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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 have been working abroad for two years ending March 1999. I returned end-March 1999 to India and went back for a few days to bring back my money in June 1999. All the money was brought back via bank drafts, mostly in dollars, which was credited to my NRE account. —Ashok Madhavan
Regarding on tax exemption on income generated from deposits in NRE/FCNR/NRNR and mutual fund units from the savings from US earnings are as follows: Based on the data provided by you, we have presumed that Rs 49,000 is the only income during the year 1999-2000. As your income is below the maximum threshold limit of Rs 50,000, you are not required to file IT return. However, in case of any refund of income tax, you would still be required to file the return.
I am an NRI working in USA for the past four years. While I was working in India, I purchased a Life Insurance Policy from LIC for Rs 1,00,000 to save some money on taxes. I have been regularly paying my premium since then. Since I am eligible to withdraw 20 per cent of my savings from my policy after five years, I have decided to withdraw Rs 20,000 from my account. Do I need to pay taxes on this amount?
— Ragu Srinivasan Based on the information provided by you, we infer that the policy you are referring to is a money back policy that releases specified sums of money at the period/intervals stipulated therein. If you receive the money per reasons mentioned above then the same is not taxable at the time of receipt.
I recently joined a bank in Kuwait and moved here on an indefinite job assignment. I have a rupee fixed deposit in my bank account in India whose interest is credited to my savings account. Do I need to file a return for this interest income despite the fact that the bank deducted TDS?
—N S Sriram
An Indian citizen who leaves India for the purpose of employment outside India would be treated as an NRI if his stay in India during that year is less than 182 days. Hence if you satisfy the above condition you would be treated as an NRI.
In your case deposits made in Indian rupees are not foreign exchange assets and you would need to file I.T return if your income exceeds Rs 50,000. I am currently working in US as a software developer from past five years. Now I am planning to come back to India, by the end of year 2000. I will be either working as independent consultant for 2-3 US firms sitting in India OR I will be still employed with one of the firm, but I will do my work from India. My company is ready to pay my salary in US Dollars. —Aniruddha Ainapure
Your taxability will depend on which income slab you fall into. Presently the various income slabs and the relevant tax rate is given below: There are no specific deductions for earning income in dollars.
I am an Indian residing in India for most part of the year but visiting UK for a month or two. Hence I don't have an NRI status. I get paid a salary in India and when in the UK, I am paid there. My earnings in UK invite 40 per cent of tax which is deducted at source by the company in UK.
Since I am not an NRI am I liable to pay tax in India for the earnings in UK in spite of paying tax in UK?
If not, do I have to still declare my UK salary in India when I submit my returns? If I am liable to pay tax in India then how much am I liable to?
— Gautam Karkera
One of the important considerations for taxability is residential status. Since you are abroad for a month or two, we presume that you are Ordinary Resident of India. In this case the salary earned by you and received in the U.K. is taxable in India.
When an NRI returns to India, what happens to his FCNR deposit? Is the interest taxable?
For how long can he avail of the benefits under the NRI status?
— Ashish Gupta
Incomes accruing to you on deposits will be exempt under section 10(15) (fa) till the time you do not become an Ordinary Resident. As long as you do not become an Ordinary Resident, you can enjoy this benefit.
After working several years in the Indian subsidiary of an MNC, I was posted to Singapore two years ago. I have been an NRI from the FY 1989/90 onwards and have not been assessed for any income tax in India. I am a taxpayer in Singapore. From April 1, 2000, I am opting for taking voluntary retirement.
But, instead of returning to India, I plan to set up my own consulting business in Singapore, for which I have already received all approvals.
Gratuity: Rs 7,00,000
Since I will continue being an NRI, am I liable to income tax on the above receipts in India? If so, what is the likely amount of tax and what avenues are available to minimise the tax liability?
— Satish Kalra
We have based our answer on the information provided by you that you are an NRI and the above mentioned receipts are received by you in India.
If you are covered under Payment of Gratuity Act
Rs 60,000 x 15/26 = Rs 34,615 x 11 years = Rs 3,80,765 Deduction:
Rs 3,80,765
If you are not covered under Payment of Gratuity Act
Rs 60,000 x 10/10 = Rs 60,000/ 2 = Rs 30,000 x 10 years = Rs 3,00,000
Deduction:
Rs 3,00,000 Leave salary in case of a non-government employee is exempt from tax to the extent of the least of the following:
Send in your questions to perfin@rediff.co.in |
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