I am an NRI
working in the UK for the last 4 years. I have just received
my PF settlement from the Indian company I worked for in
Mumbai. Can I deposit my PF earnings into the NRE
The PF funds originated in India and therefore cannot be
credited to the NRE account, which receives foreign currency
only. You can credit these funds to your NRO account.
earned on NRE Recurring Deposit taxable?
No, the interest on all types of NRE accounts is tax-free.
If I sell my
property in India and if there is a "white" value and a
"non-white" value, how do I legally repatriate the total
proceeds of the
Money which cannot be accounted for or is "non-white" cannot
Is the capital
gains tax when selling property same for both long and short
Short-term capital gains are taxed as normal income and
long-term gains with indexation are taxed @20%.
I am an NRI
and now due to acquire American citizenship. What happens to
my property, residential and agricultural, which I am
inheriting from my parents? Is it a problem to keep an
inherited agriculture property with an OCI
Obtaining OCI status gives you additional rights and
privileges over and above the ones you enjoyed in your
capacity as a Person of Indian Origin. You had a right to own
and maintain inherited agricultural property and therefore,
you continue to enjoy this right. However, if and when you
decide to sell or gift away the property, note that you can do
so to a Resident Indian only and not to an NRI or
My son remits
funds to my savings account every month - how is the tax
There is no tax liability on the funds which your son is
gifting to you. However, you can follow a procedure to protect
your savings from tax by accepting the gift in writing,
mentioning the relationship between the donor and donee.
mandatory as a NRI PAN Card holder to submit yearly returns
with IT Department even if all my income is through my
earnings from outside
is no legal obligation to file tax returns unless the income
chargeable to tax exceeds the minimum tax threshold of Rs. 1,
Obtaining a PAN card has nothing to do with
the above requirement. In other words, if your Indian income
does not exceed Rs. 100,000, regardless of whether you have a
PAN card or not, you do not have to file a tax
Do I need to declare all the money that I
have in my NRE account for the last 5 years? Do I need to pay
any taxes on it?
If you have maintained your NRI status for the last 5 years,
the income in your NRE account is free from tax. Note that tax
is collected only on interest, not on the capital. You can
include the information on your NRE account in your annual
return, even though you do not need to pay tax on
I will be posted to the UK shortly, but I
wish to continue with my savings bank account from which I can
make transfers to my family in India. Is this possible, and
what are my tax liabilities?
On becoming an NRI, you are required to inform all your banks
and also all the companies where you have investments about
the change in your status within a reasonable time. The banks
will re-designate your accounts as NRO. You can use this
account the same way as you used it before becoming an NRI.
You must also
inform all the companies of whose shares you hold, about
change in your status. If you have a demat account, it is not
necessary to inform the companies but informing the DP is a
You will also
start filing your tax returns in your new NRI status. If the
Indian income is below the taxable threshold, there is no need
to file the returns but it is practical to do so for
maintaining the continuity.
Even after you
become an NRI, you are free to deal with all your investments
and assets you held prior to becoming an NRI. The only
restriction is that the original amount is non-repatriable.
It is better to
open an NRE account since the interest on it is tax-free in
India as long as you are an NRI.
I will be
earning a rental income of around Rs. 6 lakh a year from my
property in India. I don't have any deduction to claim and I
haven't taken any loans from an Indian Bank. How much tax am I
liable to pay? Do I fall in the 30% tax bracket and TDS from
rental income 15%? Do I need to pay totally 30% + 15% tax or
only 30% (out of that 15% will be TDS (like Tax withholding)
and remaining 15% when I file the taxes.
Surcharge @10% on
tax computed after taking into account deductions, will be
levied only if the net total income is over Rs. 10 lakh.
I am buying a
residential property for Rs. 50 lakh in Mumbai from my savings
in USD. If I sell the apartment after 3 years, how do I
repatriate those funds? Or do I need to hold that property for
10 years to sell
relief is available by limiting it to the income over Rs. 10
cess @3% on total tax is applied on the tax liability thus
is like withholding tax and the tax deducted can be netted
off against your total tax liability.
There is a standard deduction of 30% available on rental
is a little difficult to compute the net income chargeable
to tax and you will do well by taking some professional
For property purchased out of foreign funds, as far as
repatriation rules are concerned, you can sell it anytime. The
lock in period for such property has been lifted
Instead of using
foreign funds to buy residential property, if I take a loan
from an Indian bank (say 85% of agreement costs), do the rules
of repatriation change?
If you buy the property on
mortgage by taking housing loans, repatriation will still be
possible if you pay off the loan instalments in India through
your NRE account or by transferring funds from abroad.
As a US citizen,
can I own property in India? If I return to India, will I be
taxed in India and the US? Will my US income be taxed in
Yes, as a PIO, you are eligible to buy property other than
agricultural property. On your return to India, you will be a
RNOR for 2 years during which your forex income will not be
taxable in India. After that your global income will be
taxable in India. If you are taxed in both the countries,
India as well as USA, the Double Taxation Avoidance Agreement
between them will protect you.
I live in
Indonesia and hold an account in India for purchasing mutual
funds/equities from the secondary market. Am I liable to pay
any Capital Gains tax when I sell/redeem these
Equity-based MF schemes (65% or more exposure to
equities) are governed differently from the debt-based
schemes. In both cases, dividend is tax-free in the hands of
the investor. However, there is a dividend distribution tax
@14.025% payable by the MF directly to the exchequer in the
case of debt-based whereas the equity-based are exempt from
schemes are also exempt from long-term capital gains tax
(holding period over 12 months). The short-term capital gains
are taxed @10.2% only.
In the case of
debt-based schemes, short-term gains are treated as normal
income of the assessee and taxed at the rates applicable to
the assessee. The long-term gains will attract tax @10.2%
without indexation or @20.4% with indexation, whichever is
more beneficial to the assessee.
In the case of
ELSS, there is an additional benefit of deduction u/s 80C.
following 3 tax concessions on investment in equities traded
on a recognised stock exchange in India:
My wife was
working in Doha for the last 2 years. After marriage she has
settled in India and will be here for at least a year. She is
working on internet-based online jobs from the US for which
she gets paid into her NRE account. Is this the right way to
be paid? Does she have to pay income
is tax-free in the hands of the investor but there is a
dividend distribution tax paid directly by the company
long-term capital gains are exempt upto Rs. 50 lakh on sale
short-term capital gains enjoy the concessional flat rate of
Since she is now a Resident Indian she cannot maintain a NRE
account. The NRE account will be converted to a resident
account on her informing her bank about the change of her
She is liable to
treat the money received as her taxable income in India. If
the income is over Rs. 1, 45,000, she is liable to file a tax
She should apply
for PAN.PAN is required not only for filing returns but also
for several transactions in India
How long will I
be considered as Non-Resident or Not Ordinarily Resident after
I return to India to settle
How long after my return to India will my income from
investments including deposits with Banks, including Indian
banks located in foreign countries, qualify for exemption from
Income tax? What are tax free and safe investments in
If your stay in India during the Financial Year is 182 days or
more, your residential status will be as Resident Indian.
is a transitional status of RNOR between being an NRI and
becoming a full-fledged Resident after returning to India
permanently. An RNOR is not required to pay tax in India on
his forex income. Anyone who returns after 9 or more years of
being an NRI will become RNOR for 2 years.
but not Ordinarily Resident (RNOR) is a person who satisfies
one of the following conditions ---
a) he has been a
non-resident in India in nine out of the ten previous years
preceding that year, or
b) has during the seven previous
years preceding that year been in India for a period of, or
periods amounting in all to, seven hundred and twenty-nine
days or less.
NRI who has returned to India permanently is allowed a
reasonable time to inform all the banks (and companies) about
the change in his status wherever he has his investments. On
receipt of this information, the bank will re-designate the
NRE/FCNR accounts as a 'Resident' account. These can be run up
to their maturity but the interest on NRE becomes taxable from
the date of the return whereas the FCNR interest is tax-free
as long as the holder remains an NRI or becomes an RNOR.
Alternatively, both the accounts can be converted into RFC
without any penalty but the interest even on RFC is tax-free
only for RNORs.
RFC is tax-free or not, withholding tax will be applied @30.6%
and if the interest is over Rs. 10 lakhs, the rate will be
NRE SB and NRO SB accounts will be re-designated as Ordinary
is also necessary to inform all the companies/DPs where you
have investments about the change in your residential status.
is the only safe and tax-free investment at present. There are
other investments which yield tax-free returns but are subject
to market fluctuations and consequently not risk-free. Fixed
income investments other than PPF do not yield tax-free
am a NRI working in the USA. I would like to know whether
withdrawal from 401K which is a contributory retirement fund
in USA will be taxable in India if I bring the money here,
even though this is already taxed in the US
is distributed at retirement. At that time, the person need
not be an NRI. There are several NRIs who eventually come home
to settle in India. However, due to their past employment,
they may be getting some pension in India from abroad. Article
20 of the Indo-US Double Taxation Avoidance Agreement spells
out that pensions would be taxable in the country of
Residence- India, in this case. However, Social Security
Benefits or other public pensions would be taxed only in
Currently I am having an NRE account with an Indian bank. I am
an Indian citizen living in the USA for the last 7 years. If I
become a US citizen, would my current account be closed and do
I need to open a new one, or can I continue to operate my NRE
account from here?
The change of citizenship does not change your rights to
operate the NRE account. You will be a Person of Indian Origin
(PIO) which allows you to handle the NRE account the same way
as a NRI.
am a NRI resident in Canada for the last 15 years and hold
only an NRE savings account in Delhi., I would like to
1) if I buy a commercial property in India (payment
made through my NRE account) will I have to inform the bank
before I make a payment through my NRE saving account?
If I get Rs.15, 000 per month as rent, how much tax will I pay
on this and will I need to file in a tax return form?
I buy this property for Rs.40 lakh and sell it for Rs. 60 lakh
after 3 years, can I invest this 60 lakh to buy another
commercial or residential property without paying any capital
there is no rule or specification as such, it is better to
keep the bank informed
is a complex matter. You can approach a consultant in the
field of filing returns. Briefly, you are allowed deductions
for property taxes on annual value (computation of which is
complex) of the property and also a standard deduction of
will be earning long-term capital gains. You can claim
exemption u/s 54F by purchasing a residential house within 1
year before or 2 years after the date of sale of the old
house. Alternatively, you may construct a residential house
within 3 years after the date. It is necessary to apply net
sale proceeds (after the related expenses) for purchasing a
residential house (and not a commercial property.)
amount which is not invested before the filing of returns
for the year or the statutory last date for filing the
returns, whichever is earlier, is required to be parked in
'Capital Gains Account Scheme' with a bank in India.
I am working in Saudi Arabia on a work permit since August
2006. Currently I have a normal savings bank account in India
and don't have an NRE account.
I am sending money home through a wire transfer service. Do I
need to pay any tax on the money earned in Saudi Arabia? If
not, how do I show this income in my form 16 so that it can be
tax free? Also what kind of proof is required to show the
source of income? How do I save tax? Do I need to open an NRI
account for showing my status as NRI for saving tax on this
income as I will be here for another 8 months.
are likely to become an NRI for the FY 06-07, unless you come
to India for a short trip rendering your stay in India for 182
days or more.
What is the TDS
deducted on NRO fixed deposit interest?
becoming an NRI, legally you are required to inform all your
banks and also all the companies where you have investments
about the change in your status within a reasonable time.
The banks will re-designate your accounts as NRO.
is illegal for an NRI to continue to hold their normal
Resident bank accounts.
It is also necessary to inform
all the companies of whose shares you hold, and UTI/MFs
about change in your status.
by itself does not create any tax-liability. If the money
transferred is capital in nature, the question of paying tax
thereon does not arise.
your status for the Financial Year 'April-March' is NRI and
if the money earned abroad is an income not arisen out of
some nexus with India, either by way of Indian employment or
business, the question of levying tax on it does not arise.
your global income is taxable in India, whether you transfer
it to India or not.
may open an NRE account for earning tax-free interest and
maintain the repatriability of the corpus in the account.
The interest on NRO is fully taxable at the rates applicable
to Residents. But there is no income threshold under which TDS
is not chargeable. However, TDS is applicable @30.6% and
nothing can be done in practice to avoid it. The only recourse
open is to claim refund by filing tax returns. In case the
interest payable is over Rs. 10 lakh from the same branch of
the bank, there is a surcharge of 10% taking the total tax to
33.99%. There is a marginal relief available by way of the
surcharge payable being limited to the income over Rs. 10
I am contemplating the sale of a plot of land in Gurgaon for
approximately 60 lakh. Can I deposit the proceeds into my NRE
or NRO account? I understand that the street value of my plot
of land is higher than the official value. Therefore, it
appears as if the official documentation related to the sale
will specify a sale value of Rs. 40 lakh instead of Rs. 60
Please help me understand the tax implications of this land
If you have purchased the plot by applying forex by direct
remittance or through NRE account, you can credit the original
forex amount of cost of acquisition to NRE. Otherwise, you
will have to credit it to NRO.
If you have acquired the property over three years ago, then
the profit on sale would be long-term capital gains and taxed
@20%. There is a facility available for indexing the cost on
account of time value of money. If the property has been
acquired less than three years back, then the profit would be
termed as short-term gains and taxed at slab rates applicable.
The rate broadly for any amount more than Rs. 2, 50, 000 is
30.6% and for an amount more than Rs. 10 lakhs is 33.99%.
There is no indexation facility available in this case.
If the sale value offered to you is less than the rate adopted
for payment of stamp duty, as per Sec 50C the stamp duty rate
would be taken as the sale value.
interest accrued in NRE savings deposits are tax free and
fully repatriable as long as I maintain NRI status, regardless
of the amount -is this
interest from NRE account is tax-free in India as long as you
are NRI and have not returned to India permanently.
If I invest in
Indian Mutual Funds using a cheque issued from my NRE bank
account, are the gains
The gains are always taxable whether the original amount is
repatriable or not. However, long-term capital gains from
equity-based schemes (over 65% equity component) are tax
Is it mandatory
to have a PAN to invest in Indian Mutual Funds if you are an
will require a PAN. You will also require a recently
introduced 'Mutual Fund Identification Number'
Are the gains
from trading in Mutual Funds fully repatriable, gross of
capital gains from whichever source are repatriable after
taxes, if due, have been paid thereon.
Can gains from
Mutual Funds be transferred to my NRE bank account to maintain
NRE asset status to be eligible for tax
but only after correct taxes, if due, are paid.