Hard-won green cards may no longer be valuable assets for NRIs as Indian government has signed up FATCA with US government
FATCA
It seems that US passport will not be priced possession anymore for NRIs due to FATCA (Foreign Account Tax Compliance Act), which was signed up Indian government and US government. Some Indians are planning to surrender their hard-won green cards because now India and US are agreed to exchange financial information for the benefit of nation and keep an eye on big as well as small transactions. There are chances that now onwards US tax officials will impose the punitive levies on undisclosed property and cash in India. If you are the one who think that Indian tax authorities are a tenacious, so still they have to see the action of US Internal Revenue Service.
A well-recognized south Mumbai based socialite is planning to claim the citizenship of India as Indian government has signed up Foreign Account Tax Compliance Act (FATCA) with US government. However; other NRIs are shutting their old bank accounts with an aim to hide the big and small financial trails, gifting and assets in India to children¸ wives or husbands or other family members. From many years, US citizenship was the perfect way to hide savings and tax, while for other it was a point of vanity. Apart from that in many countries it’s not essential to get visa for US passport holders. As per tax expert, “One retired actor who was used to live in Mumbai, but to travel European Unions and other countries he took up US citizenship”.
All information exchange under FATCA includes bank accounts as well as all the assets and property transaction in real estate sector. Apart from this information it could also involved crime records. Till now only few Indians who were US citizen were used to reveal their Indian income and investments in the US and vice versa, however; now if those information will be shared by the India in the US or US in India, so it will attract a lot of penalty with other punitive action and this is led many NRIs to move back in India to avoid penalty, as per the statement of Lloyd Pinto, Director, Grant Thornton India. Celebrities as well as businessmen are looking for ways out of the imbroglio. A large number of people residing in India and they have green card or they were retaining their American passports, but now due to FATCA, they are planning to declare all their assets in US or India, as per the statement of Jeenendra Bhandari, Partner at Tax and Audit Firm and Co LLP, who is advising clients on the matter.
Solution for FATCA Issue:
According to Bhandari, A Chartered Accountant who have license to practice in US as a certified public accountant, All NRIs has three options; they can declare their property if they have missed the deadline for this, so they can pay the penalties or they can also restructure their holdings. But for third option they have to take up Indian citizenship and renounce the American one. Those who are opting for the last one are mostly those who have took US citizenship to save tax in India, but there are many NRIs for whom its tuff and complex to transfer their assets. Because there are a lot of complications in property transferring procedure no matter you are transferring your property to your wife, son, or other family members. Transferring assets is not the most favored route because it put the owners at the mercy of relatives, as per the statement of tax experts.
However; if you are looking for the opportunity to switch the passport, so its not an easy task because according to US law, those who will renounce their citizenship have to get clearance from the revenue authorities. Most of the experts are asking their NRI clients to declare their assets because according to US tax law penalties could exceed 100 per cent. There are many NRIs who are closing their bank accounts to become Indian citizens while opening new accounts, so if you are going to US for two or more years, so you may have to face tough and complex procedure from concern authorities.
