Hello, I was staying in USA for long time and has good savings, I came back in 2022, I recently used 60 Lakh of savings to purchase a land , I still have around 1 CR portfolio as shares and I have 1CR as 401k. Need guidance on 2 things 1. What is the tax implications on the money I used for purchasing land. I already paid tax for those in USA. 2. How I shift money to India without much tax localities in both countries.

Ans: You have done well to build strong savings abroad.
Now, you have returned to India with Rs 1 crore in shares and Rs 1 crore in 401(k).
You have also used Rs 60 lakh to buy land here in India.

Let us assess your concerns carefully and offer a 360-degree financial view.

Overview of Your Financial Position
You returned from the USA in 2022.

You invested Rs 60 lakh in land from your foreign savings.

You have Rs 1 crore in Indian shares.

You have Rs 1 crore in a US-based 401(k) retirement account.

You have already paid tax on foreign income while in the USA.

Now your focus is on taxation and fund shifting across countries.

Tax Implication on Land Purchased with Foreign Savings
You used foreign savings to buy land in India.

That amount is not taxable again in India.

Reason: It is your own post-tax money earned abroad.

India does not tax remitted capital that is legally earned and declared.

However, any gains from that land in future will be taxable.

For example, if you sell the land in future at profit, capital gains tax applies.

Till then, there is no immediate tax burden for this purchase.

Make sure you maintain proper remittance records and proof of source.

These will help in case of any IT inquiry later.

Important Tips to Protect This Land Investment
Don’t consider the land as an investment.

It is illiquid and maintenance-heavy.

It gives no returns and cannot fund retirement.

If you bought it for personal use, then okay.

But don’t buy more land with financial goals in mind.

Real estate is risky and inefficient in long-term wealth building.

Tax Implication of Indian Shares (Rs 1 Crore)
These are equity investments within India.

You must declare any capital gains annually in ITR.

Long-term gains above Rs 1.25 lakh are taxed at 12.5%.

Short-term gains (under 1 year) are taxed at 20%.

No further tax if you hold, but declare dividends if received.

Use regular plans through a Certified Financial Planner, not direct options.

Regular plans offer guidance, alerts, and goal-based rebalancing.

Disadvantages of Direct Mutual Funds (if holding any)
If you have invested directly without an MFD, you may face issues.

No personal guidance or tax planning support.

No help during market corrections.

No rebalancing or switching suggestions.

Direct plans look cheaper but cost more if misused.

Shift to regular plans via CFP-led MFD now.

They will help optimise tax, exit, and long-term strategy.

US 401(k) Account – Key Tax Considerations
401(k) is still a US-based retirement product.

India will treat it as a foreign asset.

You must declare it under foreign assets in ITR if status is Resident and Ordinarily Resident (ROR).

Any withdrawals from 401(k) may be taxed in the US.

India may also tax the withdrawal unless treaty benefit applies.

But you can claim relief under Double Taxation Avoidance Agreement (DTAA).

Keep all 401(k) statements for tracking and proof.

Changing Tax Residency Status
After returning in 2022, your tax residency has changed.

First 2 years: You may qualify as RNOR (Resident but Not Ordinarily Resident).

RNOR enjoys some benefits.

Foreign income not taxed in India if not received here.

After that, you become ROR (fully taxable in India).

In ROR status, global income is taxable in India.

So, taxation on your 401(k) withdrawals in future depends on your residency status.

Shifting 401(k) Funds to India – Key Strategy
First, understand that 401(k) withdrawals are taxable in the US.

You may also pay penalty if withdrawn before 59.5 years of age.

Wait until you reach retirement age to avoid penalty.

Withdraw slowly over years. Not all at once.

Use the US-India DTAA to avoid double tax.

Show withdrawal in ITR and claim US tax credit.

Don’t repatriate full money in one go.

Repatriate in parts. Stay under LRS and FEMA limits.

Work with a Chartered Accountant who understands NRI tax and FEMA.

Avoid rushing transfer. Plan timing based on your cash need.

Taxation and Reporting for Remittance
When you bring money from abroad, remember:

India does not tax foreign capital brought legally.

You must still disclose large remittances in ITR.

If you receive foreign income now, it will be taxable in India if you are ROR.

You must file Foreign Asset Schedule in ITR.

Use ITR-2 or ITR-3 for such cases.

Failing to report can attract heavy penalties.

Suggested Strategy for Your Situation
Don’t worry about tax on land purchase. That is not taxable now.

Keep all documents proving source and remittance.

Declare all foreign and Indian assets in tax filing.

Use DTAA when withdrawing from 401(k).

Shift funds to India slowly. Avoid sudden large remittance.

Maintain NRE/NRO accounts as needed.

Reinvest idle Indian money via regular mutual funds.

Avoid real estate, direct funds, or index funds.

Work with a certified CFP and qualified CA in India.

Avoid Index Funds and ETFs
If your share portfolio includes index funds or ETFs, be cautious.

Index funds follow the market blindly.

They cannot avoid loss in falling markets.

They give no personalisation or active stock selection.

ETFs are market-driven and often volatile.

Actively managed funds are safer.

A good fund manager makes timely moves.

You need smart strategy, not just low cost.

Don't Use Annuities or Insurance-Based Investment Products
Avoid ULIPs, endowment plans, or annuity schemes.

These give poor returns and lock your money.

Also carry hidden charges and penalties.

Stay away from anything mixing insurance and investment.

Key Action Items for You
Don’t worry about land purchase tax. It's already funded by taxed money.

Plan 401(k) withdrawals smartly over years.

Claim tax credit under DTAA.

Repatriate funds only as per Indian laws.

Reinvest Indian savings in regular mutual funds.

Keep an emergency fund in liquid mutual fund.

Buy pure term insurance if not done yet.

File correct ITR with foreign assets and income.

Finally
You have done well to return to India with strong financial footing.

You must now shift from asset accumulation to asset protection and planning.

Keep 401(k) withdrawals slow and strategic.

Use DTAA and proper disclosures to stay tax efficient.

Don’t rush repatriation or land reinvestments.

Use mutual funds in regular plan through a CFP.

Avoid direct, index, and real estate options.

Work with a trusted CA for FEMA and ITR filings.

Your savings can now serve your life goals in India safely.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment