Repayment question

needCBT · Jan 24, 2015

In 2013, my husband and I sent my BIL(H's sister's husband) X lakhs for a business venture. This venture has tanked and all the money is gone. Since BIL does not have cash, he said that he will write a property worth X lakhs in my husband's name (When? Don't know) I don't want this because the cash was taken without my BIL's family's knowledge. So there might be unofficial conditions about not selling it off, when and if he does officially write it on my husband's name. There are also other issues I can think of, so I want my BIL to sell the plot and give us the X lakhs, whenever he is ready.

There is also an amount which was sent around 2011, which was invested in a construction project started by BIL's brother. The project never took off, and BIL's brother paid Y lakhs in 2014 (initial sum with some interest) When he paid it, my BIL asked for it and my husband gave it to him.

There is a third sum sent in 2011 for another apartment construction project by BIL's friend. After BIL's friend gave up, BIL's brother took on the project and the apartment is now ready to be sold at an estimated Z lakhs (though the construction by BIL's friend is supposedly cheap and due to some other issues, it is not selling fast)

The X lakhs and initial sum for Y and Z lakhs was sent to my husband's bank account (a joint bank account in my husband and my FIL's name)
There is no real documentation that the money was given to BIL/BIL's brother/friend as the money was mostly withdrawn as cash by my FIL and given to BIL.

The X+Y+Z exceed one crore. I have insisted to my husband that the money should be deposited in the same bank account and he seems okay with it now.
I have no idea when any of this will be deposited, but just wanted to know about any legal issues that might come up.

But wondering if there will be any IT problems? Obviously the tax was paid here on the (X lakhs and initial sum for Y and Z lakhs) before remitting to India - but what about interest earned for Y and profit earned on Z in India? This is actually not much, so no problems in paying tax on it in India… but how will govt know how much to tax on?

Clearly, I have no clue about this. Any inputs? (I don't know if this belongs in money matters?)

Akanksha1982 · Jan 24, 2015

It is very difficult to remit the money back to US. You will have to pay the taxes and file a return. The taxes could be as high as 50%. So instead of remitting it back, open an account in India (with a PAN card, not as an NRI) and keep the money there. Maybe use money from there whenever you visit india. Slowly, you can make some jewelry or diamonds to get the money over here during subsequent trips. Alternatively, you can look out for someone who wants to send money to India and exchange $$ for Rs in India (do it in < %5K at a time).

It is easy to send money from here to there but very difficult to get it here.

Anyway, your major issue is first getting the money from BIL.

needCBT · Jan 24, 2015

Thanks Akanksha. I don't want to get the money to US, just want it deposited in my H's bank account in India. This account is his old account, so not an NRI account. We will probably buy some property in my native place with that money.

Yes - the issue is getting money from BIL... But if he does return it at some point: Is there no problem if large sums of money is deposited into a bank account by random people? (though my BIL isn't that random) Will the bank not enquire why a large sum is being deposited and check whether it is from a valid source and properly taxed, etc? Sorry, probably stupid question.

For example, when my H was on this money sending marathon, the bank he uses for remittance sent him a letter asking how he is sending more money than his reported income. My H had to let them know that he was married and about half the money was his wife's income .

Or will it be entirely my BIL's problem.. as long as he shows proper source for the income, no one will question us why we are receiving that money from him..?

Akanksha1982 · Jan 24, 2015

needCBT said: ↑

Thanks Akanksha. I don't want to get the money to US, just want it deposited in my H's bank account in India. This account is his old account, so not an NRI account. We will probably buy some property in my native place with that money.

Yes - the issue is getting money from BIL... But if he does return it at some point: Is there no problem if large sums of money is deposited into a bank account by random people? (though my BIL isn't that random) Will the bank not enquire why a large sum is being deposited and check whether it is from a valid source and properly taxed, etc? Sorry, probably stupid question.

For example, when my H was on this money sending marathon, the bank he uses for remittance sent him a letter asking how he is sending more money than his reported income. My H had to let them know that he was married and about half the money was his wife's income .

Or will it be entirely my BIL's problem.. as long as he shows proper source for the income, no one will question us why we are receiving that money from him..?
Click to expand...

If the money is deposited through check from a local bank to local bank, it is fine. But if huge amount is deposited as cash, then all alarms will sound.

My opinion would be to transfer in smaller amounts with checks over a period of time something like 5 lakhs per month or something like that.

The problem is if someone audits your BIL and follows the trail, just dealing with that issue is painful. The process is painful even if there is no wrong doing. So it is better to stay under the radar.

needCBT · Jan 24, 2015

Thanks!! I will keep that in mind and insist on check payments (if the payment ever happens)

divshiri87 · Jan 24, 2015

@ op, as akanksha said its better to be deposited through cheques than cash. However if the amount is huge, bank will try to check for the source of money. And if the amounts are being deposited in small amounts at regular intervals, bank may get a doubt and will check if any ML activities are taking place through the account. So better to proceed through check and amount can be huge also. To avoid any problem in future better you can provide source of money to bank.

Laks09 · Jan 25, 2015

OP - The banks are very very strict these days. My relative had to show proof of loan when somebody returned an amount loaned by him. Thankfully, the person had given him a signed/dated loan agreement in a stamp paper when he borrowed the money. My relative had to show proof of how he paid the guy in the first place, the stamp paper and the borrower had to show a trail of where the money he was returning came from. This was all for a sum of 6L INR. My relative told me he was never ever doing this again. He had to take time off from work to go show all these proofs at the bank. So please talk to a Financial consultant or a legal guy who knows the banking rules in India before anyone transfers any amount of money in your name in any indian bank. I'm not sure of your citizenship status but I do declare all my bank accounts in India too in my tax returns. I don't want to get into any issues later on. I have a tax consultant who advised me to declare all those things here and I followed what he said.

needCBT · Jan 25, 2015

Thanks Laks09. This was my fear. So it looks like we are screwed whether the money is returned or not.
We are both on work visa. There is currently no balance in our Indian bank accounts as everything is withdrawn as cash and put into 'investments' or loaned without documentation. So I am not sure if we should be declaring the accounts. We have to get our taxes done soon, I will check with the tax consultant about this.

1Sandhya · Jan 25, 2015

you hav to declare it on your IT return and each and every year. doesnt matter if the money is no longer there in the account, if at any point the account balance in any given year exceeds $10K you will be taxed on that for that year. If you dont declare and get caught, the fines are horrendous.

OP I think your bigger problem is not the BIL but the gullible bakra by your side. As long as he is willing to transfer such large sums without documentation or proof or promise of return, there will always be someone to take advantage of him.

needCBT · Jan 26, 2015

I really have an uphill task this year to convince my H to declare the accounts. I will lookup horror stories and try to convince him :bang

I have big plans this year for keeping the money with us. We both have maxed out our 401k plans last year. This year too, we will do the same.
I am planning to keep all my income with me in my savings account (for home and suv down payment). I will only spend on my medical expenses and a nominal sum I send monthly to my parents.

My husband will have to pay pretty much all other expenses including my non-medical expenses. And send money to his parents/BIL (they are a joint family now)
Any paltry sum left, I am asking him to save up for a farmland that must be bought when it comes up for sale (apparently his family must buy it or else hell will break loose.. and it might go on sale any moment - that's what I keep hearing from years)

That will leave him with zero. Let's see. Great expectations, mine. lol..