Los Angeles, CA, February 14, 2023
The government of India is set to increase taxes on foreign fund transfers from India, including EB-5 Visa investments. Indian investors are to pay a 20% Tax Collected at Source (TCS) on EB-5 investment transfers to the United States starting July 1, 2023. Only transactions from accounts of legal residents of India are affected by the Tax Collected at Source (TCS) increase while transfers from accounts of non-residents remain unaffected.
EB5 Visa applications from Indian investors are expected to rise given the proposed tax fee hike on overseas remittances. EB5 Indian investors benefit from applying for the Immigrant Investor Program now while the TCS remains only at 5%. Indian EB 5 investors who apply after July 1, 2023 are able to file for tax returns on their EB 5 investment TCS to reclaim the paid taxes.
What is the Tax Increase on EB-5 Visa Investments from India?
A tax increase on overseas fund transfers was proposed by Finance Minister Nirmala Sitharaman during India’s Union Budget 2023 held last February 1, 2023. The tax increase includes a 20% Tax Collected at Source (TCS) for EB-5 Visa investment fund transfers from India. The Indian government views the proposed tax increase as an overdue collection of lost revenue. The Tax Collected at Source (TCS) increase from 5% to 20% on EB-5 investments from India takes effect on July 1, 2023.
How Does the 20% Tax Increase Affect Indian EB-5 Investors?
EB-5 Visa investors from India must account for the 20% TCS in addition to the required minimum investment. EB5 Indian investors need to invest a minimum amount of $800,000 USD (INR 65 M Indian Rupees) in a rural or high unemployment Targeted Employment Area (TEA) to be eligible for U.S. Permanent Residency. High-net-worth Indian investors must have invested or be in the process of investing the minimum capital in a qualified EB 5 Project to be able to initiate the immigration process through investment. Indian EB5 Visa investors will then have to prepare a total of $1 million USD (INR 82 M Indian Rupees) to transfer the $800,000 minimum investment from India to the United States.
The EB 5 Visa is a pathway to U.S. Permanent Residency through a minimum investment that creates at least 10 full-time jobs for U.S. citizens. The U.S. Citizenship and Immigration Services (USCIS) oversees and adjudicates all applications for the EB-5 Visa and has recently proposed filing fee increases for EB-5 petitions. Indian immigrant investors need to take into consideration these EB-5 Visa Fee increases set to take effect on March 6, 2023 as well as the additional 20% TCS on money transferred to the US. Indian EB5 Visa investors need to note that the TCS only affects transfers from accounts of legal residents of India and does not cover transfers from non-resident bank accounts.
Do EB-5 Indian Investors Get a Tax Refund?
Yes, the TCS paid on the EB5 investments of Indian investors can be claimed through tax returns. The TCS can be treated as a form of tax advance to be set off against the Indian investor’s other tax liabilities upon filing their annual tax returns. Indian EB 5 investors are able to have their TCS adjusted and are eligible for a tax refund if their net tax liability is negative.
Indian Investor EB-5 Applications Increase After RIA Implementation
Indian investor applications for the US EB5 Visa have increased since the Reform and Integrity Act (RIA) was implemented in 2022 owing to the benefits of reserved visas, priority processing, and enhanced program transparency. India ranked second among the countries with the most EB-5 Visa applications and approvals in the fiscal year 2022 which shows the renewed interest of Indian investors in the US Investment Green Card. The increase in Indian Investors Applying for the EB5 Visa is expected to continue in the years to follow, especially since reserved visas and priority processing greatly alleviate the burden of lengthy processing times for backlogged countries such as India. These set-aside visas are dedicated to investors in Targeted Employment Area (TEA) projects and only require the lowered minimum capital investment of $800,000.
How can Indian Investors Maximize their Chances of Getting an EB-5 Visa in 2023?
The demand for foreign investment programs such as the EB5 Visa is expected to increase in the months preceding the tax fee hike on overseas Indian remittances. Indian investors applying for the EB5 Visa in 2023 are advised to begin the process before the 20% TCS increase becomes effective on July 1, 2023. EB5 investors from India are able to take advantage of the current 5% TCS on overseas fund transfers if they apply before the tax increase is implemented. Additionally, Indian investors residing in India have the opportunity to benefit from the Indian Financial Year Foreign Allowance to qualify for the EB-5 Immigrant Investor Visa. The Liberalised Remittance Scheme (LRS) of the Reserve Bank of India (RBI) allows couples or parents to remit $500,000 before March 31, 2023, and an additional $500,000 on or after April 1, 2023.
EB5 BRICS regularly hosts sessions on the US EB5 Immigrant Investor Program. Below are our upcoming one-on-one meetings with immigrant investors who want to apply for the EB-5 Visa before India increases its taxes on foreign fund transfers.
- February 24-25: Dubai
- February 27-March 1: Mumbai
- March 2-3: Pune
- March 4-5: Bengaluru
- March 6: Chennai
- March 7-8: Hyderabad
- March 9-11: Delhi
- March 13-14: Singapore
EB5 BRICS periodically conducts EB5 Events for immigrant investors throughout India, Dubai, and Singapore.