The allure of the U.S., with its vibrant job market and lifestyle opportunities, captivates numerous Indians, making them eager to secure their family’s futures in the United States. The yearly surge in H-1B Visa applications – over 400,000 for a mere 85,000 visas – highlights the vast appeal of the American dream. For affluent Indians, the EB-5 Visa offers a dependable pathway to U.S. Permanent Residence, effectively countering the unsettling prospects of potential layoffs or hiring freezes. Notably, India has ascended the ranks to become the second-largest EB-5 investor market globally, with 760 Indian nationals procuring the EB-5 Visa in FY2019.
In a much-needed relief for Indian investors interested in the EB-5 Investor Visa program, the Indian government has postponed the Tax Collected at Source (TCS) hike from 5% to 20%, originally slated for July 1, 2023, to October 1, 2023. This surge in tax would have added an approximate $120,000 to the initial sum required for EB-5 investments. Thanks to this postponement, investors now enjoy an extended 90-day window to make their investments, thereby bypassing the impending tax increase.
Under general rules, Indians can remit up to $250,000 in a financial year. One may remit money overseas for expenses such as travel, business trips, going abroad for employment, medical purpose, education, gift or donation, emigration, maintenance of close relatives, and any other current account transactions (CAT) as per Rule 5 of the Foreign Exchange Management (CAT) Rules, 2000. Now, TCS will be applicable on all foreign remittance transactions that come under the Liberalised Remittance Scheme (LRS).
The increase in TCS rates, which was to come into effect from 1 July 2023 shall now be enforced from 1 October 2023 as per the latest announcement by the Ministry of Finance. The extension makes a huge difference as Indian investors now have till October to get their money out. The outbound money transfer tax can be reclaimed on tax returns.
Nicholas Mastroianni III, the President of US Immigration Fund states, “We are thankful that our Indian EB-5 investors have this additional time to help them avoid the additional TCS on their investment. The surest way to circumvent the additional 15% tax on your EB-5 investment is through diligence and careful planning – ensuring your EB-5 funds are transferred by the October 2023 deadline. I strongly urge potential investors to start engaging with an EB-5 regional center at the earliest opportunity. Explore the available projects, prepare your investment funds, and strategize to optimize your investment.”
The EB-5 program – essentially a residency-through-investment program – facilitates a direct pathway to U.S. permanent residency for foreign investors who invest a minimum of $800,000 in a qualifying project and thereby create at least 10 U.S. jobs. For years, Indian investors have exploited the potential of this program, resulting in a consistent upsurge in EB-5 applications. The EB-5 Visa has huge advantages over other visa options for investors: No employment or educational prerequisites; no necessity for employment sponsorship; potential for reduced tuition fees at U.S. colleges for investors and their family members; and prioritized visa processing for projects that meet USCIS criteria.