Many Indian parents are in a fix when their children migrate to the US. Real estate in India is expensive. They would want to transfer dollars/ savings/ investments/ insurances and also terminal benefits to their kids in the US. But they face double taxation that will drain their finances. 35% of capital gains taxes in India, followed by equal taxes by the US may not leave much for the kids, in case the parents want to dispose of their real estate in India and want to transfer funds to the US to their children. Its hopeless trying to get the Indian govt to lower the taxes. But the investments are going to go the US permanently. The US can consider waiver of taxes on investment capital from Indian parents to their kids in the US. We have this scenario prevalent in the case of most of the parents based in India with their children working/living in the US. Presently, the Indian govt allows tuition fees in dollars with nominal charges, to be paid by Indian parents to the US universities when the kids enrol in varsities abroad, but even this has a ceiling.
What shall happen if the taxes are waived off by the US for investment transfers from Indian parents to their grandchildren either for education fund or for assisting in housing for their children? There can be much more inflows than happening now. The US can also allow transfer in kind such as gold and diamond jewelry that are left back in India by migrating children as they are highly taxable in the US. A ceiling can be fixed for the quantum of transfer. Many Indian immigrants opt for OCI card in India (equivalent of the green card) on acquiring US citizenship that can help retain their inheritances in India. (India does not permit dual citizenship for security reasons). But after a generation or two, they may lose touch with the base. They can benefit from repatriation of funds. Just a thought!
vijiravindran's 