bank locker, but would logically redeposit the excess money if any immediately after withdrawal.
4. And FEMA rules require payment for immovable property to be made from an NRE/NRO account or forex remittance from abroad.

Best wishes,
RAJESH H DHRUVA

[Subbu]

I have a related question. I am borrowing money from UTI bank for a property I am buying with my mom, who is using the proceeds from sale of her home to pay cash down.

The loan amount is bigger than what we need to pay the seller, after my mom's cash is added. I am planning to put in the remaining money ( abou t 6L) in the NRO account I have jointly with my mom. What can be the problem?

To put figures, for a 30L property I am taking 20L loan but since my mom is giving 16L cash, I have 6L extra which I want to put in the joint NRO account. Are there any tax implications?

[nelly]

I've been through some of the detailed posts on the forum and checked the RBI site as well -- honestly I am a bit confused about things.

I was applying for home loan for a place in India thru the NRI loan process. I already have an NRE account. I am in this funny transition period between jobs and not fully moved to India.

I have a GC, USC applied for not completed and have already taken up a job in India. Plan to R2I in a couple months.

I understand from RBI site that home loan mortagage payments can be made from an NRE account OR and NRO account. I will have to convert my NRE to an NRO account when I return as this is required. This is OK -- I get it.

However, I also plan to keep my brokerage / 401K and college funds accounts in the US intact -- no plan on liquidating any of that. Given all this, should I consider opening an RFC account in addition to the NRO?

I am very confused about WHEN or WHY I would need an RFC account, the FAQ below doesn't get the point across to me.

http://www.icicibank.com/Pfsuser/icicibank/ibank-nri/nrinewversion/faq_RFCfixed.htm

Thanks for any help in advance.

[murari]

Nelly,

I think you don't have to open RFC account.If you are a NRI, Yes ! mortagage payments have to be made from either NRE or NRO accounts. Once if you R2I, your NRO account to be converted into resident account and mortagage will go from this account. Incase if you want to liquidate your US funds in future, you can do so by transfering into your resident account.

I've been through some of the detailed posts on the forum and checked the RBI site as well -- honestly I am a bit confused about things.

I was applying for home loan for a place in India thru the NRI loan process. I already have an NRE account. I am in this funny transition period between jobs and not fully moved to India.

I have a GC, USC applied for not completed and have already taken up a job in India. Plan to R2I in a couple months.

I understand from RBI site that home loan mortagage payments can be made from an NRE account OR and NRO account. I will have to convert my NRE to an NRO account when I return as this is required. This is OK -- I get it.

However, I also plan to keep my brokerage / 401K and college funds accounts in the US intact -- no plan on liquidating any of that. Given all this, should I consider opening an RFC account in addition to the NRO?

I am very confused about WHEN or WHY I would need an RFC account, the FAQ below doesn't get the point across to me.

http://www.icicibank.com/Pfsuser/icicibank/ibank-nri/nrinewversion/faq_RFCfixed.htm

Thanks for any help in advance.[/quote]