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HOME | MONEY | TAX | NRI TAX CENTER |
April 10, 2000
Banking |
The Rediff Money Channel presents everything you wanted to know about tax issues, but didn't know whom to ask. Chartered Accountants from Ganesh Jagadeesh & Co are here to remove all your doubts. Readers' Note: Please keep your questions short. I came to Canada in April 1999 and work for an Indian-based company. In India, I earn a salary for which I am being taxed. I am simultaneously getting paid in Canada by Indian employer and even paying the taxes here. Is the money that I earn in Canada taxable in India?
— Manish Bhojasia
Your NRI status confers exemption on all income earned and received by you outside India. Further, with specific regard to the money being received by you in Canada, Section 9 (1) (ii) of the Income Tax Act, 1961 specifies that income chargeable to tax under the head "Salaries" is deemed to accrue or arise in India if it is earned in India. You are eligible for a deduction under section 80RRA, of upto 75 per cent of the amount remitted by you into India within six months from the end of the financial year.
I was transferred to Bahrain in March 2000, to my company's new unit. I have invested in LIC's Jeevan Mitra. Will this help in tax saving? How can I send money to my parents in India? Do I need an income tax clearance certificate before I leave for Bahrain?
— Nandula Sai Rajesh
Few issues arising out of your query are as follows:
From the information submitted by you it is clear that for the purpose of Income Tax you would be a resident in India for the Financial year 1999-2000 (Assessment Year 2000-01) as you would be leaving India only in March 2000 whereby you are resident in India for more than 182 days. Insurance premium paid under schemes of LIC is useful in claiming rebate under section 88 of the Income Tax Act 1961, whereby you would be eligible for a rebate of 20 per cent of the amount invested subject to the limits specified (maximum rebate upto Rs 12,000 with additional rebate of Rs 2,000 for investment in shares, debentures or units of infrastructure sector). It is advisable for you to get Income Tax Clearance certificate in case you are leaving India for a job abroad. However, if you are going on a deputation by your Indian employers for a fixed period you would not be required to file for this certificate. I am an NRI working in US since 1994. I am planning to return to India in 2001.
I own an apartment in Pune that was built in 1996 and has been rented since for a cost of Rs 6,000 per month. Am I liable to pay tax? How do I apply for and get a PAN number so I can clear my tax liabilities?
—Kamalesh Nayudu
I have been an NRI for the past 7 years and I wish to purchase an apartment in India. Do I need to have a PAN number for this purpose ?
—Abhijit Sinha
Section 115G of the I.T Act, 1961 lays down that a NRI need not furnish a return of income under section 139 (1) of the Act, if:
Since in your case the income is arising from the House Property in India, you are liable to tax under the head "Income from House Property". Hence you will have to furnish your return of income. Assuming that you have not furnished your return of Income on or before the due date you would be liable for penalty and interest, if there is any Income tax payable on your income from House Property.
PAN is required to be applied for by an assessee if such person satisfies any of the following conditions:
Section 139A of the Income Tax pertaining to the permanent account number (PAN) does not apply to NRIs. Moreover, as per the provisions of Rule 114C of Income Tax Rule, 1962, an NRI is exempted from applying for PAN.
I shall be returning to India in September 2001 after 12 years. I want to know whether my earnings in the FY April - September 2000 will be taxable or not as I will not be finishing six months abroad in this financial year?
— Dr A K Lahiry
I have been granted NRI status in financial year 1997-98 & 1998-99. For FY 1999-2000, I may not be able to complete the required 182 days. I have worked overseas for 120 days and all remittances have been accrued in my NRE account. Are there any exemptions applicable to me or will my remittance be taxed?
— Hormuz Aderianwalla
Section 6 (1) of the Income Tax Act, 1961 contains the conditions whose fulfillment or otherwise would determine the residential status of an assessee. A person attains the status of a resident Indian for the purpose of tax if he satisfies one of these two conditions:
Further, under section 6(6) a resident individual is treated as "resident and ordinarily resident" in India if he satisfies the following two additional conditions:
On the basis of the above definition you can ascertain your residential status in accordance with the date of your return to India.
For a Resident and Ordinary Resident of India, Income received and accrued outside India from a business controlled or profession set outside India will also be taxable.
I am a Canadian citizen and my wife an Indian citizen. We have been residing in Canada for more than 25 years. We had invested US dollars in SBI bonds (non-repatriable). After maturity, money was converted in rupees and deposited in our NRO account. We have fixed deposits for one-year, two-years and three-years maturity and also mutual finds. — Pramod Kumar Interest on NRO account is not exempt from tax unlike interest income in NRE account. Hence, the interest accrued will be taxable in India. Banks will deduct 30 per cent tax from the interest credited to your account irrespective of the tenure of the FD's. Tax on long-term capital gains (units sold which were purchased and held for more than one year) on sale of mutual funds will attract tax at 10 per cent.
I am an NRI who shall be returning permanently soon. Can you give me some details on the RFC account?
— Ganesh
What are the tax implications of a person of Indian origin who is a resident of UAE on sale of immovable property in India? The property is acquired in 1992.What about the applicability of DTA provisions for the income since Personal incomes are not taxed in UAE? What are the formalities to be completed?
— S Natrajan Sale of immovable property in India will attract short-term/ long-term capital gains in India. Since the property was acquired in 1992, the transaction will attract tax on long-term capital gains. Since you are resident of UAE, we infer that your residential status in India will be that of an NRI and hence the capital gains will attract a tax of 10 per cent. The above transaction is taxable in India and existence of DTA does not affect the taxability of Income. DTA will only ensure that the income once taxed in India is not doubly taxed in UAE. Since your incomes are not taxed in UAE this particular transaction will attract 10 per cent tax in India for which you will not be able to avail tax benefit in UAE.
In case you desire to repatriate the funds back to UAE then at the time of purchase of the property you should have submitted a declaration and obtained RBIs' permission.
I have been employed in US for the past three months. I cannot send money to India
before completing 182 days, without being taxed. Can I send the money to my parents through a friend who has been here for a couple of years. Will that be considered as gift money ?
— K Mehul
You will not be taxed for income earned by you abroad if you have stayed abroad for a period more than 182 days. This calculation will be done at the end of that particular year (March 31). So if your assignment requires you to stay abroad for more than 182 days then irrespective of how many days you have spent, you can send money to India. I am a US citizen of Indian origin and have been working in India for the past four years.
I received a sign-on bonus in May 1998. In my return, I classified this as a capital receipt since this could not have been deemed to be a revenue receipt - the rationale: no services had been performed for the amount to have been classified as salary. Currently, the ITO is mulling on this issue. Would like to have your thoughts on this. — Rajiv Goel
Since you have stayed in India for the last four years, from the facts given by you, we conclude that your status will be Resident but Not Ordinarily Resident (RNOR). All incomes received and accrued in India will be taxable in India.
I am an NRI working in the US for the past three months.I would like to send some money to my parents in India. My father has got an account in a nationalised bank. Will I be able to mail them a check bearing a value, so that my father can encash the check to his account?
— Suresh D S
You can send the cheque which, your father can deposit in his account without attracting any tax incidence. Such transfers are considered as gifts by you to your father.
Send in your questions to perfin@rediff.co.in |
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