I am a resident of the
United Kingdom in
the process of setting
up a start-up in Bengaluru. I am in talks with
a few institutions for
seed funding. My wife’s
brother has offered
financial help, but I
am more inclined to
raise the money in the
form of a personal
loan rather than as
equity in the company.
What are the regulations with respect to
an Indian resident giving a loan to a Non-Resident Indian, who is a
— Piyush M
A resident is permitted to make a rupee loan
to a NRI/Person of Indian Origin who is a close
relative of the resident individual (‘relative’ as
defined in section 6 of the Companies Act 1956)
by way of crossed check/electronic transfer sub-
ject to the following conditions:
i. The loan is free of interest and the mini-
mum maturity of the loan is one year.
ii. The loan amount should be within the
overall limit under the Liberalized Remittance
Scheme of $250,000, per financial year
iii. The loan is to be used for meeting the bor-
rower’s personal requirements or for his own
business purposes in India.
iv. The loan shouldn’t be used, either singly or
in association with other person, for any of the
following activities in which investment by per-
sons resident outside India is prohibited:
a. the business of chit fund,
b. Nidhi Company,
d. trading in Transferable Development
Explanation: For the purpose of item (c), real
estate business shall not include development
of townships, construction of residential / commercial premises, roads or bridges.
v. The loan amount should be extended as a
credit to the Non-resident Ordinary account of
vi. The loan amount cannot be remitted /
repatriated outside India.
vii. Repayment of loan shall be made by way
of inward remittances through normal banking
channels or by debit to the NRO/Non-resident
External/Foreign Currency Non-resident account of the borrower or out of the sale proceeds
of the shares or securities or immovable property against which such loan was granted.
I am a United States citizen. I inherited a
house from my father when he passed away
more than a decade ago. It’s been lying vacant.
a. If I sell this house, would I have to pay any
taxes? If yes, how much?
b. How much foreign exchange (US dollars)
can I repatriate from the proceeds of the sale?
— A Sawant
You’ll have to pay tax on long-term capital
gains at 20 percent on indexed capital gains.
The cost for the purpose of calculation of capi-
tal gains will be the cost as paid by your father.
After the provision or payment of taxes, you
may remit up to 1 million per FY. You’ll have
to submit Forms 15CA and 15CB to effect the
My friend returned to
India permanently in
January 2015 after being
an NRI for 10 years. He
has NRE fixed deposits
that will mature in 2018.
His tax consultant has
said he’ll be a resident
but not ordinarily resident for 2016-2017. He
says since my friend
came back to India permanently, he will be a
resident in India as per
Management Act and his interest income from
NRE deposits will be taxable in 2016 and 2017.
The tax consultant is correct. RNOR is a sub
status under the Resident status. So, the interest on NRE will become taxable. It is only the
foreign income that is tax-free for an RNOR.
My uncle from India would like to donate
funds to a school for differently abled children
in Canada. What are the regulations? Are there
any limits on how much he can donate?
— Manpreet Kaur
A resident individual/entity (trust; company,
etc), may remit up to $250,000 in a FY as gift
to a person residing outside India or as donation to an organization outside India. Remittances exceeding $250,000 require prior Reserve
Bank of India permission. This is also with
respect to a resident Indian making a dona-tion/gift to an NRI/organization outside India.
A resident cannot gift to another resident, in
foreign currency, for the credit to the latter’s
foreign currency account held abroad.
General permission is available to persons
other than individuals to remit towards donations up to 1 percent of their foreign exchange
earnings during the previous three FYs or $5
million, whichever is less, for (a) creation of
Chairs in reputed educational institutes; (b)
contribution to funds (not being an investment
fund) promoted by educational institutes; and
(c) contribution to a technical institution or
body or association in the field of activity of the
donor company. Remittance in excess of the
same shall require prior approval of the RBI.
I’ve been in the UK since May 2015 on a work
permit. My Indian company pays me in the form of allowances and not a salary. Will I need to
pay taxes in India when I return after a year for
the amount that I save out of my allowances?
For FY 15-16, you would be an NRI and your
foreign income would not be taxable in India.
For FY 16-17, it depends upon when you return.
If its after October 2, you will continue to be an
NRI and hence the income will not be taxable.
If you return earlier, the income would be taxable in India.
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
‘A MAJOR VICTORY FOR FREE SPEECH AND INTERNET USERS EVERYWHERE’
Even as Facebook dealt with the blow of the Telecom Regulatory Authority of India’s decision to
bar Free Basics, it received a second
blow when billionaire venture capitalist
Marc Andreessen, a board member,
tweeted, ‘Anti-colonialism has been eco-
nomically catastrophic for the Indian
people for decades. Why stop now?’
Though Facebook founder Mark
Zuckerberg quickly distanced himself
from the comments saying, “I found the
comments deeply upsetting, and they
do not represent the way Facebook or I
think at all,” and Andreessen issued a
formal apology, it caused a massive
amount of public relations damage to
Facebook. As a Vox headline noted, ‘ The
biggest drama in Silicon Valley this
week is over a VC’s bad tweet.’
Venktesh Shukla, president, TiE-
Silicon Valley told India Abroad, “I have
no idea why Marc would say something
as insensitive as he did. If he had meant
to say that anti-capitalism had been cat-
astrophic for India, that would have
been far less offensive. Instead, he said
India has been following anti-colonial-
Venture capitalist Kanwal Rekhi said,
“I am sorry to see this from Marc. Marc
definitely is not an anti-Indian person
in any way. Social Media does tend to
amplify the sentiments.”
He added, “In any case, I am for Net-
Neutrality and not in favor of Free
Basics proposed by Facebook. As an
after thought, Marc’s comment about
anti-colonialism is probably not too far
off the mark. Anti-colonialism resulted
in socialism, which has served India
Anirvan Chatterjee, a technologist
and activist, told India Abroad,
Renderos hoped that Facebook would now take a step back to consider solutions
that provide Indians and other people around the world the opportunity to experi-
ence the same Internet experience that allowed for them to grow from an idea to a
multi-billion dollar corporation.
Anirvan Chatterjee, a technologist and activist from the San Francisco Bay Area a
A N SHANBHAG SANDEEP SHANBHAG
supporter of 18Million Rising, told India Abroad, “Like many Indian American
techies, I’m delighted that TRAI came out for an open Internet for all Indians. Over
two-thirds of Indian Americans are foreign-born, and most of us rely on an open
Internet to stay in touch with our friends and families back home.”
Net neutrality, he said, “guarantees our friends and families in India freedom of
choice on how we stay in touch. Skype? Google? Twitter? Or new products from
Indian startups? Indians can now make their own choices, instead of being pres-
sured to use Facebook products on a two-tiered Internet.”
Evan Greer, representing Fight For The Future, a nonprofit advocacy group in the
area of digital rights, too called TRAI’s decision a major victory for free speech and
Internet users everywhere, no matter what Mark Zuckerberg’s well-paid public rela-
tions team might tell you.”
India’s rules for giving an NRI a loan
At the joint news conference by Reliance Communications and Facebook in Mumbai February 10, 2015, announcing their Internet.org tie up. SHAILES