What nominees of your Indian investments need to know
I am an Indian national and a Singapore permanent resi-
dent working in India. My stipend is paid by my Singapore
employer in my Singapore account. I have a non-resident
external savings account to transfer my stipend (in
Singapore dollars) to India and would like to open a non-
resident ordinary savings account. The NRO account is
meant to credit the reimbursement of my expenses while I
am in India (in Indian rupees). This reimbursement is
being done by the Indian client company.
It has been two months since I shifted to India, and I am
still a non-resident Indian. But I will be based in India for
12-months due to which my status will change to resident
Indian. What is the implication of the same on my NRE and
If you are in India for 182 days or more in the financial
year (April–March), you will become a resident. When your
status changes to resident, you should get your NRE/NRO
accounts redesignated as resident accounts. The interest
from NRE account will be taxable during the FY for which
you are resident as per the Income Tax Act. The interest
from NRO account was anyway taxable and will continue
to be taxable even after redesignation.
The reimbursement of expenses if it is deemed over and
above normally permissible expenses incurred for performance of your duties could be taxable. You will do well by
posing the query regarding taxation on reimbursement to
I am an NRI and senior citizen aged 66 years. I have rent-
ed out a shop for Rs 25,000 ($460) per month. My income
is within the tax free limit as a senior citizen. But the tenant
insists he must deduct 30 percent tax at source. Is it a must
for him to deduct TDS?
Your tenant is right. He is legally required to apply TDS,
irrespective of whether you are in the tax zone or not.
However, the rate applicable to you is 30.9 percent. You
can claim the refund of tax, if due, by filing tax returns.
I am an NRI. I earn agricultural income in India of
around Rs 75,000 ($1,380) per annum. I understand agri-
cultural income is not taxable in India. Since the income is
lying idle in the bank, I would like to invest it in mutual
1. What is the ideal type of account for this type of needs,
with less or no tax implications?
2. Will I attract tax if I move all my current funds (around
Rs 800,000 or $14,700) as a single deposit into this pro-
posed new account? Would I have to split this amount into
several smaller deposits to avoid tax? This is all agricultural
income. Does agricultural income attract tax?
Agricultural income is tax-free in India. This income
being non-repatriable should get credited to your NRO
account. NRIs are not allowed to have normal resident
accounts. After becoming an NRI the account holder is
expected to get his resident accounts redesignated as NRO.
You are permitted to have a joint account with any resident
as a second or third holder.
Opening multiple accounts will not solve the problem.
You will have to be prepared to answer a query by the
department, if raised.
Note that interest on NRO suffers from TDS and this
amount can be reclaimed, if due, by filing tax returns.
I had bought a house in India before I came to the United
States. This was in 1999. Subsequently, I have taken up US
citizenship. Now, I am planning to sell the house. As per my
information, there was a 10 year ‘lock-in’ period that has
recently been done away with. Also, in the transaction, there
is a certain cash element involved i.e. ‘non white.’ Can this
also be repatriated? I also heard that there was a limit of
two residential properties? Has this also been removed?
1. Yes, the 10-year lock-in will not be applicable to you
when you sell the property. It used to be a requirement but
the same has been dropped a few years ago.
2. The ‘non-white’ element cannot be repatriated.
3. You can sell any number of properties, but only the
amount of forex applied to purchase two residential prop-
erties can be repatriated. This restriction hasn’t been
removed. There is no limit on the number of properties the
sale proceeds of which can be remitted after payment of
taxes, in the case of properties bought by rupee funds when
you were a resident Indian. The limit is only in the case of
properties bought by applying forex funds or from the NRE
account. The only limit in the former case is that the remit-
tance cannot exceed $1 million per financial year.
If my wife is made a nominee for a public provident fund
and NRE fixed deposits made with State Bank of India then
in the event of my death how can she prove herself to be the
nominee? Will amounts lying in such accounts automatical-
ly flow to her or does she have to pay some
inheritance/wealth tax, etc.?
— M V Ghosh
Your wife will have to provide to the bank, to its satisfaction, proof of her identity. You may check with the bank its
policy in this regard. Different banks/organizations have
differing policies in this regard. However essentially an
identity proof needs to be submitted. As per current tax
laws, India does not impose any inheritance tax nor is
wealth tax applicable on financial assets such as PPF and
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 firstname.lastname@example.org
India sets $2 billion currency
swap deal for South Asian nations
India has set up a $2 billion currency swap arrange-
ment to allow South Asian nations easier access to for-
eign currency funding, the Reserve Bank of India said.
This facility, which will be completely funded by India,
will enable the central banks of Afghanistan,
Bangladesh, Bhutan, Maldives, Nepal, Pakistan, and Sri
Lanka to borrow funds in dollars, euros and Indian
Man who discovered KG-D6
fields for RIL quits
Ravi Narayan Bastia, the man who discovered the gigan-
tic Krishna Godavari basin D6 field for Reliance
Industries and was awarded a Padma Shri for energy-
hungry India’s second biggest gas find to date, has quit
the week that was
Tourist inflow to Kerala crossed
Tourist inflow to Kerala crossed the 10-million market
in 2011, as against 9.2 million in 2010. The number of
foreign tourists increased to 732,980 in 2011, as against
659,265 in the previous year, whereas the inflow of
domestic tourists increased to 9.3 million as against 8.5
million. There has been a 350 per cent increase in the
number of overseas travelers during the last decade.
Moody’s cuts RIL credit rating to
A week after Reliance Industries cut estimates for
proven gas reserves in its Krishna-Godavari block by 6.7
percent to 3.67 trillion cubic feet, credit ratings agency
Moody’s has said RIL is credit negative. The revision has
not yet prompted a write-down of the value of the explo-
ration assets, which stood at $5.4 billion as of March.
HCL to freeze investment in
HCL Infosystems has said it will not make any new
investment in its computing hardware business. One of
the few Indian personal computer makers, it wants to
focus on higher margin businesses like services, learning
and multi-brand distribution.
Asha Bhosle’s restaurant chain
to open 15 outlets in India
After tasting success in international markets like the
United Kingdom and West Asia, fine dine restaurant
chain Asha’s — promoted by Bollywood singer Asha
Bhosle — is set to enter the Indian market. It plans to
open 15 outlets in the next five years.