I am on H1b visa and contribute to 401k. If I go back to my home country India, what taxes will I have to pay in both US and India?

For the financial year 2017, the lowest tax bracket is $9,325, so I would withdraw only $9,325 annually to pay as little taxes as possible and the withdrawal penalty. What taxes will I have to pay to India? Are there additional taxes that I have to pay? Since I am no longer a resident, I assume I don't need to pay state taxes. Can I claim any deductions?

2 Answers 2


What taxes will I have to pay to India?

Income earned outside of India when your status is Non-Resident Indian, there is no tax applicable. You can repatriate the funds back to India within 7 years without any tax event.

Someone else may put an answer about US taxes.


The money that you have under your control (e.g. in bank accounts, savings accounts, taxable investments, etc) is your money and there is no tax of any kind (either in India or in US) that needs to be paid when the money is transferred to India. As Dheer's answer says, you need to transfer all these monies within 7 years as per Indian tax law.

For your 401(k) account, assuming that all the money is tax-deferred (i.e. you contributed to a regular 401(k) and not a Roth 401(k)), you will have separated from service as far as US tax law is concerned. So, check if it is at all possible to roll over the money into a similar scheme in India, specifically the Employees Provident Fund. Wikipedia says

The schemes covers both Indian and international workers (for countries with which bilateral agreements have been signed; 14 such social security agreements are active).

and so a rollover might be possible. If not, you could withdraw small amounts each year and avoid US income tax (but not the 10% excise tax), but how long you can continue holding 401(k) assets after return to India and whether that is long enough to drain the 401(k) are things that you need to find out.

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