Am I an NRI? The Non-Returning Indian?

Written by Pawan Kumar Sharma of NRImatters.com

I want to return to India someday. When I am done looking for what I’ve always wanted in life – wealth, lifestyle, progress and success, I would surely go back to India!

How can I ever forget where I come from? No matter how rich I become or how much luxury I enjoy, it will always make me really happy to go back to the place I was born and raised. The local village ground where I played with my friends, my one-storied rugged old school, my farm, and the narrow street lanes just next to my ancestral house that was built in red bricks.

The smell faces and the places that reminded me as I got up every early morning that this is the place where I belong. This is the space where I will always be welcome no matter where I go to live in the world or whatever I do!

“A man travels the world over in search of what he needs, and returns home to find it.” That’s the beauty of life. It made me realize that as an NRI, all my dreams, ambition and hunger to excel will eventually fizzle-out like those soft drink bubbles once I have had some luck, when someday I feel that my longing for material wealth and pleasure has ran its course!

Look at India today…..India’s great! The economy’s booming, now they have so many multi-million dollar companies, the standard of living is better; it is better connected through airways and roadways. I guess someone in that country has finally woken up to the untapped, infinite potential that a mammoth country like India has!

I just love what the country has to offer now! Global recognition in the form of being an, “IT giant”, “Bio-technology hub”, economic powerhouse and one of the finest medical tourism industry in the world! The other day I even heard that now there are more millionaires in India than any country in the world after United States and China! Phew…that’s gonna take the icing on the cake!

I mean, seriously, the amount of progress, wealth creation and economic transformation that India has had over the last 15 years have been nothing short of phenomenal! For the first time in my life, I have really felt proud of being an Indian. The other day some random guy in the US came to me and congratulated saying,”Hey buddy, I heard you guys made the world’s most economical car at what? 25, 00 bucks or something that runs 15 miles? If that’s true than why don’t you tell our guys to stop wasting millions of dollars on that stupid bio-fuel thing?”

I was spell-bound to hear this and felt like people from India do have the ability to surpass even the American technocrats when they have the desire and the fuel and opportunities that fund this desire!

You know I really feel like returning to India now! There’s no such thing in this first-world country that India does not have anymore. With world class malls, multiplexes, shopping arcades, fast food chain of restaurants, the KFC, McDonalds, Wal-Mart, Levis, Gucci, Rado and what not? As a person now habituated to foreign lifestyle and culture, I can get anything and everything I want at my fingertips! I miss so many things….my habits, my ways, my Desiness. For a father, it’s like missing out on his infant daughter growing into a teen and finally a beautiful woman ready to get married.

When I first stepped out of India to do a respectable white collar job in a foreign country, I thought I would make quick buck working really hard for a couple of years and finally return back to India to my small village life and my family. Today, I cannot recall when those couple of years ate into my whole life and I am still living in the same alien, foreign country that I never feel attached to or comfortable with- be it the culture or daily routine.

I keep asking myself the same question- will I ever go back? Here, I have wealth, better standard of living, less chaos (unlike in India), order, law, safety, life has a value. In India, I have my culture and roots, my relatives, less cost of living and education, my parents, my brother and sisters, my friends- my identity and existence!

For people like me who have settled in a foreign country for the last 20 years- there’s one recurring question and thought that we all are afraid to answer and confront- how will I start my life all over again? I left India to have a good, better life. Now I have everything I had set out to achieve but if I have to return to India today- my social existence, my friends, my relations, my lifestyle and myself will have to undergo so much transformation which might not be easy after getting accustomed to a foreign culture and lifestyle for the past 20 years of my life.

It’s a catch-22 situation and there’s no easy answer for a guy like me- a Non-Returning Indian!

In Search of the Unknown- Redefining Indian Spirituality in 21st Century (Part II)

Part II: In Search of the Unknown: Re-defining Indian Spirituality in the 21st Century. Written by Pawan Kumar Sharma of NRImatters.com

There are millions of people all over India and the world who define their spiritual space in their own style! 



 Someone like Lotan Baba or the‘rolling baba’, a spiritual Hindu holy man, rolls thousands of kilometres in search of God.  

Lotan Baba promotes peace by rolling his body along the ground when he travels and has covered 30,000 kilometers (18,750 miles) to various cities in India. 

Then you have this really interesting Sadhu, Baba Hath Khada — last seen at the ArdhKumbhmela (the largest human gathering on earth)in Allahabad, India — who has kept one arm raised over his head for nearly two decades in his search of salvation and spiritual quest. 



 People all over the world go to temples, mosques, churches and offer prayers to God. They wear beads, burn incense sticks and go on a pilgrimage to be one with their beliefs and faith.


 Human emotions and actions play a great role in making a man aware of his spiritual needs. If you be at peace with yourself, the world appears calm, serene and peaceful to you. 



 Even the Italian scholar, poet and humanist, Francesco Petrarch had said that five great enemies to peace inhabit with us:  avarice, ambition, envy, anger, and pride.  If those enemies were to be banished, we should infallibly enjoy perpetual peace.


 
Again, everyone has their own ways and means to attain peace and reach Him. Some simply fold both their hands in His remembrance while others roll on the ground to their way to Him. Still the rare ones like Hath Khada Baba hold out their hand in air all their lives. Maybe, they hope, someday God would eventually come down on earth and catch them by the same held out hand eventually ending their exhaustive, tiresome journey on earth!




 
Balance in everything is important. Balance in mind, balance in your heart. A successful man is someone who maintains his spiritual balance well, no matter where he goes, in India or America. He carries with him a soul that guides him to his journeys and milestones in his life- to witness the good and the bad, to see the beautiful and the ugly.




 Happiness cannot be travelled to, owned, earned, worn or consumed. Happiness is the spiritual experience of living every minute with love, grace and gratitude.

Being happy is being at peace with yourself and with every object that surrounds the existence of ‘YOU’.



Indian Budget 2011 for NRIs

Do you have NRI status? Wonder what NRIs have on their minds? Ever think about the Indian budget? Want to learn via an interactive form? Get your questions answered!

NRIMatters.com will host a question and answer driven webinar with their NRI Advisor on February 28th. About the speaker: Ameet Patel is a Partner at chartered accountant firm SKP and heads the International Tax & Advisory Services department. Patel has over 24 years of experience in the area of tax planning and was the President of Bombay Chartered Accountants’ Society in 2009-10. He has experience dealing with NRI-specific questions and issues, and is the NRI Advisor at Kotak NRI Banking.

If you would like to learn more about NRI topics visit our other posts -

• November 2010: Buying Property in India
• December 2010: Should NRIs have voting rights or not
• January 2011: NRI VISA woes or lack of communication?

Visit: http://www.nrimatters.com

Tax exemptions available to NRIs/PIOs under Wealth and Gift Tax

Written by Pallavi Chibber, investment expert from NRImatters.com. Each week Pallavi will be posting premium content exclusively for NetIP.

Everybody’s horror is this time, when we go frantic trying to figure out what to do and how to align our investments in such a manner that we avail maximum tax benefits. To make your life a bit easier, we have enumerated the tax exemptions that you can avail from Wealth Tax and Gift Tax.

TAX EXEMPTIONS FROM WEALTH TAX

Where an NRI/PIO returns to India for permanent residence, the money and the value of assets brought by him into India and the value of assets acquired by him out of such money within one year immediately preceding the date of his return and at any time thereafter are totally exempt from wealth tax for a period of years after return to India.

The above exemption may not have much relevance now since the Finance Act 1992 has considerably reduced the scope of wealth tax. With effect from 1st April, 1993, wealth tax is being levied only on nonproductive assets like urban land, buildings (except one house property), jewellery, bullion, vehicles, cash over Rs.50,000/- etc. The current rate of wealth-tax is 1% on the aggregate market value of chargeable assets as on 31st March every year in excess of Rs.1.5 million.

However, it may be noted that NRls are also liable to pay wealth tax if the market value of taxable assets as on 31st March exceeds Rs l.5 million.

TAX EXEMPTIONS FROM GIFT TAX

Gift Tax Act, 1958 has been repealed with effect from 1st October, 1998 and as such, Gift Tax is not chargeable on any gifts made on or after that date.

With regard to gifts of foreign exchange or specified assets made by NRls to their relatives in India, it should be noted that

1. Gifts made by an NRI/PIO to his or her spouse, minor children or son’s wife will involve clubbing of income and wealth in the hands of the donor-NRI/ PIO.

2. In the case of gifts to minor children the clubbing of income, as above, will cease upon such children attaining the age of 18 years.

3. The clubbing provisions will apply, in case of gift to spouse or son’s wife in India, only to the first-stage of income from the original gift. Second-stage income arising from investment of the income from the original gift is not clubbed and this will constitute the separate wealth/income of the donee- spouse.

Generally, the income of minor children, from any source (including income from gifts from parents) is clubbed with the income of the parent whose total chargeable income is greater.

We hope you consider these before working out your tax sheets for the year. All the best.

Visit: http://www.nrimatters.com/

Buying Property in India

The following is a sponsored message.

You have worked hard, saved up, and are now looking for a good investment opportunity. Maybe your goal is to move back home to India to be with your family within a few years. Maybe you have considered the high return on investment potential as India comes to the forefront of the world’s economy. Whatever you reason, there are many considerations to be made before you take the plunge to purchase real estate in India. Many of us have heard the horror stories of people who have lost money from fraudulent developers, inexperienced brokers, and projects that have been delayed for over 6 years with no end in sight. We have also heard stories of great success: a plot of land that has appreciated 96x over 20 years; a new apartment purchase that was sold for 40% over the initial purchase price only 6 month before. How do you ensure that you become one of the success stories?

Who can buy property in India?

Non-Resident Indians and People of Indian Origin are allowed to purchase non-agriculture land in India with no restrictions. A Non-Resident Indian (NRI) is an Indian citizen who is abroad for business or another circumstance for an indefinite period of time. A Person of Indian Origin (PIO), is eligible to buy property if a) he/she at any time held an Indian passport; b) he/she or either of his/her parents or  grandparents was in Indian citizen; c) he/she is married to an Indian citizen or a PIO. For the purpose of simplicity, NRIs refer to both for the remainder of this article.

Investment Options

Depending on risk appetite, one would put money in either long or short term avenues.  In North America, equities are volatile. The average Bank of America high yield CD is currently 0.7%, and the real estate market suffered a decline of almost 11% in 2009 alone. In India, The State Bank of India is giving a 3.5% interest rate annually to NRI accounts. Conversely, real estate in the National Capital Region increased 54% in first quarter 2010 alone.

Choosing a Property

First, you should determine the purpose of this purchase.  Do you eventually want to live there? Is this for a parent? Is this strictly an investment? Your answer will affect where and with which developer your purchase will be made.

Secondly, determine a budget. New construction properties are an excellent investment or modern, end use property, but there is more than just base sale price to consider. Reputable developers will be forthcoming with each charge associated with the purchase, including preferential location charge (PLC), external development charge (EDC), infrastructure development charge (IDC), parking, club membership fees, maintenance charges, etc.  Additionally, with any property, considerations should be taken account on charges upon possession: stamp duty, registration charges, legal fees, brokerage fees (if applicable), yearly taxes and more.

Next, focus on a city or region. For example, if you want to be close to Delhi, you have the choice of many new developments in Gurgaon and Noida. Investigate current and future infrastructure in the city of your choice, including connectivity to national highways, airports, and public transportation. One critical factor to consider is the job growth rate and employment opportunities when determining future rental income and resale value. Also, examine convenience factors and quality of life, including access to shopping and greenery.  These factors have all generally resulting in appreciation of home value.

Additionally, when choosing a new construction property, it is crucial to research builder reputation, including ease of transaction, on-time delivery, compliance with the buyers agreement, quality of construction, and delivery of amenities promised. Some insight to the builder’s financial status is if banks have approved home loans to be given to buyers of the project. Based on your budget, look for the development that has the highest quality and offers modern amenities, such as clubhouse and pool. The asking price of the home should commensurate with existing marketing value of comparative properties.

Buying Process

One little known fact is that you can buy property in India without ever leaving the US.

You are able to appoint power of attorney to someone in

India to sign the papers at the time of property possession and registration.

The booking amount for property is typically 10% of the base sale price, which can be made via wire transfer or INR check from established NRE/NRO accounts maintained with banks in India. Some developers, including IREO, give the option to pay in USD check, eliminating an additional step for many NRI buyers.

Developers typically offer two payment plans. In a down-payment plan, the buyer pays 85% of the total sale price within 30-60 days of booking, and the remaining 5% is paid at closing. The benefit to this option is that a substantial discount is offered as an incentive to pre-pay. With a construction linked plan, payments are made in installments based on stages of construction. Over the course of about three years, installments are made approximately every 2-3 months. The advantage to this method is that capital is not blocked due to delays in construction.

Another avenue is financing through a home loans from an Indian bank including Citi, State Bank of India, ICICI, Kotak, HDFC and more.  On average, approval takes the same amount of time as it would obtaining a US-based mortgage, as there is an established credit history system in place in the States. Generally, the borrower meets 30% of the cost of the property, and the term amount does not exceed 15 years. Currently, first year rates can be as low as 8%, but can rise to 9.75% or higher in subsequent years.

You do not need to have a PIO/OCI card at the time of purchase. You must, however, establish your NRI status. The cards are needed only at the time of sale and to repatriate funds (more on that in the next section).

NRIs can acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian citizen or a person of Indian origin whether resident in India or not, provided gift tax has been paid.

Repatriation of Funds

The final consideration when purchasing a property in India while abroad is the repatriation of funds from rental income and eventual sale of the property. NRIs are currently allowed to repatriate up to $1million per person each year. If you do not have a PIO/ICO card, one can be obtained from the Indian Embassy in approximately 7 days. At the time of sale, capital gain taxes will be applicable, and are considered long-term after 36 months of ownership, resulting in a significant tax break. If tax on capital gain is paid to India, the income is not subject to tax in the United States with proof of payment. Rental income must be credited to an NRO account, maintained by an Indian Bank. HSBC and Citi have NRI divisions in the US that can assist with options for these accounts.

One key factor is to access if the property developer has a property management arm to assist after possession. While you are sitting in the US, the property management company can manage security, maintenance, rental agreements to quality tenants, and the resale of the home.

About IREO

IREO is a leading property developer in India and the largest foreign investor in the sector. Since 2004, IREO has committed approximately $2 billion of capital to 14 announced projects across India in prime locations within the Delhi NCR, Punjab, Chennai, Pune, the Goa region, and Coimbatore. IREO has a blue chip set of global investors and seven offices in India. IREO’s team consists of internationally experienced and accomplished US, Indian and expatriate professionals from diverse backgrounds to lead initiatives to deliver the best in class products and services to customers.

Should NRIs invest in the Indian stock market?