8621 is hard because the calculations are complex and there are a lot of edge cases, however, once you codify those, it's just a formula. Hence, we use this formula to generate a filled 8621 (based on your inputs on your tax bracket + our calculations) document that you can attach with your 1099.
We have worked with CPAs exclusively focused on US-India taxes to develop expertise on this. This video from our last webinar may help - https://www.youtube.com/watch?v=InNW3OZY-Ig
Tbh, if you're just looking for FD, 8621 doesn't even apply. But assuming you want to capture india's growth, you would want to invest in index funds giving 12-13% return, for which 8621 will be applicable. An offline process for filing 8621 is truly a nightmare, hence we are making it online and simpler.
Yes we have written about 8621 in our blogs, we help in the documentation that individuals require to be compliant for FBAR and PFIC.
Post the zero interest rate regime, it's unlikely US will give that much return as it has in the last decade. AT the same time, India is in a better position vs last decade because foreign reserves are stronger, so depreciation probability is lower as well as fundamentals are better - RBI revised its growth forecasts upwards from 6% to 6.8%, capex to GDP has doubled in the last 7 years etc.
Overall, these factors make India a good diversification for X% of your capital, X can be higher if you choose to move to India, and lower if not, but it can be non-zero, provided the friction of investing is removed
This is also a more efficient way of investing, which leads to higher returns because of low tracking errors. The fee more than covers for itself with the return delta you get here, refer the comment on investing in India ETF vs investing here.
That's true, but going to India is not frequent for a lot of NRIs/OCIs.
Also, NRO account essentially means you are putting restrictions on repatriation of that money. For people who want to repatriate back, NRE is much better and those processes are very painful for demat accounts.
We think the market for Indian residents is fairly saturated, lot of upgrades in the last 5 years and already some products which do this. But NRIs/OCIs are still underserved
You can apply for a PAN card if you are an OCI holder.
Refer to form 49AA here - https://www.protean-tinpan.com/services/pan/pan-index.html
This can be done online, attestation will be required though of a copy of your tax identification document (SSN card for US)
Agreed with points on tax and repatriation, that is a core part of the service. On the depreciation, most of the depreciation has happened in the zero interest rate environment, which is unlikely to hold true in the medium term. But yes, agreed with the solve there of hedging the currency risk independently, cost of hedging has to be baked in though.
If you are interested in the product, do check out the website / fill the form and we will reach out
Over the last 20 years, NIFTY has had a CAGR of 15%. Currency depreciation was 3% every year. So a net gain of 12%. Compared to this, S&P500 CAGR was 7%.
We are not talking about stock picking here, since that is anyway individual investor dependent. Plus not all stocks have a foreign counterpart. So funds end up becoming a better diversified alternative.
We make the accounting experience simple and online as well but I'd definitely want to know more about your experience, if you are open to chat, feel free to fill the form on the website and we'll reach out
1. Their tracking error (because of frequent currency transactions + cash requirements) cumulates to a large underperformance vs investing directly. In the last 5 years, there's a cumulative return of 14% for INDY vs 69% for NIFTY. Even accounting for currency depreciation and remittance charges, the $ adjusted return for NIFTY is at least 2x.
Even active funds like WAINX, EPGIX havent beaten investing directly over the long run. You can compare these with NIFTY growth % - USD/INR growth % - two-way currency transaction charges to confirm.
This is a fair option for anyone who cant access the Indian markets directly, but for Indians with PAN card, the efficiency of investing directly is much higher.
2. Depth of funds is still not as good as in the Indian market. India has 8000+ mutual funds listed, with specific allocations available to mid cap, small cap, thematic (tech vs pharma vs consumer vs infra), equity-debt hybrid etc.
Secondly, we are not just a way to invest faster but also offer continuous rebalancing services, and are an end to end platform for NRIs along with taxation and repatriation support.
It is not mandatory for NRIs, only indian residents. Refer below:
Aadhaar-PAN linkage requirement does not apply to any individual who is:
Residing in the States of Assam, Jammu and Kashmir, and Meghalaya;
a non-resident as per the Income-tax Act, 1961;
of the age of eighty years or more at any time during the previous year; or
not a citizen of India.
Agreed with this comment, the 5% is applicable for Indian residents, not NRIs. If the tax status and bank account was not updated to NRI, this would have been incurred.
It would, unfortunately, the bank account creation requires PAN card (Indian financial identity document) which you cant get if you dont have any ties to India.
No, since you are an expat, this rule doesn't apply to you while remitting back your profits.
Your capital will go back to your NRE account once you exit your investments, (assuming that's where you invested it from) and then you can remit it back from there to your resident bank account using any remittance product