INDIA ABROAD June 23, 2017 46 BUSINESS
am a Canadian citizen of
Indian origin and have recently applied for the OCI card.
Now that I am an Overseas
Citizen of India, will I be eligi-
ble to buy or do any dealing in
agricultural land? Also what are
the other benefits of opting for
--- O. P. Mehra
A: As per the Indian law, even
NRIs (as against those who have
overseas citizenship) are not
allowed to buy agricultural land.
Therefore, there is no question of
a dual citizenship to be allowed
just on account of the OCI card. It
must be remembered that having
the OCI card brings you (
theoretically at least) on par with an NRI
and not an Indian resident.
Recently I have taken up U.S. citizenship. If I opt for the dual citizenship offered by India, is there any
possibility that my U.S. income
may be taxed in India? Since I am
already taxed in the U.S., it would
amount to double taxation. What
are the precautions that I have to
A: Indian tax is payable
depending upon residency status
and not on citizenship.
Therefore, a dual citizen who is
an NRI (PIO actually), working in
the U.S. won’t have to pay tax on
his foreign income (foreign to
India). However, regardless of
dual citizenship, if such person
has an Indian income, tax will be
I am an NRI living in the U.S. I am
thinking of buying property in India.
Would I need permission from any
authority like income tax? Are
there any other considerations to
be kept in mind before undertaking the deal?
--- F. M. Dastoor
A: You do not need permission
from the tax authority or even
from RBI to buy property in
India. Tax incidence on property
is also minimal unless you sell it
upon which you have to pay cap-
ital gains tax. However, the most
important thing that you need to
take into consideration is that
you can buy or sell any number
of properties but you may repa-
triate funds relating to only two
properties in your lifetime. Most
NRIs, unaware of this rule, end
up trapping their capital.
Therefore, if you are thinking of
buying more than two proper-
ties, either now or later, you
should buy at the most two prop-
erties in each of your family
members’ names. The limit is per
person and not for a family. So
families of, say, four members
can potentially acquire, sell and
repatriate four properties.
I am a U.S. citizen born in India. I am
going to inherit a property in India,
and have a couple of questions in
this regard. Firstly, can I keep the
property in my name?
Alternatively, can I sell the property and keep the money in my
A: By virtue of being born in
India but being a U.S. citizen, you
will be a Person of Indian Origin
for the purposes of the law. You
are free to either hold the proper-
ty or sell it. However, if you
decide to sell it, you cannot sell it
to an NRI or a PIO, you will have
to sell it to an Indian resident.
Capital gains tax will be payable
if you sell the property.
Also note that since India does
not impose inheritance tax,
inheriting the property per se
will not lead to any tax incidence
I have an NRE account with two
different banks. I would like to
transfer amount from one NRE
account to another NRE account
or vice versa as per my convenience. Could you please tell me is
there any tax implication for this
--- Sharmila M.
A: Transfer by itself does not
create any tax liability. You may
freely transfer funds between
your NRE accounts without any
tax liability whatsoever.
I am in the process of selling my
apartment. This apartment was
purchased somewhere in 1994/ 95.
The money was paid from an NRE
account. The queries are:
Is it possible to put this money
in an NRE account directly? If yes,
then is it the entire amount or only
a part of it? If the entire amount is
credited to NRO in the beginning,
can it be transferred to NRE
account at a later date after show-
ing proof of payment from an NRE
account while purchasing? If the
funds are required to be invested
in long-term bonds, do the banks
have any schemes? Is any kind of
tax applicable on the difference of
price? If yes, how soon these for-
malities should be completed?
--- Lester Gomes
A: The sale proceeds of the
property are in practice credited
to the NRO account. After providing for the capital gain tax,
the balance proceeds may be
remitted abroad. Credit to an
NRE account by means of a
transfer from NRO account is not
The difference in the sale and
the cost price, i.e. the profit, is
termed as capital gains.
However, in this case, since the
apartment is held for more than
three years, the capital gain is
long-term and the same has to be
arrived at after indexing the cost.
The rate of tax is 20 percent.
The tax on all long-term capital gains which are chargeable to
tax, can be saved by investing
within six months the amount of
capital gains in capital gain tax
saving bonds issued by NHAI and
The lock-in period is three
years. The current interest rate is
around 6 percent p.a. and this is
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Benefits of an OCI card; dual citizenship and Indian taxes
By Sandeep Shanbhag