Are regular USA savings subject to India tax when you transfer the funds ?

bantu · Post by **bantu** » Mon Dec 13, 2010 3:04 pm

Hello,

Are savings in USA taxable accounts liable for tax in India when you transfer these savings to India after one returns to India ?

Thanks.

RRK · Post by **RRK** » Mon Dec 13, 2010 5:03 pm

There are no taxes for transferring your money from US to India.

However if you receive interest in your savings a/c in USA, the interest is taxable income in India.

cmdrsk · Post by **cmdrsk** » Mon Dec 13, 2010 9:12 pm

With many folks posting so many question and answers on income in India & US.

Indian TAx dept guys are not educated lot. Most of them are not aware of many tax laws and dont understand.

People who get into questioning sometime will just pay the tax as claimed by IT instead of taking time to explain and submit paperwork.
Time = Money.

I have had few instances and consultated tax consultants. Suggestion was keep it simple. Dont worry abt 'insignificant incomes'.

This is not advice but my experiance.

cmdrsk · Post by **cmdrsk** » Mon Dec 13, 2010 9:54 pm

One Tax consultant in india specially south and Chennai REACHTAX. I dealt with them and were very good.

There was an article about the founder in REDIFF last year. Their future growth plan is like H&R block kind of growth.

RRK · Post by **RRK** » Mon Dec 13, 2010 11:52 pm

cmdrsk;355369With many folks posting so many question and answers on income in India & US.

Indian TAx dept guys are not educated lot. Most of them are not aware of many tax laws and dont understand.

People who get into questioning sometime will just pay the tax as claimed by IT instead of taking time to explain and submit paperwork.
Time = Money.

I have had few instances and consultated tax consultants. Suggestion was keep it simple. Dont worry abt 'insignificant incomes'.

This is not advice but my experiance.

Next time you get such tax advice, tell your advisor that you are really happy about his suggestion and you wanted to share this valuable suggestion in a public website and put his name along with it.

Let us know his reaction and what he says.

I think members should disclose tax advisors who give suggestions like this. Helps members to remove chaff from grains..

pms_123 · Post by **pms_123** » Tue Mar 29, 2011 11:01 am

Hi , On a similar note, Is the money transferred as 401K income taxable in India? I have transferred that in my NRE account. My understanding is any money you transfer from US to India thru NRE account is non-taxable. Is that correct?

Thanks

Desi · Post by **Desi** » Tue Mar 29, 2011 6:35 pm

pms_123;378620Hi , On a similar note, Is the money transferred as 401K income taxable in India? I have transferred that in my NRE account. My understanding is any money you transfer from US to India thru NRE account is non-taxable. Is that correct?

Thanks

401K from an Indian perspective becomes a bit iffy because of not having full control over 401K. Hence before transferring or rather before R2Iing, it is best to rollover 401K to IRA.

In general, IRA and 401K money is your savings and your assets and not income and hence should not be taxable in India. US govt taxes it as income because they had deferred the taxes on it, note that in reality it was income when you recieved it in the 401K account and not when you withdraw it and hence India should not tax it.

As to money any money transferred via NRE account being non taxable, that is false.

Money is going to be taxed if it is income, capital gains, interest, dividends (ie active or passive income). It will not be taxed if the assets are your savings.

Taxation does not care how you transfer.
Taxation does not care IF you transfer. As long as you earned the money in a specific year, it is income for that year and hence comes under tax purview. It has absolutely nothing to do with whether or not you decide to transfer that money or how you choose to do the transfer.

kumte · Post by **kumte** » Tue Mar 29, 2011 10:41 pm

Desi;378660In general, IRA and 401K money is your savings and your assets and not income and hence should not be taxable in India. US govt taxes it as income because they had deferred the taxes on it, note that in reality it was income when you recieved it in the 401K account and not when you withdraw it and hence India should not tax it.

The only thing to note here is if you have invested in stocks or bonds in your 401K or IRA and those pay dividends, interest or capital gains. Then those become your income and hence taxable in India even though they are tax free in US.

Desi · Post by **Desi** » Wed Mar 30, 2011 1:42 am

kumte;378753The only thing to note here is if you have invested in stocks or bonds in your 401K or IRA and those pay dividends, interest or capital gains. Then those become your income and hence taxable in India even though they are tax free in US.

Thanks, Yes, the dividends, interest, capital gains received within IRA will be taxed by GOI if the owner of the IRA receives those during his ROR status. If such are received during RNOR status then they escape Indian taxes.

AlwaysIndian · Post by **AlwaysIndian** » Wed Mar 30, 2011 4:45 am

Desi;378808Thanks, Yes, the dividends, interest, capital gains received within IRA will be taxed by GOI if the owner of the IRA receives those during his ROR status. If such are received during RNOR status then they escape Indian taxes.

What about the capital gains in the rolled over IRA account that are unrealized (profits not booked during the tax year)? Do they attract Indian taxes during and after RNOR?