I will be going to USA for a 5 year assignment. I am likely to return to India after 5 years. I have existing substantial Equity MF portfolio (held through Demat route) and add substantial amounts every month as SIP in those funds. - I will be going to USA for a 5 year assignment. I am likely to return to India after 5 years. I have existing substantial Equity MF portfolio (held through Demat route) and add substantial amounts every month as SIP in those funds. - Ask the Expert - Fee Only Investment Advisers

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I will be going to USA for a 5 year assignment. I am likely to return to India after 5 years. I have existing substantial Equity MF portfolio (held through Demat route) and add substantial amounts every month as SIP in those funds.

My increased income in US project means I can further increase the SIP amounts even higher. I am aware of the PFIC rule. Can I avail of any of the following options to overcome the rigours of PFIC?

    • Stop all existing SIPs
    • Gift Existing Units to Mother (Indian Citizen resident in India)
    • Gift monthly amounts to her from the USA
    • Mother uses the monthly gifts to start SIPs in the same funds
    • Mother will gift units back to Son when he returns to India
    • He will be the sole nominee for all the mutual fund folios invested by his mother
  • No apparent tax issues at Indian end
  • Issues under Benami properties Act
  • Prime facie no issues at US end either unless mother expires
  • Legal issues if Mother refuses to gift back when required by son
  • If mother dies before gifting back then other heirs may create an issue if no Will exists
  • Possible inheritance tax in USA (depending on the amount) if the son is still a US tax resident at the time of his mother’s death