[Samurai]

What about US citizens having bank accounts in India, do they have to report it to IRS? My son has a HDFC bank account, where he just keeps his allowance from us, so that he can use ATM card or UPI. Does he have to report it to IRS? We thought he could do that once he started earning.

[Thad E Ginathom]

India and UK do have a double-taxation agreement. I even get a small refund.

The wealthy and the highly paid can go for the services of the international accounting companies, who will, no doubt, manage their clients' incomes and capital . The rest of us pay more.

The reason is simple. In rough numbers, I can earn 2.5 lakh a year on which no tax is payable. In UK, that figure is over GBP10,000

I am resident in India. I pay Indian tax on my global income. I pay British tax on what I earn in Britain, and not on what I earn in India.

Bottom line on all this is, if a person is going to live somewhere, they are going to pay that place's taxes, just like everybody else who lives there does.

(I won't say without grumbling, because we all grumble about taxation )

[aim120]

Originally Posted by Samurai

What about US citizens having bank accounts in India, do they have to report it to IRS? My son has a HDFC bank account, where he just keeps his allowance from us, so that he can use ATM card or UPI. Does he have to report it to IRS? We thought he could do that once he started earning.

My uncle who had a GC reported is income from India when he moved back to India for 4 years. When he shifted again to the US, he did report 3 or 4 years later to the IRS, long story short he is now poorer by $200k or more in penalties/fines and the dreaded attorney fees. Granted he was making 80lakh per annum in his brief stay in India and also sold is property here in Bangalore and then bought a house in the US.

My other uncle is a US citizen and he has not reported anything. When I asked him, how come you didn't have to pay up similarly, he simply replied, he didn't report.

[kvk]

Originally Posted by Samurai

What about US citizens having bank accounts in India, do they have to report it to IRS? My son has a HDFC bank account, where he just keeps his allowance from us, so that he can use ATM card or UPI. Does he have to report it to IRS? We thought he could do that once he started earning.

It depends on the balance, you may need to file what is called an FBAR. I think we are now getting into details of US taxation etc. so best to talk to your accountant.

[kvk]

Originally Posted by Thad E Ginathom

India and UK do have a double-taxation agreement. I even get a small refund.

The wealthy and the highly paid can go for the services of the international accounting companies, who will, no doubt, manage their clients' incomes and capital . The rest of us pay more.

The reason is simple. In rough numbers, I can earn 2.5 lakh a year on which no tax is payable. In UK, that figure is over GBP10,000

I am resident in India. I pay Indian tax on my global income. I pay British tax on what I earn in Britain, and not on what I earn in India.

Bottom line on all this is, if a person is going to live somewhere, they are going to pay that place's taxes, just like everybody else who lives there does.

(I won't say without grumbling, because we all grumble about taxation )

Yes, it is the stark disparity in tax brackets/marginal rates between the two countries that is the issue. One of the main drivers for me to come to India was to be close to aging parents etc. and I was fortunate to be on expat terms in India for my entire assignment (8+ years) prior to retirement - I remind myself of that come tax time every year.

[hondatoyotafan]

Originally Posted by Samurai

What about US citizens having bank accounts in India, do they have to report it to IRS? My son has a HDFC bank account, where he just keeps his allowance from us, so that he can use ATM card or UPI. Does he have to report it to IRS? We thought he could do that once he started earning.

As long as the total aggregate value of all his foreign accounts are <US$ 10k he can avoid filing FBAR. Once it starts exceeding he needs to fill a simple form called FBAR in the FinCen website.

But if he starts earning he needs to file his US tax returns. The US is unique in the way it taxes its citizens and permanent residents wherever they may live. I being a H1B could get out of the system after filing my US incomes 2 years after i left.

[hondatoyotafan]

Originally Posted by aim120

My uncle who had a GC reported is income from India when he moved back to India for 4 years. When he shifted again to the US, he did report 3 or 4 years later to the IRS, long story short he is now poorer by $200k or more in penalties/fines and the dreaded attorney fees. Granted he was making 80lakh per annum in his brief stay in India and also sold is property here in Bangalore and then bought a house in the US.

My other uncle is a US citizen and he has not reported anything. When I asked him, how come you didn't have to pay up similarly, he simply replied, he didn't report.

Things have changed a lot the Obama administration has concluded a far reaching agreement with India on the data sharing of US persons data. If you recently opened a bank or demat account in India you would have given the FATCA declaration. There have been many cases of non reporters caught by US tax authorities and fined heavily.

One of my uncle who is a US citizen has become a successful ceramics businessman and is now regretting his decision to become one. The only use of US passport he says is going for visa free vacations in Europe or Australia.He takes the help of Deloitte India to file his huge tax return of more than 100 pages

[Jeroen]

Just some additional thoughts and experience:

When we left the Netherlands in 2009 to move to the USA we stopped paying taxes in the a Netherlands. There are some formalities involved, but I only paid tax in the USA. Same when we moved from the USA to India. Mind you, for years the American IRS demanded we do a formal tax return even though we had left the USA many years earlier.

My employer kept my company pension going in the Netherlands as well. Also, they kept up social premiums, and benefits for my wife and myself, which also includes the state pension. One of the big headaches when you move around the world is your pension. In our case that continued to build up in the Netherlands as if we had never left.

When you leave the UK you need to check what happens with your pension funds there as well. Not sure how it all works today, but when we moved from the UK to the a Netherlands in 1986, my wife, who had worked in the UK and is a British national managed to get her whole pension funds paid out in one big lumpsum.

As an expat things tend to be a bit different. Tax was never an issue. My employer had global nett contract. So my contract stipulated nett earnings and how much of that would be paid into our Dutch/UK/Indian/USA account. They dealt with the various taxes in the various countries.

The other thing these days is bank accounts. It is becoming increasingly more difficult to have a bank account in a different country from where you reside. When you leave the UK, the bank is going to cancel your account!

We held a UK bank account for decades whilst we moved around the world as we had some property in the UK. A few years ago, we had to fake a mail address, to keep our account. (We used the address of a good friend of ours).

So, when you immigrate, or just move for a few years as we did, you need to check things like what happens to your home pension and bank account.

Not being resident in your home country might also have other complications. E.g. you might not be able to sell property. Raise a mortgage if you want to buy property. I had to jump through some hoops to keep insurance on my three classic cars in the Netherlands which were in storage whilst we were abroad.

Lots of stuff to check, decide upon and arrange. And that is just in the country you are leaving.

Jeroen

[Thad E Ginathom]

Originally Posted by Jeroen

We held a UK bank account for decades whilst we moved around the world as we had some property in the UK. A few years ago, we had to fake a mailadres, to keep,our account. (We used the address of a good friend of ours).

That hasn't happened to me, although I sometimes wonder if it ever would. That would be a real pain in the neck. Not impossible to handle, I'd just have to get three pension funds (one of them pays me about GBP300 a year!) to pay to an Indian account. But it would be inconvenient. When in Britain, I spend British money on a British card, with no worries about fx rules or limits.

[SS80]

Originally Posted by kvk

We held a UK bank account for decades whilst we moved around the world as we had some property in the UK. A few years ago, we had to fake a mail address to keep,our account. (We used the address of a good friend of ours).


Jeroen

I agree with you on this. HSBC UK bank accounts need one debit transaction every 90days to avoid going dormant. You can stay anywhere in the world, still hold an HSBC UK bank account and operate it without issues - as they allow 2 addresses to be held on the account.

1. Primary address - the address on your utility bill/ employers letter - has to be a UK address.
2. Correspondence address - to receive statements, debit cards etc, this can be any address in any non sanctioned country.

The issue arises if your account goes dormant, your passport is out of date/ renewed but not updated with the bank. Then the bank may or may not offer you with an option go restore your bank account until you physically drop into a UK branch with original documents to be scanned.

Hence it's best to visit your branch, scan and update your photo id and proof of address before you leave UK. Also get a new debit card issued and activated. You can always get your statements to India without an issue.

PS: This bank considers India as a high risk country hence does not send renewed debit card & pin. It is first ordered to a local branch, then redirected through bluedart etc it takes over a month to get the card delivered to Bangalore.

To know in detail about the tax related requirements, just google SAFCA HSBC UK, refer to faq section.

[Jeroen]

It’s not necessarily about the account being dormant.

Banks in Europe at least, need to comply with ever increasing rules about tracing fraudulent funds. When you don’t reside in the same country as your bank account is considered suspicious and requires a lot more effort on the bank behalf to verifying the funds have been obtained legitimately. Irrespective whether you have Euro 100 or Euro 10.000.000 in your account. So they just get rid of you and your account. It’s easier for them. Over the years we have had many British friends who moved back to the UK after residing in the Netherlands for many years. All of them had to close down their Dutch bank account.

There are worse things in life, but it can be a real pain. Especially if you have ongoing obligations or commitments in the country you have left. E.g. property that requires maintenance and being hooked up to utilities.

It used to be very different, although for instance opening a bank account in a country where you don’t reside has always been difficult. When we bought our first property in Suffolk in the early 90s, we had difficulty opening an account. We went to Ipswich and walked along Main Street going from one bank to the next. We explained it would be our second home, we had just exchanged contract and we needed an UK account for utilities, insurance etc. None of the banks wanted to help out. Eventually we ended up in Barclays. They understood our predicament and we had everything sorted within 20 minutes. I still had to submit some proof of ownership, income etc. But they were fine if I did all of that in the next two weeks or so.

The same Barclays that wanted us out of their system, twenty years later.

We still have an account in the home country of my wife, Barbados. Laying low, maybe they have not noticed yet, my wife left the island when she was 18 years old. That was 45 years ago.

Jeroen

[Aditya94]

Some background before I answer your question. I am a Practising CA , a CS, an ACCA (UK) and CPA & CMA (From the USA).

The UK has two professional accounting qualification, Chartered Accountancy (CA) and Chartered Certified Accountancy (ACCA), unlike in India. Predominantly, both of them are very similar when it comes to syllabus, professional responsibilities, skill sets and area of work.

ACCA in India is becoming popular over the last few years and that's good news. In India, the areas of taxation, corporate law, Accountancy and Auditing does not have any scope for a person holding a non-Indian qualification since the former are laws which vary from jurisdiction and the latter two are solely vested with Chartered Accountants because of law.

So, if you partner is into Taxation or Corporate Law, there is very less scope in India, unless he works for a company which has operations in the UK. When it comes to Accountancy and Auditing, India now follows IndAS (which is followed in the UK as IFRS) and the Indian Auditing Standards are based on the Global Standards and the transition would not be very difficult as such. However, there are other areas such as Finance, Systems Audit, Management Consultancy, Management Accounting, just to name a few which are common across the globe.

To answer your specific question of what is the procedure to re-qualify in India, please visit this link. https://resource.cdn.icai.org/69612ia55553.pdf
However, the caveat here is an ICAEW member qualifying through this route will not be eligible to practice in India. Unless your friend is really interested in jurisdiction specific areas of Taxation (Direct & Indirect), Corporate Law or Auditing, there is absolutely no point in taking this arduous process as your partner would be required to learn things from scratch. I personally had a tough time learning UK and US taxation because I was so involved in Indian taxation - takes a bit of unlearning and re-learning . But it is just a passing phase.

On the other hand, non-jurisdiction specific areas such as systems audit or finance are much easier to adapt to. I mean there are certain level of fresh learning which is needed - Like FEMA or say Cost Accounting Standards, but it is not as radical as the former.

However, all hope is not lost. These Big 4s have something called as GDS a.k.a Global Delivery Services, which is basically the back office for operations across the globe. So your partner could very well choose this GDS Department and continue to work on the same field. One tip to get into a Big4 is to work in a Big4 in UK and subsequently transfer it to India. I have had people jumping departments within a Big4 and jumping countries after joining one.

As far as your second question on the pay-scale. This is a very subjective area based on various factors and the ballpark cannot be given without any details. The factors which influence pay-scale include qualification, experience, job position and you know the general stuff. A fresh CA's starting average CTC is between 9-10L. If you partner has got some good experience and is able to place himself in the GDS department, my assumption is that he will be able to make north of 15L p.a. (this would obviously be more, but I am being very conservative) There are other organisations such as BDO, Grant Thornton, the non-big4 accounting firms which can also be explored.

If your partner is more into Finance options such as JPMorgan Chase, Goldman Sachs, Morgan Stanly, etc. are present in India and if your partner is into Consultancy companies such as McKinsy, BCG, etc too are present.

Finally it boils down to the following factors
(i) Qualifications of your Partner
(ii) His willingness to adapt / learn new stuff
(iii) Job Experience
(iv) Current Job title (in case he is currently employed)
(v) Which city he would like to relocate and obviously
(vi) How much will he like to earn.

I wish him all the best

[tsk1979]

Originally Posted by Samurai

Tax liability works both ways I think. Aren't US citizens liable to pay tax on assets no matter where they live? My US born son has OCI status, and plans to live in India. Once he starts earning, his tax situation will get complicated. When he inherits property some day in future, US government will demand tax on it. He is a commerce graduate, so I expect him to figure it out.

Its usually a problem if you move to a country with lower rates of taxation than USA. Since India has higher taxes than USA for regular tax brackets he should be fine. BTW, a solution to this double taxation problem is to give up US citizenship. But it costs about 2500$

Originally Posted by Samurai

What about US citizens having bank accounts in India, do they have to report it to IRS? My son has a HDFC bank account, where he just keeps his allowance from us, so that he can use ATM card or UPI. Does he have to report it to IRS? We thought he could do that once he started earning.

Yes, above a threshold it has to be reported. Its $10000

If the amount is above $10000 in the bank, a return has to be filed every year and it has to be reported

[ads11]

First off want to thank everyone who has responded so far - just wanted to say I've fed back a lot of the comments on here verbatim to the significant other and it's gone a long way towards assuaging her concerns about a move to India (in the distant future).

Originally Posted by 84.monsoon

Last year they introduced a vague and generic provision that you may want to explore more about, since you state that you are in reasearch field. The provision states that an OCI cardholder, will need to seek special permission from the mission/FRRO to undertake research activities in India. I am assuming you are also a UK citizen and India OCI. It is not clear what "research" in this context means.

Ah, oversight on my part. I should mention that I'm an Indian national! Dad couldn't be bothered with the paperwork when we moved and well, over two decades later, I don't see any reason to change despite the many hassles and considerable expense that's come with that. I'd like to do my bit back in India eventually and dropping the citizenship would only make that harder. I tend to joke with my parents it's the sunk cost fallacy!

As for the research part, I'm all too familiar and rather salty about the GoI's attitude to research by anyone - I tried to appeal to reason for some offshore data from Andamans for my PhD but it was like getting blood from a stone. Just out of curiosity I wonder how it impacts foreigners doing research in terms of a PhD in India?

Originally Posted by SS80

A lot of companies in Bangalore especially banks, run processes that are into core banking, accounting, audits etc for UK clients. The UK graduated person is preferred over an Indian in such cases, as he/she would have in-depth and actual knowledge of that country-specific accounting works. Best examples of this would be Accenture, HSBC, JP Morgan Chase, and Barclays - 50% or more of their backend processes are run from here.

Thanks SS80! Again, another reassuring response - something to keep in mind for down the line.

Originally Posted by Aditya94

Some background before I answer your question. I am a Practising CA , a CS, an ACCA (UK) and CPA & CMA (From the USA)...

Thank you Aditya94 for such a detailed response! I've bookmarked it for future reference. A lot of it went over my head but I've passed it on to my partner and I'm sure it'll make a lot more sense to her!
Thanks also for an idea of the pay scale - again I must admit I've little real idea of where that fits in in the Indian perspective (I've been very fortunate to never really have to worry about financial affairs for most my life and haven't really paid as much attention to it as I should have).

Originally Posted by Jeroen

When you leave the UK you need to check what happens with your pension funds there as well. Not sure how it all works today, but when we moved from the UK to the a Netherlands in 1986, my wife, who had worked in the UK and is a British national managed to get her whole pension funds paid out in one big lumpsum.

Cheers Jeroen! I barely understand how pension works now that I'm having to pay into one (oh how I miss being able to live in blissful ignorance when I was underwritten by the bank of mum and dad). It's an interesting point because my dad paid into his pension pot when he worked for the NHS in the 90s, I wonder how it works when he gets to pensioner age.

I'm already dreading navigating the tax landscape in both countries! Not gonna lie, it's the kind of thing I happily bury my head in the sand for. But thanks again all, keep it coming! It's all very much appreciated

[dragracer567]

Originally Posted by ads11

As for the research part, I'm all too familiar and rather salty about the GoI's attitude to research by anyone - I tried to appeal to reason for some offshore data from Andamans for my PhD but it was like getting blood from a stone. Just out of curiosity I wonder how it impacts foreigners doing research in terms of a PhD in India?

For my field (Marine biology/aquaculture) atleast, doing research in India is about as difficult for a foreigner as it is for an Indian national. For example, it is impossible to even collect samples of sea cucumbers and sea urchins in India even for research because the government thinks that this will somehow lead to commercial exploitation. I have two foreign acquaintances who did their respective PhDs in India - a Bangladeshi guy who did his PhD on Marine Biology in Mangalore and a Vietnamese girl who did her PhD on agriculture in Coimbatore. Both just had to apply for a visa where they had to get MHA approval, took about a month. So, once you have your visa for the PhD, the only limitation is what the Indian government will allow you to do, whether an Indian national or a foreigner. Offcourse this might vary based on the fields of study as some fields might be deemed too sensitive for foreigners.

Offcourse, this is from my field, not sure how much of this applies to your context.