Demonetization: Indian students applying to US colleges have no funds proof

One of the many requirements to acquire a US student visa, apart from the university admission letter, is the proof of adequate funds in an Indian bank account. This process of showing funds proof has attracted censure in recent times as a consequence of the Rs 500/1000 note ban by the Modi government. In light of demonetisation, depositing large amounts of money in the bank can invite income tax trouble. 

For most study abroad aspirants, immigration authorities require them to display their bank statements with a minimum mandatory credit balance (usually crossing Rs 10 lakhs). However, having so much money in the bank at the end of the financial year will make one liable to pay tax of around Rs 1.25 lakhs + 30% on the amount exceeding Rs 10 lakhs. Hence, the money is often deposited into the bank account during the visa procedure and then converted to foreign exchange. Vikram Sharda, a US college aspirant, says, “The money is used to fund living expenses  in the US. It is credited into banks only temporarily to show proof of funds to the immigration office and then converted to dollars for use in the US.” This process of money transfer to study abroad throws light on the bigger picture of black money, now brought to a halt by the demonetization move. The obsolete Rs 500/1000 notes, earlier set aside for foreign exchange and fund proof for visa, are now making tax evasion difficult for study abroad aspirants.

The government has directed banks to report cash deposits exceeding Rs 2.5 lakhs during the 50-day window until December 30, to the Income Tax department. Those depositing large amounts of unaccounted money will have to face the consequences under tax laws, which provide for a 30 per cent tax, 12 per cent interest and a 200 per cent penalty. This move has left several study abroad aspirants contemplating ways to deposit money into their accounts for visa requirements without getting into trouble with IT department. Sayli Shah, an MIS 2017 US college aspirant, says, “I don’t have sufficient bank balance to show US immigration authorities and was planning to take help from relatives through bank transfers. But with bank rules becoming more stringent, I am unsure as to how high value transfers into my account will work out with the IT.” Sayli is applying for an F-1 visa for which the minimum fund requirement is mentioned on I-20 form. On a discussion with Richard Lasrado, Education Abroad Counseling Centre, India, about the funds required for a student to obtain a US student visa, he said, “If you wish to study a 2-year master’s in US and they have mentioned $ 40,000 (Rs 27.3 lakhs) in your I-20 form, then you will have to show at least $80,000 (Rs 54.6 lakhs).” I-20 is the certificate of eligibility for non-immigrant (F-1) student status for academic and language students. 

According to Tonny Parekh, another MS in US 2017 aspirant, “Bank transfers for educational purposes can be justified by giving an affidavit of support representing them as sponsors to the concerned bank where deposits are made. Although, the bank needs to be consulted for such cases.” However, bank POs have been so distraught with work since the notice of demonetisation that getting such consulting tasks down also requires a tedious procedure. Meanwhile study abroad aspirants in India are still looking for solutions to assist them with fund proof for I-20. Only time will tell how the demonetisation move will further pan out for such students.