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HOME | MONEY | TAX | NRI TAX CENTER |
April 26, 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 am a US citizen. I bought a flat in Hyderabad in September 1999. I haven't fully paid for it. Part of the flat was funded with my money (earned in the US, of course) and part of it was funded by a loan from the State Bank of India, which I haven't repaid yet. I have an NRE account which I use to pay off the monthly payments to the State Bank of India.
I have been in the US for the past three years. Last year, I took a loan of Rs 5,00,000 in India to build a house for my parents. The house is in my father's name. I am now paying a regular monthly installment towards the principal and interest. Can I show this in my taxes?
— Meena K S
I am an Indian presently employed in Kuwait. My money is in an NRNR deposit. I need to buy a house in the village but I heard that you cannot withdraw the amount kept in the NRNR since it will attract 2 per cent tax. I need the money urgently since I am planning to authorise my wife to use the already available money to pay for the house instead of applying for a loan and paying more. You can surely withdraw your own money that is kept with a bank. There is no tax on withdrawal of deposit. But there is a RBI directive to banks that in the event of premature withdrawal of deposit, they ahve the option to deduct 1 per cent from the rate applicable for the relevant period of deposit. For instance, if you have placed a deposit for 3 years and the rate of interest applicable is 10.5 per cent. Now you withdraw the deposit after 1 year and the applicable rate of interest for 1 year is 8 per cent. The bank will pay you interest at the rate of 7 per cent only for the entire period of the deposit. I have been abroad since mid November 1999. I was also out of India on a daily allowance basis for December 1998 & January 1999. Other than that I have been in India. When working in India I received a post-tax monthly salary of Rs 11,000. Now, it has dropped to Rs 7,500. My allowance here is $1,860 after tax deduction at source. — Amit Karkhanis
From the data provided by you, your residential status is not very clearly mentioned. However, a resident is taxable on his global income and NRI would be taxed for all income arising or accruing or deemed to be arising or accruing in India and income received or deemed to be received in India. Hence in your case as your contract of employment is with an Indian company, the income earned by you in India as well as USA is subject to tax in India.
The deduction would be restricted to the amount of convertible foreign exchange brought into India within six months. An example illustrating this is mentioned below. Income earned, say, for a period of 4 months (FY 1999-2000) = $1,860 x 4 = $7,440 Amount remitted on June 30, 2000: $5,000 Amount remitted on September 30, 2000: $2,000 Amount remitted on October 5, 2000: $440 Amount eligible for deduction: $7,000 Deduction: $7,000 x 75 per cent = $5,250 Is it true that if I pay taxes abroad, I get a refund on the tax paid in India on that amount? What is the tax percentage slab under the head salary income. My company says short-term percentage is 30 per cent and long-term is 10 per cent? Which is correct (you said 36/20)?
— Rajadurai Asirvatham
Taxability of income is dependent on your residential status. Global income of resident Indian is taxable in India. We have presumed that you are a non-resident and have answered your queries accordingly. Both my husband and myself were working abroad for seven months. Is it possible for us to still maintain our bank account abroad? Is the interest on our NRE account taxable?
— S R Janani RBI has granted general permission to persons who have stayed outside India for a period of at least one year to maintain foreign currency accounts. In case of persons who have stayed outside India for a lesser period, they are required to close their foreign currency accounts maintained by them and arrange to transfer the balances therein to India within three months from the date of their arrival in India. If the accounts are desired to be continued for a slightly longer period, application in Form FAD 1 must be made to Reserve Bank within 3 months from the date of applicant arriving in India. Interest earned on NRE accounts are exempt from income tax under section 10 (4) of the Income Tax Act, 1961. I want to set up a fund to promote rural education and scholarships in specific fields like and environmental protection. I also plan to buy land, lakes to protect and other areas for conservation in
and around the cities. How do I do that? Will I get a tax break?
— Rishidhar Dayaneni For getting tax exemptions you can get registered as a Charitable Trust or Society under section 11 of the Income Tax Act, 1961. By doing so people who donate also can get a tax benefit. For doing so there are certain procedures like getting the permission from the Commissioner of Income Tax etc which you have to undergo. I have been a NRI for the last 20 years and have now returned for good. Over the years I have parked my savings in a couple of fixed deposits in my NRE/NRNR accounts. I also purchased an apartment. Do I have to inform my bankers of the change in my status? What is my tax liability on the income from the above fixed depsoits? How do I spread the above amounts in various savings schemes so that I may get a regular monthly income ( as I have no other source of income), and at the same time attract the least tax liability?
— W Fernandes
Since you have come back for good, you will have to inform your bankers about the change in your status at the earliest.
Send in your questions to perfin@rediff.co.in |
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