Money transfer from India to USA

Question

My daughter is a US Citizen. We (parents)are also planning to permanently settle in US. We will go their as Permanent Resident,as per US Law. We have a house here in India worth Rs.2 Crores. We want to sell it and take money with us. We have ordinary savings Bank account here in India. My US Citizen Daughter is a Income Tax payer. Now your advises are required as under:

1. What are the routes to take money from India to US and our tax liabilities
2. Can I gift this whole amount to my US Citizen Daughter or what is the maximum limit of Gift amount.

3. What will be the tax liability on me and on my Daughter in case of Gift

4. Whether I have to show it in my Income Tax Return or in my Daughter's Tax Return. What US Income Tax Laws says.

5. What will be the procedure to send money as Gift to my Daughter.

6. Will the money will go directly from my Bank Act.to my Daughter's Bank Account.

7. Will there will be wire transfer from bank to bank

8. Can I send money through other money sender Certified Companies also.

Please advise. If there is something more on the subject to make me understand, please advise. Thanks,

Answer 1

We have a house here in India worth Rs. 2 Crores. We want to sell it and take money with us.

Selling the house in India will attract Capital Gains Tax. Essentially the price at which you sell the property less of the property was purchased [or deemed value when inherited by you]. The difference is Capital Gains. You have to pay tax on this gains. This is currently at 10% without Indexation and 20% with Indexation.

Please note if you hold these funds for more than an year, you would additionally be liable for Wealth tax at 1% above Rs 50 lacs.

Can I gift this whole amount to my US Citizen Daughter or what is the maximum limit of Gift amount
What will be the tax liability on me and on my Daughter in case of Gift
Whether I have to show it in my Income Tax Return or in my Daughter's Tax Return. What US Income Tax Laws says.
What will be the procedure to send money as Gift to my Daughter.

Assuming you are still Indian citizen when to gift the funds; From Indian tax point of you there is no tax to you. As you daughter is US citizen, there is no gift tax to her. There is no limit in India or US. So you can effectively gift the entire amount without any taxes.

If you transfer this after you become a US Resident [for tax purposes], then there is a limit of USD 14,000/- per year per recipient. Effective you can gift your daughter and son-in-law 14,000/- ea and your husband can do the same. Net 14,000 * 4 USD per year. Beyond this you either pay tax or declare this and deduct it from life time estate quota. Again there is no tax for your daughter.

What are the routes to take money from India to US
Will the money will go directly from my Bank Act.to my Daughter's Bank Account.
Will there will be wire transfer from bank to bank
Can I send money through other money sender Certified Companies also.

The best way is via Bank to Bank transfer. A CA Certificate is required to certify that taxes have been paid on this funds being transferred. Under the liberalized remittance scheme in India, there is a limit of USD 1 Million per year for moving funds outside of India. So you can move around Rs 6-7 Crore a year.