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Avoid teams with only Chinese or Indians especially with a Chinese/Indian manager
Sold my stocks and now I am contemplating investing the money in India since the bank CD interest rates are higher in India. (6%+). My understanding is that interest earned on these NRE accounts is tax free/exempted in India. I understand that foreign exchange fluctuation is the ONLY thing that is risky here but historical data and current indian economy shows that risk is low. For USA, we would have to report the interest earned in taxes. Anyone who has recently done this, am i missing anything? Not planning to move to India. Goal is to take money out of volatile stock market and put in multi year CD/FD with steady interest growth Have only met Axis bank rep - repatriation is not tough. Money can be transferred online back to USA at exchange rate applicable at the time of transaction. TC - 190K
I am doing the same thing. Another hack is to gift your money to your family and then invest on their name. This way you don’t have to report the investments when you file your tax here. Obviously I am not an expert but this seems like a good option.
Won’t that family member have to report the income earned in taxes ? I haven’t looked into Senior citizen if that’s what you are inferring...
Yes, the family member will have to report in India. Again remember gifting it back to you will have tax implications
Moving to UAE, Bahamas, Bermuda or Andorra or Monaco would be easier if looking to escape income taxes.
How flexible is it to send the money there and get it back when needed? How stable are those markets from an investment purpose?
Who is Escaping income taxes ? Read my post again
Just FYI. There is no insurance or guarantee on FD. Even if you put 1 Cr in FD and bank fails, you will only get 1 Lac.
WTF? Source?
It's RBI rule. 2 months back, Punjab Coproration bank failed and all customers were doomed as nobody was aware of this rule. So, all other banks started putting stamp on passbook for new entries to convey this message to customers. https://www.businesstoday.in/sectors/banks/rbi-banks-started-putting-warning-passbooks-deposit-insurance-cover/story/385442.html
Arbitrage for interest rates is bad choice. Even if the recession occurs in USA, stay in USA markets. Don't convert USD to INR for investment purpose. INR continues to be weaker against USD. If you are interested in investing in India markets, there are specialized multual funds operating here. You can not avoid US taxation. If it is tax free there, probably you pay taxes here.
What about Forex risk?
You are right. Didn't miss anything. I use HDFC NRE.
Have done this before. If you're sure to move back to India some day in the future and won't need these funds in USA then do this. If you never intend to move back to India then it's probably a bad idea. You'll have to pay tax on the interest here in USA. The interest will be added as your income when calculating taxes.
Don't you have to pay US taxes even after you move back to your home counties if you meet the residency test?
Yes, after moving back to home country, if one has a green card then tax will have to be paid in US for income in home country. Best case scenario in this situation is to consult a tax consultant to check if there are any tax breaks for this. Or someone from blind community can comment on this.
You can on an average make 7-8% in the US stock market in the long term.
I sold and got my money out as I want to diversify and Stock market is up at the moment but it’s not rosy always.
If the NRE account is opened in rupees, how are the taxes reported? Do Indian banks have a form Similar to 1099? Also, I assume the interest will be reported in rupees, tax free in India but we would have to convert the amount into dollars to report taxes in US?
Are you planning to relocate to India and are 1000% sure OR would you need these funds in India ? Moving money out of India is a pain, Taxation is difficult and loss on exchange rate will bleed your gains
Edited the post. No plan to move/relocate back to India. Money growth is the primary objective. Why do you say that taxation is difficult if I use CPA to do the paperwork (FBAR and other formalities). Loss of exchange rate is the only risk but I don’t see Rupee getting super strong against $
Look at the past historical trend of INR vs USD. I lost a lot of money due to exchange rate, I have been burnt, hence the advise