Indians Considering EB5 Investment Rush to Transfer Funds to U.S. Before Indian Remittance Tax

Citizens of India, who are interested in applying for a green card via the EB5 immigrant investor program, are racing to transfer money to the U.S. before a new Indian remittance tax takes effect on October 1, 2023. The tax hike on most remittances sent from India to another country will substantially increase the cost of EB5 investments for investors relying on funds being moved from India.

Background on EB5 Program

The EB5 program allows a foreign national to apply for permanent residency (i.e., a green card) based on a qualifying investment in a U.S. enterprise that creates at least 10 full-time jobs for U.S. workers. The minimum investment is $1,050,000. There is a reduction in the investment to $800,000, if the investment is in a targeted employment area (TEA) or qualifying infrastructure project. A TEA is an area of high unemployment or a rural area. More details on the EB5 program are available in the MurthyDotCom InfoArticle, Overview of the Revisions Made to the EB5 Program (06.Apr.2022).

Indian Remittance Tax

India is increasing the tax collection at source rates for most foreign remittances, including remittances used for investments, from 5% to 20%. For Indians hoping to use money from India as part of an EB5 investment, the tax hike will significantly increase the cost of sending money to the U.S. Initially, the increase was to become effective on July 1, 2023. However, the Indian government delayed the effective date until October 1, 2023.

Conclusion

It should be noted that funds for an EB5 investment do not need to originate from abroad. Generally, if the investor can demonstrate that funds were lawfully earned, then it is permissible to use funds acquired from any country, including the United States. For Indians relying on funds from India, however, the cost of moving the money to the United States is going to make foreign investments far less attractive, come October 1, 2023. Anyone seeking more information about the EB5 program can reach a Murthy Law Firm attorney at EB5@murthy.com.

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