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Month: July 2017

Tips to Get Married in US if You’re On Tourist Visa

Tips to Get Married in US if You’re On Tourist Visa

Do you think your marriage can be proven as the visa fraud? Yes, it’s true! If you go on tourist visa to the US and solemnize wedding shortly, you may be alleged with the charges of visa fraud.

The USCIS (or United States Citizenship and Immigration Services) is a pivotal entity that looks into visa related matters in America. If any individual enters with the evil intentions of porting his/her status through marriage with the native, the doer may be considered as the defaulter. Although it would be a coincident yet the drawn message would be negative. Therefore, the expats must be aware of the following facts to get off the severe consequences or deportation due to wedding.

  1. Good intentions behind marriage: As told above the USCIS is the apex authority to keep an eye on the immigration matters. If it identifies that you have arrived there with wrong intention of getting green card or US citizenship, it can initiate the process kick you out.
  2. Remember ‘30/60 day’ rule: It’s the fraud detecting rule of the USCIS. The rule was constituted after deep observation of the expats doings. This rule puts such people under scanner who apply for visa subsequent to application for Adjustment of Status. How can a person preconceive the idea of adjustment of status before immigration! The adjustment of status between 30 and 60 days of arrival can push the trigger of suspicion for the USCIS. Resultantly, the culprit can face off permanent denial of immigration & its benefits to the US.          
  3. Wedding time: Reverse to the aforementioned rule, the petition for adjustment of status shortly after marriage would be assumed as premeditated act. Despite submitting CENOMAR and fulfilling all necessities, your intention would be considered suspicious. Although you file for adjustment of status after mandatory 60 days yet you fingers would be pointed at you. It is so because you solemnized marriage within short duration post entry to the US.
  4. Adjustment of status can be denied: The adjustment of status would be rejected due to these reasons:
  • Filing for change in the status shortly after entry to the US.
  • Filing for changing status pre-entry to the US.
  • Illness
  • Criminal background.
  • Previously sentenced.
  • Sanctioned in the past.
  1. Can’t leave the US immediately after marriage: It’s mandatory to apply for change in the status once you wed with the US native. Legally, you would be eligible to get green card or advance parole. But the fear of being convicted can let you leave the country immediately after wedding. You can’t file for it till 60 days.

Bear in mind that you can’t leave the US without getting advance parole or green card. If you do so, your entry to the US would be permanently banned.  And your spouse has to live outside the country and re-apply for the green card within one year.     

  1. Equip with all proofs: The US rules-book does not state any rule that you can’t return to your country after marriage. So, you must be ready with all the proofs, like lease agreement, letters from employer, return ticket or the evidence from your spouse that the immigration was pre-conceived.

How PMAY Can Help NRIs to Take Care of Parents In India?

How PMAY Can Help NRIs to Take Care of Parents In India?

Good news for NRIs who have left their parents in India ‘homeless’! The newly introduced scheme of “Pradhan Mantri Awas Yojana (PMAY)” emerges as a ray of hope to homeless elderly parents.

Many parents are left with pinching pennies in their old age. They turn blind eye to owning a house for themselves in their youth while dedicating all resources to their child’s education. As the time passes away, their efforts pay off. Their child gets employment in the multinational firm in the US, UK or any other foreign country. Consequently, he/she sets off to take charge of their professional responsibilities in abroad.

Meanwhile, he/she leaves their parents ‘homeless’ at the back. However, he/she wants to bear the responsibility of the parents. Distance and scarcity of funds shoot as a major boulder.

Now, NRIs don’t need to battle out with such critical situations.  The launch of PMAY has introduced healing scheme called PMAY. By enrolling to it, he/she can provide a nest to the homeless parents in India.

What is PMAY?

As aforementioned, it stands for Pradhan Mantri Awas Yojna. It is commenced for providing shelter to all homeless people in India on easy terms and benefits. This scheme has an entry under the title ‘MIG’ which denotes Medium Income Group. It’s a category added to this scheme. It is further segregated into two sub-sets which are:

  • MIG I for those who have income between INR 6,00,000 and INR 12,00,000.
  • MIG II for those who have income between INR 12,00,001 and INR 18,00,000.

What’s the eligibility criterion for enrolling to PMAY?

Since it’s a housing scheme, the NRIs can take care of their parents in India by registering for the house. But before that, they must drill in their head the eligibility criterion, subsidy and home area. Catch on these points that display what this scheme requires for registration:

Eligibility:

  • The couple would be treated as a ‘beneficiary family’ of this scheme. It comprises of a husband, wife, unmarried son(s)/ unmarried daughter(s). If the beneficiary family has another couple or earning person in the family, it would be treated as a separate beneficiary family. It also can apply for the house under this scheme separately provided that it also doesn’t have any pucca house.
  • It should not have any pucca house is their name.
  • They should not be getting central assistance under any housing scheme from the government of India.
  • The couple living in a rental house will be a separate household. Therefore, the parents of NRIs who accommodate rental house can apply for the same.

Subsidy: It’s a parliamentary grant to the sovereign of the state needs. It benefits the low income group by keeping the price of the housing or commodities as low as it can afford.

This housing scheme has also a provision of subsidy grant. The NRIs can apply loans for their parents at subsidized rate. But the rate is different for both segments. These are:

  • MIG I is eligible for 4% subsidy on a loan up to INR 9 lakh.
  • MIG II is eligible for 3% subsidy on a loan up to INR 12 lakh.

The categorization defines the limit to which extent the subsidies can be granted. If anyone wants to borrow more money as loan, he/she can grab it. But the subsidy will not applicable on the additional loan amount.

Suppose an expat wishes to buy a house worth INR 50 lakh for his parents. He has to pay 20% of the total cost as down payment. As 3 percent subsidy is applicable for the amount up to INR 12 lakh, the subsidy would be applicable on that amount only. The balance amount, i.e. worth INR 38 lakh, can be borrowed as loan but it would be available at subsidized rate.

Adjustment of subsidy: The interest subsidy amount will be the net present value (NVP) (the difference between the present value of cash inflows and cash outflows).  Under the scheme, 9 percent discount will be applicable on this value. Loan’s amortization schedule is a must since interest amount of the each EMI is to be considered.

Loan: It is not essential that only government bodies would be open for subscribing loan for PMAY. The expat can contact a developer or builder for buying a house from the secondary market. If he is willing to construct it, he can do so also by taking loan.

No home loan provider can reject application for loan under this scheme. Be it for the purpose of adding a room, kitchen or balcony to the existing house, he can apply for the loan.

Length & breadth of home:

Under these two categories, the land area is mentioned as:

  • For MIG I, 90 sq ft (968.752 sq ft) would be granted as carpet area. The carpet area means the length and breadth excluding walls that are covered by a laid carpet. It’s different from built area which includes the thickness of the inner walls.
  • For MIG II, 110 sq ft (1184.03 sq ft) would be availed.

How can NRIs provide home to their homeless parents under this scheme?

Since the wholesome amount of the home is difficult to arrange for the expats, they can contact lending institutions in India. The following list of banks would provide easy finance under nri services at no processing fee if the loan is taken at subsidy. The balanced loan amount would require nominal processing fee.

  • Scheduled commercial banks
  • Housing finance companies
  • Regional rural banks
  • State Cooperative banks
  • Urban Cooperative banks
  • Small Finance banks
  • Non-Banking Financial company

How to Save Capital Gain Tax on Property Sale?

How to Save Capital Gain Tax on Property Sale?

Tax is like a phobia for its payers. They have to pay a big share of their hard-earned money as the tax. Out of multiple taxes, capital gain tax is the most surprising one. Let’s catch on what it means.

What is Capital Gain Tax?

The tax levied on capital gain is determined as the capital gain tax. When we earn profit on the sale of capital asset, it is termed as capital gain. The capital assets include any stock, consumables, raw materials for business, personal goods, agricultural land in rural India, 6.5% gold bond or national defence gold bond, special bearer bond & gold deposit bond. The gain earned on these assets’ sale is taxable.

Capital gain is further divided into:

  1. Long term capital gain: The capital asset held for more than 36 months is classified as long term capital gain.
  2. Short term capital gain: The capital asset held for 36 months or less than this period is termed as short term gain. In case of immovable property, the duration is shrunk to 2 months.

There is an exception as well in the case of property. The inherited property by an NRI or emigrant or any native is not considered as the capital gain.

How much capital gain is taxable?

  1. In case of long term capital gain, 20% of it is charged as the tax.
  2. In case of short term capital gain, the capital gain tax is added to the taxable income.

Do you know that income from the sale of property is taxable? It implies that you have to pay tax if you sell the property. The money earned through that sale is considered as the income. You can get off that tax by investing in Indian share market because no tax is levied after one year of investment.

It’s just one trick to save tax on the sale of property. We have some more tax-saving tricks. Keep on reading to unearth what more strategies we have for saving tax, especially for providing best services to NRIs. These suggestions would be worth million dollars if implemented:

  1. Compute ‘cost Inflation Index’ to get capital gains: Cost inflation index evaluates the inflation rate. It is used to compute long-term capital gains on the sale of capital assets. When inflation goes up, the cost inflation index also goes up in parallel.

For example, an NRI invested in a property worth INR 30 lakh. After 2 years, he desired to sell it. During meanwhile years, the inflation was evaluated 20%. After computing, the cost inflation index is evaluated as INR 6,000,00, i.e. 20% of INR 30,00,000.

With increase in prices, the real cost of property rolls up in the same ratio as in inflation during that period. Therefore, the capital gain would be contracted and so does the tax. The profit margin would be less.

The property owner should increment the real cost in correspondence to the cost inflation index. Thereby, the profit on sale of that property would reflect less.

How to know the cost inflation index?

The income tax department releases its table annually. 1980-81 is set as its base year wherein general prices are indexed as 100. As the price inflates, the index rises up gradually.

You should observe cost inflation index table to cut on taxes.

How to calculate Capital Gains using Cost Inflation Index?

  • Computation of capital gain:

Computing capital gain is not a big deal. Put the cost in this formula:

Capital gains=Sale price of the property-cost of the property

  • Computation of indexed cost of property

But if you want to derive actual capital gain after putting cost inflation index, compute this way:

Indexed cost of the property= Cost of the property X (Property’s cost inflation index in which it is sold/ Property’s cost inflation index in which it was bought)

For example, I bought a property in the year 2012, @ INR 10 lakh. After 3 years, I sold it @ INR 18,00,000. This is how I calculated the real cost of my property:

If I would simply determine the capital gain, it would be like this:

Capital gain of my property= INR 18,00,000-INR 10,00,000=INR 8,00,000

The cost inflation index of 2012= 785

The cost inflation index of 2015=1024

Indexed cost of my property=INR 10,00,000 X (1024/785)

Indexed cost of my property =INR 1304458.5987

Capital gain= INR 10,00000- INR 1304458.5987=INR 304458.5987

You can see that the real capital gain is just INR 304458.5987 which is far less than INR 8,00,000. Now, the calculation of capital gains tax on INR 304458.5987@20% would return INR 60891.71974 as payable.

  1. Invest in a residential house: How is it if you are taxed for the sale of a residential property to buy another one for same purpose? Your motive here is to buy another place to live. In such cases, the income tax department provides relief under Section 54.

Even if you sell a non-residential property for purchasing a residential place, this Section heaves a sigh of relief.  You need not pay capital gain tax in such case.

What does Section 54 (& 54F) state?

  • No capital gain tax on the capital gains from the sale of property that are invested in the purchase of new residential place.
  • No capital gain tax if the wholesome capital gain is absorbed in the purchase of new property.
  • Buying a new house is permissible one year prior to the sale of old house.
  • Constructing or purchasing a new house within 3 years & 2 years respectively from the sale of the old house is permissible.
  • The exemption on capital gains tax is limited to purchase of residential house.
  • The new residential house can’t be sold for 3 years. If so happens, the tax would be applicable from the date of acquisition or construction of the new house.
  • Section 54 states that the amount of exemption, in the foretold case, would be lower of capital gain or cost of the new house.
  • Section 54F states that the amount of exemption would be proportionate to the selling price and purchase price of the new residential house.
  1. Invest in capital gain bond under Section 54 EC: It’s another capital gain tax saving trick which is really popular. You can invest in these AAA rated secure bonds and enjoy exemption.

Benefits of Capital Gain Bond:

  • No need to pay capital gain tax after investing in it.
  • The pan capital gain can be invested in it. No tax would be levied.
  • The investor would get interest @6% annually. But it’s slightly lower than the fixed deposits.
  • The interest you earn on capital gain is taxable but the TDS will not be deducted.
  • Invest in these bonds within 6 months of capital gain.
  • These bonds are valid for 3 years. No withdrawal is allowed meanwhile.
  • You can redeem capital gain bonds automatically after 3 years or maturity. Afterwards, no interest would be earned.
  • These bonds are not for sale or transfer.
  • If capital gain exceeds the value of these bonds, the difference would be taxable.
  • Its face value is INR 10,000.
  • You can start investing with minimum INR 20,000. It can be maximized to INR 50 lakhs in a financial year.
  • These bonds can be deposited in Demat account or in physical form.
  • NHAI and REC or their designated branches are government approved agencies for investing in capital gains bond.
  1. Invest in Capital Gain Account Scheme: Unfortunately, some people find it an uphill battle to buy a new residential house post selling of the old one due to filing tax. They should not be anxious as they can invest in ‘Capital Gain Account Scheme’. You can keep your money safe in this scheme for 3 years. Even, you can withdraw it for constructing or purchasing a new residential property if you want meanwhile. It form can be downloaded from income tax website.

What does this scheme offer?

  • Invest before filing for income tax returns. State it in the income tax return form also.
  • Except ineligible corporate and regional banks, you can open capital gain account in the scheduled bank.
  • The options to deposit money in lumpsum & installment are available. But the gains must strictly be deposited before filing the income tax return.
  • If the deposited gains are locked down, you should open CGAS account and deposit gains in it.
  • Gains can be deposited in cash, cheque or draft.
  • This account is of two types, i.e. Account A & Account B, wherein Account A is similar to saving account. The interest rate is identical, i.e. 4%, as in ordinary saving account.

Account B is like fixed deposit. The money gets locked up for a specified time. The interest rate is equal to any ordinary fixed deposit account.

  • For lumpsum withdrawal of money to invest in residential property, choose Account B. But if you invest in construction, go for the Account A as you can withdraw periodically.
  • Expenditure of withdrawn gain from the account within 2 months is mandatory.
  • Reserve Bank of India fixes its interest rate.
  • These are transferable from Account A to Account B or vice versa.
  • The account is not for mortgage or loan.
  • Interest earned on deposition of capital gains is taxable. TDS is deductible.
  1. Capital Loss: It’s an opposite of capital gain. When the amount of sale of property is computed less than the cost of its purchase, it is termed as capital loss. Like capital gains, it is also categorized as long term capital loss and short term capital loss.

Capital loss can help you escape capital gain tax provided that:

  • It has been born before capital gains.
  • Short term capital gains are adjustable to short term capital loss.
  • Likewise, the long term capital gains would be used to get relief from the long term capital loss.
  • Capital loss can be adjustable in the 8 subsequent years. Bu the carried forward loss must be mentioned in the income tax return form.
  • Long term capital loss of securities would not be adjustable in to the long term capital gains. For example, you can’t carry forward the long term capital loss to your long term capital gains in equity mutual funds.
  • Capital loss would be carried forward only if the income tax return is filed on or prior to the last date of income tax return filing.