Is your income in India taxable?
3. How to convert the entire amount in dollars and bring
it with me to the US?
Recently I came across some communication from my bank
in India informing me about a changed law related to repa-
triation and remittance from India. It was mentioned that
some form has to be uploaded by the customer online, etc.
The language was too technical and I could not follow much
of this jargon. Could you throw some light on what it is that
exactly has changed and how does it affect any remittances
that I may need to make in the future?
— P K Vora
The procedure for the remittance process has been mod-
ified from July 1, 2009, as follows. First, you would need to
provide the bank with a certificate from an Indian
Chartered Accountant. This certificate is to be provided in
prescribed Form 15CB. You would also need to fill out Form
15CA. This Form 15CA, also known as the ‘undertaking,’
requires the remitter to furnish certain specified details
(like name of the bank to which the money is to be credit-
ed, etc) regarding the proposed remittance. The informa-
tion to be furnished in Form 15CA is to be filled using the
information contained in Form 15CB (certificate). Form
15CA has to be then uploaded on www.tin-nsdl.com. The
remitter will then take a print out of this filled up Form
15CA (which will bear an acknowledgement number gener-
ated by the system) and sign it.
The duly signed Form 15CA (undertaking) and Form
15CB (certificate), has to be submitted to the bank, which
will forward a copy of the certificate and undertaking to the
assessing officer concerned.
Once this is done, the funds may be remitted abroad.
Please note that though the procedure seems complicated
at first, it basically amounts to filling out of two forms, one
of which will be done by the chartered accountant. The
other one has to be filled online and then printed out with
the system generated acknowledgement number.
Submission of both these documents is all that is needed to
effect the remittance.
I was working in India before becoming a non-resident
Indian and had purchased/invested in post office instru-
ments such as PPF, NSC, etc and was paying income tax on
salary. After becoming NRI in the United States, I pay
income tax here on salary and the savings from my salary
have been invested in India in fixed deposits, mutual funds,
property, etc. Now, the rental income as also bank interest,
etc in India is more than Rs 160,000 ($3,400).
1. Please let me know whether my income is taxable.
2. If yes, am I permitted to avail deduction under section
80 (c) of the IT Act 1961. What are the limits?
3. Can my parents or spouse’s parents/ close relatives give
gifts to me/spouse (who is non-working and also an NRI)
and deposit in NRO account? Is any gift tax applicable? If
yes, what are the limits?
4. Is wealth tax applicable to NRIs and what are the lim-
If your taxable income is above Rs 160,000 ($3,400) you
would be liable to pay tax and file a return. Note that it is
the taxable income that needs to be above Rs 160,000
($3,400). Incomes specifically exempted (example, long-
term gains on shares and mutual funds, etc) would not be
considered in arriving at this figure. Also note that you
would need a PAN to file tax returns in India. You can most
certainly avail of the Sec 80C deduction. Any investment in
some specified avenues (tax-saving mutual funds, life
insurance premiums, etc) qualify for a deduction of up to
Rs 100,000 ($2,100) in a financial year (April to March).
Your parents/parents-in-law as well as close relatives (as
defined in the law) can give you and your spouse any
amount of gifts. It will not be taxable on either the donor or
the receiver. However, income tax officials are empowered
to go into the antecedents of the gift to ensure that the gift-
ed money has been legitimately earned by the donor.
Wealth tax is not applicable to financial assets such as
shares, bank deposits, mutual funds etc.
I built a house in 1995 on my ancestral agriculture prop-
erty in my village in Rajasthan at the cost of about Rs
500,000 ($10,700). I lived there up to 2004, migrated to
the US and am now a US citizen. I now want to sell it at Rs
1.6 million ($34,300), the buyer wants about 80 percent to
be paid in cash. My questions are:
1. What are the tax liabilities if the entire transaction is
done by cheque payment?
2. What is the safe amount to avoid the tax?
— Kalyan Sharma
1. Though Indian property transactions are rife with cash
transactions, it is best to avoid the same. It is possible to
find buyers who will pay 100 percent of the consideration
by way of a cheque.
2. Tax liability would be 20 percent of capital gains, com-
puted by subtracting sale proceeds from indexed cost. The
tax can be saved by investing the capital gain amount in
specific capital gains tax-saving bonds issued by the Rural
Electrification Corporation and the National Highways
Authority of India. There is a lock-in period of three years
for such bonds. The maturity amount is tax free and may be
remitted abroad once the three years period elapses.
3. It is possible for you to repatriate the net sale proceeds
(less taxes paid) or if tax is sought to be saved (less capital
gains since the capital gain has to be invested in bonds),
provided you follow the proper procedure for which you
can get guidance from your bankers. You would need to
provide the bankers with a CA certificate in Form 15CB and
an undertaking detailing the amount, etc that is desired to
be remitted abroad. The bank normally would provide you
with the formats for both these documents. The detailed
procedure for the same is explained in one of the queries
that appears in this column.
Readers who wish to ask A N Shanbhag a question can
fill in the following details and mail the coupon to: The
Business Editor, India Abroad, 42 Broadway, 18th Floor,
New York, NY 10004
Or fax it to 212-727 9730
A N Shanbhag is an investment consultant and author of In the
Wonderland of Investment; How to Convert a Taxpayer into a
Taxsaver; NRI Investment Guide. This article does not constitute
tax or legal advice. Consult your tax or legal advisor before making
any tax- or legally-related investment decisions. The authors may
be contacted at email@example.com
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