Remit funds from India to CH

Investing / Others
1

Hi, I am liquidating my family’s Indian portfolio and like to bring the funds to CH.

Funds in India are mostly in Indian equities and mutual funds in my parent’s demat account.

So, my parent wishes to gift me the proceeds after liquidating the investments.

AFAIK, I have two possibilites:

  1. My parent transfers directly to my CHF account in CH. This incurs a 20% TCS deduction and I understand i can only get the refund once the FY tax return is processed plus I have to keep doing this repetitively for at least 2-3 years.
  2. My parent pays any tax outstanding and transfers to my NRO account. I will then need to transfer them from the NRO account to the NRE account. Once done, I can transfer the entire proceeds at one go.

I am interested in the 2nd option. But, my CA keeps finding new issues when I ask him for the same.

Has anyone done this ? Please do share your experiences. Also, if there is a better alternative ..

What documents are needed by the CA or the bank ? Can the banks assist here ?

Also, what should be the source of funds / reasons for transfer ?

Thank you

2

I did option 1 in 2023 when TCS in remittance was still 5%?

I ran the numbers up front and in my case the TCS was in the ballpark of the capital gains tax my parents would have to pay. So it got to small residual tax upon filing tax return.

In option 2 you’ll need to do paperwork to prove source of funds that that it has been taxed appropriately in India. And the bank might still be reluctant to let you do it (NRO to NRE) because it makes them responsible for making all funds repatriable.

You can split the option 1 over 2 financial years and over both parents ( if both have investments over their names)

PS: INR to CHF rates are crap at the Indian banks. If you want to invest the money, get USD in your bank or brokerage account. PostFinance charges 5 CHF per month total for 3 bank accounts (CHF, EUR, USD), and PF USD to IBKR costed me under 20 CHF. Ask around is someone has send USD from other banks/neobanks like YUH to the broker of your choice.

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3

Thanks, that’s a good point.
In my case, TCS is 20% and LTCG will be 12.5% so 7.5% is blocked until next September.
I will check with my bank if they will assist.
Thanks also for the USD suggestion - i will check that possibility.

4

First 1 million (10 lac) INR remittance per person has no TCS.

So think of splitting both selling funds and remittance over 2 years. 1 till march end, another in April.

Depending on your situation, if the capital gains is large enough to take total ( income plus capital gain) above 40-50 lac INR, the. Expect another 1-1.5 lac surcharge on top of capital gains tax.

Talk to CA (or better google if you find useful tax calculators) and then plan out transactions.

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5

Not sure if it applies: should your parent(s) relocate to Switzerland, gift tax to descendants is free in some cantons.

6

Thank you for the tips. I decided to remit asap the cash-in-hand taking the 20% TCS hit for now as it makes no sense investing in India until end of FY (March 26) as the STCG will also be 20% and the remaining gain is also subject to currency depreciation risk. Better to take the hit of OC loss of 20%. From the corpus already invested, I will calculate the tax outgo and accordingly liquidate and remit. @covfefe - what is this extra surcharge if total income > 40-50 lac INR ? Thanks again !

7

Thanks for the tip - unfortunately not applicable in my case. But, i checked with the tax office that there is no inheritance or gift tax applicable to me (Zürich kanton) if my parent is domiciled outside CH.

8

You can get the number here:

Add to that the health and education cells (4% of the tax on top)

9

Related question on this - similar situation - can I transfer funds directly to my IBKR account from my India account….avoiding currency exchanges in the Swiss account?

10

If what you meant is receiving USD, etc from Indian bank to your IBKR account, it should not be a problem I think (as long as money is coming from your Account)

What I am not sure about: Given that it will be a ‘transfer to self’, Indian bank might want the foreign bank account to be in your name. PostFinance USD account in my name worked for me. IBKR will not give IBAN in your name. Maybe Wise does, and then route money from Wise to IBKR.

11

You need to try using IBKR deposit form. They will give you proper instructions.

As far as I know INR option might be possible only for resident Indians and not NRIs.

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