Hello, I am an NRI staying in the USA for 5 yrs on H1B. I am currently in the queue for the green card which could take another few years to complete. I have been told by the LIC office that it is not an issue as far as purchasing of a new policy before I become a permanent resident or citizen. If a policy is purchased before obtaining a Green Card, I can still continue to pay premiums after getting Green Card. I am facing some questions as below: 1) I wonder if I shall continue investing in LIC policies that then gives you back annually return until the one lives or policy anniversary. Some of the policies also allow one to get the sum assured in a lump sum if one chooses instead of yearly returns. Can I repatriate such funds from India to USA using my NRO account? Are there any limitations or additional taxes to be paid before repatriation? By that time I might be a permanent resident. I have read some places that funds are not repatriable. 2) Would there be any additional complications in repatriation or taxation on such returns if I become USA citizen? Thanks,
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For rupee denominated policies issued to NRIs, funds held in NRO accounts are to be used to pay premiums."
2)
If the policy is foreign currency denominated, the premiums are to be collected in foreign currency from abroad or out of
of the insured or insured’s family members held in India
3) Maturity and death proceeds are repatriable to the extent of premium paid in foreign currency
4) if premium is paid in Indian rupees it would not be repatriable
5) in India maturity proceeds are tax free
At present you can repatriate upto USD 1 million per year from your NRO account.
No additional tax implications.
Income earned in India is taxable as per Indian tax laws.
1. The insurance agent will be interested in selling their policies by giving some or the other false promises, however if you ask this question of repatriation of the funds they may not have an answer.
As per the RBI regulations, the claim amounts can be repatriated in proportion to the premiums received from an NRE Account or by way of remittance through normal banking channels. Hence, depending on your period of stay abroad, you can decide how to make the premium payments.
An NRO account is like your regular bank savings account but has certain restrictions. In this account you can deposit your rupee earnings from India such as rent, interest, dividends etc. You can also deposit funds from abroad that are in the form of freely convertible foreign currency. You can issue cheques for all local payments, EMIs or investments through this account.
2. You can repatriate (that is transfer to a bank account outside India) all current income such as rent, interest, dividends etc that you earned in India. Apart from that, if you made any capital account transactions like sale of property or investments, and if you got the sale proceeds in the NRO account, you can repatriate up to $1 million per calendar year. However, you would need to produce a certificate from your chartered accountant declaring that all taxes on the funds have been paid. Only then will the banker permit the repatriation.
Yes you can repatriate the funds from India to USA though your NRO account.
No you will not have to pay any tax as returns will be tax free under section 80 C of Income tax act.
No there will no complications even if you get permanent residence of USA
No bar to repatriate income earned through LIC policy.
Yes you can repatriate funds using your NRO account. See the amount received shall be taxable as per the laws in the country at that particular time as of now same is taxable.
Funds are not repatriable as you said
