A large number of US based NRI’s are shedding off their properties in India, provoked with the fear that a new information sharing protocol, might bring their assets in India under the US tax authorities. A reason for this discomfort can be blamed on FATCA (Foreign Account Tax Compliance), which is recently agreed between India and US. This law is aims at ensuring that tax is paid on income generated from overseas wealth.
Under FATCA, they will share information about the citizens with assets in each other’s countries. Since, it is not easy for Indian government to define properties owned by NRI, this agreement was signed by both the countries. While, the NRIs assume that their assets would be shared with US authorities. In order to escape from the reassumed tax burden in US, they decided to sale off their properties even at discounted rates.
According to Economic Times, Jignesh Shah, a civilian employed in Silicon Valley has bought bungalow in Surat, Gujarat three years back, now he has been advised by fellow NRIs to sell its properties as early as possible. Whereas, some US based NRIs are transferring their Indian assets to relatives and friends. Ultimately the FATCA agreement has created a chaos among US based NRIs.
On the contrary, the real estate experts says that NRIs selling their properties not because of FATCA, but are avoiding overseas investment, as it may lead to tax complications in future. Additionally, Indian banks are unwilling to open accounts that will help US based NRIs to invest in India, as it will increase their reporting obligations.