My mother is selling her apartment in Mumbai. She is likely to
realize a sale price of around Rs
20 million (around $318,000).
Since she was given a flat by the
developer as a result of demolition of the old building, I am
assuming her cost basis is ‘zero’.
What would the capital gains
tax be? Is there a way to tax shelter it by buying government
bonds? What are the limits on
If she wants to gift me some or
all the proceeds in dollars, how
will that work out? I am a United
States citizen and her only off-spring.
— R Kairamkonda
1. It is necessary for you to get the value of the redeveloped flat she is occupying as on the date she was given possession of the flat by the builder. This can be obtained from
the builder or her neighbors who have bought their flat
from the builder. If this is not possible, you can get the flat
assessed for its value on that date from an official valuer.
This is her deemed cost of acquisition of the redeveloped
If she was the owner of the redeveloped property for a
period of over 3 years, compute the LTCG based on this
deemed cost of acquisition. She can save the 20 percent tax
on this capital gain by investing this amount, (limited to Rs
5 million per financial year), in Capital Gains Bonds of the
Rural Electrification Corporation or the National
Highways Authority of India.
If she was occupying the property for less than 3 years,
she has earned short-term capital gains and will have to
pay tax at the normal rates applicable to her after taking
into account her other income chargeable to tax and the
tax-saving strategies she is employing on this income.
Though there are some accountants who carry the same
view as you do in assuming the cost of acquisition of the
redeveloped flat as nil, we have a different view. She did
earn LTCG when she surrendered her original flat to the
builder for redevelopment. These gains became exempt
under section 54 when she was given possession of the
redeveloped flat since the value of this flat (= her deemed
cost of acquisition) was far higher than her capital gains.
She was right in not paying any tax on this redevelopment
transaction at that juncture. The
second capital gains she would be
earning, if and when she sells this
flat, is unrelated with her first
2. Under the Liberalised
Remittance Scheme, resident
individuals can remit up to the
limit of $75,000 per FY (
April-March) for any permitted capital
and/or current account transactions or a combination of both.
The facility under LRS is in addition to those already available for
private travel, business travel,
studies, medical treatment, etc.
Gifts and donations are subsumed under the LRS limit. In
other words, she can send as a gift to you up to $75,000 per
In July my family and I relocated to India from the US. We
have rented out our house in the US.
If I have understood your past columns correctly, as per
Indian laws, I will be a Resident but not Ordinarily
Resident. Consequently, the US rental income will not be
taxable in India. Is this correct?
If I were to eventually sell the US property, by what time
should I sell it so that I don’t have to bear any India-related
taxes on the same?
—- Berjis Mistry
Your understanding is correct. RNOR is basically a sub-status under the general category of the Resident Indian
status. Under this status, one’s foreign income is not taxable in India. Consequently, the rental income from US will
not be taxable in India as long as you are an RNOR.
Generally, the RNOR status would be available for a period of two FYs. Hence, if you have relocated in July this year,
then you would be an RNOR for FY 13-14 and for FY 14-15.
The same principle would apply in the case of selling the
property too. Any profit (capital gain) on sale of the property would qualify as your foreign income and if you wish
to remain outside India tax liability, then you should execute the sale before March 31, 2015.
I’m a senior citizen. Recently, I have taken up Canadian
citizenship and have obtained the Overseas Citizenship of
India card. However, over the long term I plan to live in
India and hence wish to maintain all my records and bank
accounts as they are. I wish to continue my Resident Indian
Saving Bank Accounts my Permanent Account Number and
also file Income Tax Returns as an Indian Resident. What
amount of stay in India do I have to show for this? Can I still
retain my Canadian citizenship?
—- Malati Joshi
If you are based in Canada and keep visiting India, then
you need to be in India for 182 days or more in each FY to
maintain your resident Indian status. Once your status is
resident Indian, you may file your return as a resident as
well as maintain all your resident bank accounts. The PAN
is, as the nomenclature suggests, permanent and does not
change during your lifetime. You can file your returns in
India even if you do not come to India during the FY.
Your Canadian citizenship will in no way affect your residentship status. That would strictly be as per the number of
days spent in a particular country.
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
Tax breaks after relocation to India
social networking on mobile apps or search
engines these are coming together, which
means the bucket size getting smaller and
smaller. When the bucket goes to one that
becomes hyper-personalization. That means
the result is particularly targeted at you.”
“Hyper-personalization is not new though
it was on a slow slope,” he said, noting that it
was the technology of delivering this hyper
personalized experience that was not there.
“But what has happened in the last 10 years
is basically the rise of commodity hardware
and commodity open source software. The
cost of these new platforms got cheaper and
cheaper. Data Warehousing platform just
about 10 years ago used to cost $70,000
to $80,000 to analyze 1 terabyte data.
Today it cost less than $100 and is avail-
able in the market all because of open
source. Now you can keep more and more
data in your saving system.”
He added, “So companies are not deleting
data collected earlier, though there are regu-
larity requirements. But if it is not there, we
have enough technology available economi-
cally in order to keep this data forever.
Ubiquitous connectivity is actually one of
the major causes of what we are seeing in the
But Kumar also acknowledged that hyper-
personalization came with the risk of mak-
ing users more vulnerable. Citing Scott
McNealy, co-founder and chief executive
officer, Sun Microsystems — who predicted
the lack of privacy in an Internet-driven
world in the 1990s — he said, “The notion of
privacy has to change. We have made our-
selves more vulnerable by carrying those
devices. But we have to live with it, because
the value that we get out of giving up some
privacy is actually enormous.”
This vulnerability was also a key concern
among the attendees, who posed questions
on the subject.
Deepak Deolalikar, president, SIPA, spoke
to India Abroad about why they chose
hyper-personalization as the topic for the
“Over the last few years, big data, mobile
and social technologies have evolved
tremendously. So the question is what next,”
he said. “The topic of personalization is a
very interesting one as it involves the conflu-
ence of big data, social, Web and mobile
technologies. Pioneers like Amazon, Netflix
are already at the forefront of provided high-
ly personalized recommendations. It is now
time for other companies to take advantage
of this trend.”
The event was keynoted by Ro Khanna,
former Deputy Assistant Secretary in the
Department of Commerce and now a
Congressional candidate from California
District 17 for the 2014 election.
He spoke about creating job opportunities
for the middle class as well as keeping the
products made in the US consumer friendly
He also spoke about the need for the
United States to fix its immigration policy:
“US is losing high-skilled immigrants and
these people are moving, seeing opportunity
in China, India and Brazil. We have to see
The question of hyper-personalization ;Page A56