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.

Festive season offers

If we will look the business of real estate market at the time of festive season, so we will find that developers and the consultants are on the same side because they are accepting that it will continues to go through a slow time. There are many real estate developers in country which have strong financial support and they tend to challenge or complete the convincing progress of real estate market with their under-construction projects. Unfortunately fact this has been overly hyped by the media and real estate developers that they have strong financial background and they are able to complete their projects on time. But still there is drop in the overall confidence of end buyers because they are worried that if they will commit their money into properties which will not be delivered on time, so it could be problem for them.

Price Correction in Projects:

In last one year, the prices of property in Mumbai has been increased by 3.7 per cent, in Chennai its increased by 15 per cent, but in Delhi or NCR no change recorded in the price of property. All this rise represents the more or less stable scenario and it is expected that it will continue for another 2 or 3 quarters as there are many fence-sitting buyers, who are waiting for the time when real estate prices get correct. But according to real estate experts price correction will be location specific as well as developer and will happen only if there will be nothing to attract the buyers. There are few cities where demand is still sufficient and prices are more or less affordable and in those cities there will be no price correction. Apart from that the regions where people looking for more affordable property certainly price correction will happen in those areas. However; there are much activity to make the real estate market more affordable because developers are actively re-configuring their projects as per market conditions in process to save the cost and pass the benefit to buyers. Much number of real estate projects are about to launch and they all have been at lower rates than those of earlier projects launched in the same locations in such category projects.

Economical Scenario:

In present, economy has not shown any type of perk for which real estate developers are waiting. However; market has definitely improved in comparison of last year. But market is still improving and recently, RBI as cut the interest rates to help the sentiment of buyers and it is expected that it will be factor to drive more sales in real estate market. With the cut in interest rate, the RBI has sent the signal to the real estate market that inflation is under control and buyers and developers can be more confident about economic growth. However; these kinds of signals are positive for buyers and developers as well. If you will show the actual pertinence on property purchase, so it could draw big impact on the savings because impact may not be very significant, in expensive regions such as; MMR, NCR, Delhi and more. If property prices will be expensive in any case, then marginal reduction in the cost of borrowing will not make any big impact. However; the reduction in interest rates will draw a bigger impact on the buying behavior in less expensive markets such as; peripheral locations of tier I and tier II cities.

NRI Investment:

If will take a step towards the domestic real estate consumption and analyze the demand and supply ratio in metro cities so you will understand that outlook looks very upbeat. In present, there are many non-resident Indians (NRIs) who are extremely active while investing in Indian real estate market. In India, NRIs are among top five investor communities who are investing in countries property sector. Apart from that there is natural affinity to India that NRI with high intrinsic value prefer to buy property in India than buying property anywhere else in world. However; sometimes due to weaker rupee value NRIs prefer to invest in India.

This festive season it is expected that buyers will see the mixed bag, but still question remains same, is it a good time to buy? Definitely yes, for end buyers because they have never been more spoiled for choice with bargaining power and lower interest rates. There are many real estate developers who are offering hard discounts registration charges and waive on stamp duty, VAT service tax and on other services such as; floor rise premium, free parking space and more. This festive season is an ideal time to make the best deal of your life and turned your dream home into a reality.