Your column mostly discusses Non-Resident Indians.
However, what about an Overseas Citizen of India? I have
recently acquired United States citizenship and am about to
apply for OCI.
How are the rules relating to public provident fund, tax
laws different for an NRI and an OCI?
— Maneck Dastur
The column actually refers to NRIs and Persons of Indian
Origin. A PIO is an NRI who has subsequently taken up
foreign citizenship. Almost all rules and regulations are
equally applicable to NRIs and PIOs.
OCI is a facility provided to PIOs — it is not a legal status
under the law. Therefore, you are actually a PIO under the
law who would have subsequently acquired OCI.
PPF and tax laws applicable to you are the same as applicable to someone who is an NRI.
I used to work for a state government in India. Last year I
retired. Now I will be moving to the US, and I intend to stay
there. I have already applied for a Green Card, which is
expected to come through soon. As I will be living in the US,
will my Indian pension be taxable in the US or in India?
— P Sangwan
As per Clause 2(a) of Article 19 of the Double Tax
Avoidance Agreement between India and the US, any pension paid by, or out of funds created by a Contracting State
or a political sub-division or a local authority thereof to an
individual in respect of services rendered to that State or
sub-division or authority shall be taxable only in that state.
In other words, any pension paid by a state government of
India will only be taxable in India and not in the USA.
I am a retired NRI, 75. I have no income in India. I do have
Permanent Account Number. I understand, I need to sub-
mit Form-15G for exemption of tax deducted at source.
How do I get this Form 15G?
— Raj Maheshwari
Form 15-G (or 15-H for senior citizens) is not available
for NRIs. The tax threshold for resident senior citizens is
Rs 250,000 ($4,000), but for NRIs, irrespective of their
age, it is Rs 200,000 ($3,200).
You will do well by filing tax returns to claim the tax
1. If an NRI or an OCI comes to India for an uncertain
deducted at source. Even if there were no TDS applied on
your income, it would be a prudent policy to file the returns
to protect yourself against inconvenience when the income
period, what is his tax liability as per Indian tax laws on his
foreign income overseas? The foreign income could be by
way of interest, rent, dividends on foreign shares etc.
2. If I become a resident of India, can I continue to hold
foreign assets, including Non-Resident External accounts?
As per the current Indian tax laws, a resident is one who
during a financial year, April to March, satisfies any one of
the following basic conditions:
S/he is in India for at least
a. 182 days in the FY, or
b. 365 days out of the preceding 4 FYs AND 60 days in
The stay in India need not be continuous.
Moreover, if an Indian citizen or a person of Indian origin, who is out of India, comes to visit India, the period of
‘60 days’ is to be replaced by 182 days. In other words,
they will be treated as residents only if they are in India
for 182 days or more in the FY.
The global income of a resident is taxable in India.
There is a transitional status of Resident but not
Ordinarily Resident between being an NRI and becoming
a full-fledged resident after returning to India. 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 10 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 amount-
ing in all to, 729 days or less.
An RNOR is not required pay tax in India on his foreign
It is true that the Foreign Exchange Management Act
Section 6(4) has granted general permissions to a resident
to hold, own, transfer or invest in foreign currency, foreign
security or any immovable property situated outside India
if such ‘Foreign Currency Assets’ were acquired, held or
owned by him when he was a Resident Outside India or
inherited these from an ROI.
However, in the case of NRE and Foreign Currency Non
Resident accounts, the NRE and FCNR accounts can be
closed either immediately or allowed to run up to their
maturity. Such deposits are treated as resident deposits
from the date of the return. FCNR interest remains tax-free
if and only if the returning NRI becomes an RNOR, but the
NRE becomes taxable from the day of his return, irrespective of the status.
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
The tax implications of transition
from NRI to resident Indian
would only embarrass his client.
Raising something that happened long
ago is a transparent effort by the government to unduly influence the ongoing
court proceedings, according to Lou
Colasuonno, a spokesperson for Martoma.
But the judge noted, ‘It is undisputed
that Martoma falsified the grades. The
embarrassment Martoma will suffer if the
law school evidence is disclosed does not
trump the presumptive right to public
access that attaches to substantive pretrial
The ruling gives the prosecution a
chance to prove that Martoma understood
the importance of minimizing electronic
evidence and his capacity to alter such evi-
dence to fit his version of events, accord-
ing to reports.
In another ruling the judge said the
defense could not use SAC founder Steve
Cohen’s testimony to the Securities and
Exchange Commission made in 2012 to
The judge said the SEC inquiry that
included the questioning of Cohen was
exploratory and investigatory in nature
and irrelevant for the criminal trial.
He noted that Cohen’s deposition was
taken before the development of much of
the evidence against Martoma, including
an admission by a doctor that he had provided the final results of the Alzheimer’s
test to Martoma.
The jury selection in the case was concluded January 9 and the trial began
The legal and economic sectors are
keenly watching the Martoma trial as it is
the largest insider trading case, involving
Martoma is accused of arranging for
paid consultations with an Alzheimer’s
disease doctor between 2006 and 2008 to
obtain inside information about a drug
being developed jointly by the pharma-
ceutical companies Elan Corporation and
Wyeth, according to court papers.
The information helped CR Intrinsic, a
part of Steve Cohen’s SAC Capital
Advisors, sell Elan and Wyeth shares and
avoid losses of approximately $276 mil-
lion, according to the prosecution.
Martoma, who was fired in 2009,
earned $9.8 million from this, according
to the chargesheet.
He has refused to plead guilty or cooper-
ate with the prosecution against Cohen.
He has claimed SAC Capital sold its
Wyeth shares based on information from
Ridgeback Capital Management LLC
founder Wayne Holman and not him.
He said that Cohen and Phillipp
Villhauer, SAC Capital’s senior trader,
were the ones who decided how to sell its
Elan and Wyeth holdings and to short the
Martoma faces 20 years in prison on
each of two securities fraud counts and
five years for a single conspiracy charge.
A victory and
a blow for Martoma