y query relates to tax-
ation on earnings
(interest / rent etc.)
that we receive from
our assets in India. My
husband and I have a
joint bank a/c (NRE). On whose
name will the income be assessed?
Can we opt to have the income
assessed on any one name?
A: As per the Indian law, it is
the source of the funds that the
taxability depends upon. If the
funds invested belong to you,
the income will be treated as
yours and tax, if applicable, has
to be paid by you. And vice
versa. If both of you have separate sources of income, then it is
best to have separate accounts.
These separate accounts may be
held jointly, however, each
account will have one principal
source and there will be no mix-up as far as taxation is concerned. As far as the rent is concerned, again, if the asset (in this
case the property) belongs to
you, then the rent will be taxed
in your hands, irrespective of
whose name the money comes
into the account. If the property
is jointly owned, the tax will be
in proportion to the ownership.
Could you please explain the tax
implications that are involved when I
send money to India? I have a rupee
savings account in India and the
money gets deposited in equivalent
rupees. I then order a demand draft
in the name of my beneficiary. Will
my beneficiary get taxed?
That would depend upon
whether you are a relative of the
beneficiary. The first act of
transfer from a bank account
abroad to your rupee savings
account does not create any tax-
liability. If your status for the
Financial Year April-March is
NRI and if the money earned is
an income not arisen out of
some nexus with India, either by
way of Indian employment or
business, the question of levying
tax thereon does not arise.
Otherwise, your global
income is taxable in
India, whether you
transfer it to India
the funds to beneficiary will be treated
as a gift. If the
money gifted is
above Rs. 50,000
and as mentioned
earlier, you are a
relative of the
would be no tax.
ii) brother or sis-
iii) brother or sis-
ter of spouse
iv) brother or sis-
ter of either parents
v) any lineal ascendant or
vi) any lineal ascendant or
descendant of the spouse.
vii) spouse of the persons
referred in clauses (ii) to (vi).”
Also note that the rupee sav-
ings account that you mention
has to be NRO. An NRI is not
supposed to have a Resident
savings account as per law.
I am in the U.S. and have just
received my green card. My father
upon his death left me and my
cousin a property through his will.
My cousin is based in India. Now we
own this property jointly. I wish to
buy this joint property from my
cousin. My questions are:
1) What is my tax liability consequent
to inheriting my share of the property? Can this tax be offset by purchasing my cousin’s share of the
2) Do I need to have an NRE account
to buy this inherited property? Or
can I issue my U.S. bank checks to
my cousin for the purchase?
3) I have a regular savings
account (not NRE/NRO) in India, Can
I transfer money from the U.S. to this
account and then issue the checks
to my cousin, where he
can withdraw from this
regular savings account?
1. India doesn’t
apply inheritance tax –
so the event of inheritance per se will not
give rise to any tax liability. Similarly, there
will be no tax liability
for your cousin too
upon inheriting the
when his share in the
property to you, he
will have to pay capital
2. It would be convenient if you have an
NRE bank account in
India but direct remittances would also be
3. An NRI cannot have an
ordinary Resident account. You
will have to get your regular savings account redesignated as
You may send the funds
either to a freshly opened NRE
account or the redesignated NRO
account and then issue your
cousin a check from such
We presume that your cousin
is not a PIO (a person may be
resident in India yet not be a citizen of India) and also that the
money transaction will take
place in India.
If one has moved out of India about a
year back and has become an NRI,
what will happen to his existing
investment in PPF, NSC and other
tax saving instruments? Also, can
we still invest in PPF or not?
An NRI can continue to invest
in his PPF account (opened during his Resident tenure) till
maturity only. The PPF account
cannot be extended after maturity.
Other post office-related
investments such as NSC, NSS
and SCSS aren’t open for NRIs.
However, for tax saving purposes, NRIs can invest in tax saving
mutual funds (called ELSS in
India) or in tax saving banking
fixed deposits — these are like
ordinary fixed deposits but specially designated as tax saving.
There is a mandatory five-year
lock in for such deposits.
Also, it is possible to remit the
funds to your account abroad.
You will require an Indian
Chartered Accountant to issue a
certificate certifying that tax if
any is due on the sale has been
The author may be contacted at
By Sandeep Shanbhag
Paying Tax on Earnings From Assets in India
INDIA ABROAD September 8, 2017 25 BUSINESS