NATURE OF INCOME
There are a few types of income that are essentially exempt
from tax, such as dividend income and long term capital
gain derived from a sale of public listed equities. Income
tax rules made it optional to disclose exempt income in
the income tax return until a few years back. Therefore, in
MR. X SOLD INHERITED
ENTITY TYPE INCOME TYPE OWNERSHIP
MR. X SOLD AN INHERITED FAMILY PROPERTY FOR $600,000.
HE RECEIVED $594,000 AS PAYMENT TOWARDSTHE SALE.
THE AMOUNT WAS USED TO FUND HIS EB5INVESTMENT
$600,000 $594,000 USED
CIRCLE RATE TAX DEDUCTIONS REMITTANCE
CHART 1
many cases it is observed that investors have chosen not
to disclose their exempt income even though the same
was legally earned and received. Now consider a scenario
where a significant portion of an EB-5 investment is derived
from exempt income, documenting lawfulness of this
source would depend entirely on gathering relevant third
party documents demonstrating that such income was
actually earned and received.
OWNERSHIP OF ASSET
Another prevalent scenario in India is lack of a will and
succession document. Ver y few draw up a will and
therefore, in absence of one, as per Hindu Succession Act,
their estate gets distributed equally amongst all the male
successors. The Hindu Succession Act has had its fair
share of ambiguities and one of which have been put to
rest by a recent judgment of the Supreme Court, which held
that a daughter and son have equal right in inheritance.
This ruling from the Supreme Court has brought into
question ownership and title of all inherited property of
male members who also have female siblings. Therefore,
in order to demonstrate clear title of a male member, a
relinquishment deed must be executed by all the female
siblings. Such relinquishment deed needs to be registered
with a local revenue authority for it to be legally binding.
Thus, while documenting source of funds received from a
sale of inherited property, it is important to have a complete
family tree and registered relinquishment deeds from all
other lawful heirs to establish a clear title of the investor
and lawfulness of source of funds.
CIRCLE RATE
In India, each state government has issued a “Circle Rate”
for each property depending on their type and actual use.
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