5 Tips for NRI's Investing in India
By siliconindia | Wednesday, August 31, 2011
Bangalore: The U.S. taxmen are now after the wealthy Indian-Americans. The Global Organization of People of Indian Origin (GOPIO) has sought extension of the deadline for Indian-Americans to disclose their offshore accounts from 31 August 2011 to 31 December 2011. The IRS focus on India and Indian-Americans follows a campaign against undeclared offshore accounts held by U.S. taxpayers, primarily in tax havens such as Switzerland and the Caribbean. India is fast emerging as a lucrative investment destination for NRI's because of its growing economy. Foreign funds are flowing into India and China as they have been among the few star performers when the global economy is struggling to emerge out of the meltdown. With the Indian economy on a long-term growth curve, the non-resident Indians (NRI's) should look at multiple investment options to park their funds in their home country. Avoid investment in Mutual FundIf you plan to invest in Indian Mutual Funds you should be aware of how U.S. taxes capital gains or dividends from International Mutual Funds. Mutual Funds in India (or any other country outside U.S.) mostly qualify as Passive Foreign Investment Company. These investments need to be declared to IRS every year by 30 June 2011. Capital gains and dividend income from these investments are taxed at the highest Income tax rate and not as capital gains. Additionally deferred taxes (non-payment of taxes till asset is sold to realize capital gain) are charged interest. Therefore investing in Mutual Fund will not be a wise investment.