You are on page 1of 11

Can NRIs file nil tax return?

A N Shanbhag & Sandeep Shanbhag
Mail your queries to

Q : 1. What is the minimum time required to be outside India to qualify as an NRI and be exempt
from paying income tax in India? Is it 182 or 183 days? Are the days of leaving India and arriving
back in India (i.e. the dates stamped on your passport) counted in the tally of days outside the
2. Is it necessary to file income-tax (I-T) returns if an individual has attained NRI status for a
particular year? If the answer is no, what if proof of IT returns is required while buying a house,
car etc. (upon move back to India). If the answer is yes, on what basis would we be taxed?
--- Arnav

A : You have to consider time spent in India and not outside India to determine your NRI status. If in any
financial year if you spend 182 days or more in India, you will be a Resident of India. If you do not
satisfy this condition, by default, you will be an NRI. Both days of leaving and arriving back in India (as
stamped on your passport) will be considered in calculating the 182 days as specified above. If your
Indian income is less than Rs. 1.50 lakh, you need not file a tax return as no tax is payable by you. The income
you earn as salary as an NRI will be considered as your foreign income and hence
not be taxable in India. If you do desire to file an I-T return for the purposes as specified by you, you may
file a nil tax return
Q: I have been given to understand that as an NRI, I can buy a maximum of two real estate
properties. Is this true? What if I sell my existing properties (two in number). Then can I purchase
--- V N Saldana
A : You may buy or sell any number of properties. However, in the case of residential property, as an NRI
you would be allowed to repatriate the sale proceeds of a maximum of two properties over your life time.
Therefore, if your final aim is to repatriate the money, after two properties bought in your name, it would
be advisable to buy any further properties in the name of your immediate family members.

Q : I have misplaced my PAN and I need a duplicate. I need to pay income tax on
my savings account in India. I am a NRI. Please advise the procedure for getting a
duplicate pan number.
--- K

K Gupta

my wife will not have any income at all. MFs etc. PPF. his father. You will have to attach a photocopy of your lost misplaced PAN card along with an address proof. Q: We have some bank accounts with my name first and my wife's name second. contribution to PPF and for new investments in pension plans if permissible by FEMA rules. For Income tax purpose. LIC. it would be advisable to include the interest on the accounts standing with your wife's name first in your tax return. 2. We wish to know if 1.Shidhaye A : Yes.A : A specific form is available for requesting a duplicate PAN card. Therefore. it is better to have your name first in all the accounts where the money belongs to you. total income from all the banks will be mine. Now that some of them are compulsorily traded in demat form we wish to open a demat a/c with a separate linked SB a/c and online trading a/c. . It is possible to have such a/c jointly with an Indian Resident. The names of others as joint holders can be inserted for the sake of safety. If you do not have a photocopy of the PAN card. as you yourself have observed. or can I claim that it is my money and I will pay the tax on that income also (along with my own income). The shares are in physical form in joint names with me. --. Now the questions are as follows: 1. My son does not wish to repatriate the earnings from these investments but wishes to utilise them for payment of LIC premium. will the income earned from the money lying in bank accounts with my wife's name first be compulsorily be considered as her income? 2. before he changed his status to NRI. We also have some other bank accounts with my wife's name first and mine second. The money in these bank accounts has been from my earnings. Nonetheless. In other words. you will have to file a complaint at the police station and attach a copy of such complaint. Q : My son had invested in shares. only the interest on NRO will have to be shown in your account. Note that NRE and FCNR interest is tax-free. Ideally we should have opened / kept all bank accounts with my name first.

on arrival in India. bank notes or travellers cheques brought in by such person at one time exceeds the equivalent of US$10. The CDF is provided by the custom authorities if needed. We suggest he apply for OCI (Overseas citizenship of India) in which case a work permit will not be required. if the aggregate value of the foreign exchange in the form of currency notes. He also has multiple entry visa for 10 years. However. however. My question is whether there is any limit on the funds (money) that I can carry into India and out when I return again. : Me & my husband are US citizens but were born in India. Once a person becomes and NRI. in terms of the CDF. I am going to India for the first time. We would like to know the following: 1) Does he need any kind of 'work permit' to work & be paid in INR? For tax reporting purposes what kind of permit does he need in India? --. . My husband recently got a job in a software outsourcing company in India. Q: I am originally born in India.Clayton D'souza A : Any person.000 or the aggregate value of foreign currency notes brought in by such person at any one time exceeds the equivalent of US$5.3. What are the legal formalities in this regard? --. And as far as taking back is concerned.Sudheer Moghe A : Your son will have to open an NRO (Non PINS) demat account for the shares that he had purchased before becoming an NRI. such person has to make. Earnings from the shares may be utilised for the purposes specified by you. whether NRI or PIO or a foreign citizen can bring into India foreign exchange without any limit. it follows that such sum cannot exceed what has been brought in. After a period of six years.000. Does he has to close his old SB a/c --. He would need to file tax returns in India in the regular course. He maintains a NRE account and his old SB a/c is still active. now I have acquired US citizenship. This account can be jointly held with a Resident Indian. In our opinion your husband would require a work permit to work in India. a declaration to the Custom authorities in Currency Declaration Form (CDF).Shamina Sharma A : Your husband would be an NRI working in India. we strongly recommend that you consult an emigration lawyer before leaving for India. Indian income of an NRI is taxable in India more or less on the same lines as a Resident Indian's. All such accounts can be either redesignated as NRO or closed. All said. by law he is not allowed to have Resident SB accounts.

I have one NRE account. then how much tax would she need to pay? Is there any upper limit to transfer the money in my wife's account? --. the amount becomes chargeable to tax in the hands of the recipient. If you are remitting the funds to your own account in India. will she need to pay tax on that amount? If I transfer the money from my NRE account to my wife's account (In India) and she uses this money in a fixed deposit.Kurush Canteenwala A : Transfer by itself does not create any tax-liability. you can send any amount.000 during an FY. However. If it is a gift (or amount sent for household expenses) and you are relative of the donee.000 to India.Ashish Wagh A: There will be no tax incidence either on you or on your wife resulting from the transfer of funds from your NRE account to your wife's account in India. This year I intend to send around $50. If the money transferred is capital in nature. if the transfer is a compensation received in India against some service rendered or some goods exported outside India. There is no maximum limit as such. as explained in the above para. if you are sending the funds to some other person's account. However. if she were to invest the funds (open a Fixed Deposit as per information provided). Q :I propose to remit US$20.000 a year can be remitted that way. She proposes to invest in term deposit in Indian bank in her name.Q : I have been an NRI for over four years now. the purpose for which you send the money is important. 50. My query is "If I transfer money from my NRE account to my wife's account (in India). the whole of such amount will be charged to income tax of the recipient.000 to my mother in India through my NRE account in India by way of gift. Q : I am currently working in UK on a client site for last 1 year. what is maximum tax free amount I can send to India? --. the question of paying tax thereon does not arise. There is no upper limit on the amount that you can transfer to your wife's account. She has no other income in her name and hence the interest she earns will earn from the TDR will be below the taxable limit. However. I will be grateful if you favour me with a reply. the income / interest from the investment will be clubbed and taxable in your hands. Just wanted to know if I would be needed to pay tax on that? Also please let me know. Can she after one year remit the entire amount to me for my maintenance expenses? I understand a sum of $200. if the amount exceeds Rs. there would be no tax. . Otherwise. there is no tax.

Again. this rental income may be (check with a consultant in the USA) taxable for you in the USA. if you rent it out. The annual expected income from this property is about Rs 3 Lakhs.50. Which approach do you think has more tax benefits and why? --. If this is the only house that you own. I am keeping the house locked currently but if I rent that house out then would I be still able to claim the tax benefit by showing earning from rent in my income and pay appropriate taxes in that. the entire interest you pay (even if it over Rs 1. The same is the case with you if your Indian income is negligible.000 as maintenance expenses and US$ 200. My Indian employer is paying me my Indian salary which is getting credited in my account every month.Sumi A : There would be no tax incidence on either you or your mother upon gifting to each other any sums of money.--. So technically she can remit to you US $300. My question is as an NRI.50. who is a Senior Citizen. tax benefits on home loans are common for residents and NRIs. I have taken house loan in India from ICICI for which I am claiming the income tax benefit on the interest as well as amount paid as principal. if you keep it locked. Can you please let me know if there is any best time for returning back in relation to tax and other related matters . am I allowed to avail the tax benefit on the house loan.000 as a gift. the rental income will attract lower (or nil) tax.000) is deductible.000 per financial year. I am on deputation to Canada. I am planning to purchase an investment property in Mumbai.000. OR Under my father's name.a. Now I have two approaches to purchase this property: I can buy it under my name. On the other hand.000 p. Q: I am working in Canada for past two years. --. The US$ 200.Vrushabh A: You will have to gift the amount to your father to enable him to buy the property in his name.000 and not US$200. as an NRI. You will lose title to that amount (and of course to the property).com Q: I want to return back permanently to India after completion of many years of living in the US. you would be entitled to an interest deduction of Rs 1. You are correct in observing that she can remit the entire amount back to you for maintenance expenses. If your father has negligible income. India.Laxman Rai A: Yes. however. The investment will be about Rs 1 Crore. is US$100. This property will generate rental income for many years into the future till I sell it.S.000 limit is for investments abroad including gifts and donations. What is the best time for NRIs to return? A N Shanbhag & Sandeep Shanbhag Mail your queries to ww_sify@sify. which includes US$ 100. I am an NRI and I currently live in U. but your father is a better bet since he is a senior citizen. The limit for maintenance expenses.

satisfies any one of the following 2 basic conditions: 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 FY. The duration can be extended if needed. Q : I am a citizen of India and staying in India. I request the mutual fund to deposit my cost of Rs 10 lakh to NRE account which is repatriable & Rs 2.Pappu A: A Resident is one who during a Financial Year (FY) which is from April to March. Tax becomes payable only when you redeem the units. Do I have to pay any tax for the trading? Please let me know. however. they will be treated as Residents only if they are in India for 182 days or more in the current FY. Therefore. --. Most persons going abroad for an employment for the first time will have the status of Resident since they will be covered by the ‘b’ clause above. Your bank will help out with the procedure for the same. My company wants to send me US for project related work.165% payable by the MF directly to the .and the reasons behind it. Also. Equity-based MF schemes (65% or more exposure to equities) are governed differently from the debt-based schemes. dividend is tax-free in the hands of the investor. : I am Canadian citizen migrated in 2001 from India. I have H1B VISA.oriented mutual fund for Rs 20 lakhs. Also depending upon the number of years you have stayed outside India. NRIs or otherwise. always plan to arrive into India after the 1st of October in any year. Please advise how muck tax I have to pay in India for holding the fund more than one year. Can I buy shares when I will be in USA? 5. My stay in USA will 1 year initially. your demat account will be redesignated as NON PINS and you cannot buy any shares in such demat account. you can avail of the RNOR status for the next two years. note that long-term gains are tax-free for all categories of investors. Do I have sold them before moving to USA? 3. I have demat account here and I am possessing shares of different companies. You will have to open separate demat account in your new status as NRI under the PINS scheme. whether for more than one year or not. --. In both the cases. The tax depend upon the nature of your trade.5 lakh to NRO account. the 60 days in the clause ‘b’ above is to be replaced by 182 days. In other words. Shall I be called a NRI during my stay in USA? 2. If I open NRE & NRO Account and redeem 50% of my holdings after one year & fund grows by 25% (assume). I am thinking to buy equity.Somanath A: No tax is required to be paid merely for holding the funds. Here are my questions:: 1. However. You do not have to sell the shares of your existing companies. or as a member of the crew of an Indian ship.Michael A: If you can. your income abroad could be tax-free up to three years after you become a Resident. Can I sell them when I will be in USA? 4. The stay in India need not be continuous. if an Indian citizen leaves India in any year for the purpose of employment. My concern is if I visit India can I withdraw cash from NRO account to use in India without any restrictions. A person who is not a resident is an NRI. You can continue to buy shares when you are in the US. --. there is a dividend distribution tax @14. However. This way you can live in India for the rest of the year and yet be an NRI and not pay tax. I am working in a software company. Under RNOR status your foreign income if any is not taxable in India.

2006. the sale proceeds are repatriable after payment of tax. NRIs can't gift their income. I also understand that the taxes I have already paid in Japan can be deducted against my income tax payable in India (Article 23 of DTAA). However.. the rate as on March 31 may to be taken for all forex income on which tax is payable in India. Can I gift this money to my close relative and escape taxation? --. A N Shanbhag & Sandeep Shanbhag Mail your queries to ww_sify@sify. The repatriable amount can be credited to NRE account and also to NRO account. since my earnings are in JPY (Japanese yen). Therefore. all the funds arising from your income for the years when you were an NRI would be tax-free in India. your understanding is perfect. After retirement. your salary for April to June and that portion of your gratuity which is assignable to this period would be eligible to tax in India. During this period (2002-2007). Q: I am a legal resident of Switzerland. DTAA). I am planning to visit India. 80C.. Equity-based schemes are also exempt from long-term capital gains tax. my status as a taxpayer is Resident Indian (182+ days in India).Pramod A: 1. You cannot escape your tax liability by gifting your income to any person. often myself (OCI Card holder) with my wife (PIO Card holder). For the purpose of converting your earnings in JPY to INR. Also. Please let me know if I'm right on these counts. If you have used forex for purchasing the units.3% Q: I am coming back to India in June 2007 after staying at UAE for 5 years. 2. You can lessen the burden by contributing up to Rs 1 lakh to avenues under the umbrella of Sec. Yes. So my status would be ordinary resident for the financial year 2007-2008.exchequer in the case of debt-based whereas the equity-based are exempt from this tax. 2. transfer or invest in foreign currency. Notified Bank Deposits. I understand that for income tax purposes. LIC etc. So do I have to pay income-tax on this gratuity money to be received and remitted to India in June 2007? I have some other earning outside India like my salary during FY 2007-08 (My status will change to Ordinary resident as explained above). own. Q: I started working in Japan since Nov. held or owned by such person when he was resident outside India or inherited from a person who was resident outside India. The short-term capital gains are taxed @10. I understand from the DTAA between India-Japan that my income in Japan is taxable in India as my status is Resident Indian (Article 14/15. such as PPF. I was having NRI status. your foreign earnings for FY07-08 would be taxable in India. I will get my gratuity which is occurred for last 5 years (2002-2007). However. . if any. foreign security or any immovable property situated outside India if such ‘Foreign Currency Assets’ were acquired. Consequently. 6(4) has granted general permissions to a person resident in India to hold.Praganesh A: FEMA Sec. we always want to come back to Switzerland as we are paying regular and relatively high Swiss income tax. how do I calculate the rupee equivalent of my income for income tax purposes? Is there any Chapter/Section of the Income Tax Act that discusses this issue? --. You can freely withdraw from either of the accounts for local disbursement.

As mentioned before. Under the general permission. My brother owns a successful event management firm and is looking for some additional funds to expand his business. Mail your queries to ww_sify@sify. the general permission is not available even for large listed companies. In other words. from April 2008 to March 2009 you should not be in India for 182 days or more and so on to maintain your NRI status. will I be allowed to invest in his business as a partner? And if yes. A financial year ranges from April to March. if you spend 182 days or more in India. This is as per current tax laws. India) . you will lose your NRI status. it is advisable to check the law as is applicable for each year that you travel to India. An NRI or a PIO may invest by way of contribution to the capital of a firm or a proprietary concern in India on non-repatriation basis. I currently have an NRE Savings account to transfer my stipend (in Singapore Dollars) to India and would like to open an NRO Savings account as well to reimburse my expenses from the company (Satyam Computers. Question: How many days can we stay in India. would like to keep our Non-Resident status to avoid taxation in India. Similarly. will I be allowed to transfer my share of the profits back to the US as and when required. Therefore. My headcount is Singapore and I am paid my training stipend by the Government of Singapore in my Singapore account. Investment with repatriation benefits requires permission of the RBI. note that in future. Special permission is required for repatriability. A person resident outside India other than NRI/PIO also require the prior approval for making investment by way of contribution to the capital of a firm or a proprietorship concern or any association of persons in India. So as of now. each year for the years? 2008 2009 2010 2011 2012 2013 2014 to be able to have a status as Non-Resident to avoid taxation? --.Veerat A: You will have to take the precaution of not being in India for 182 days or more during a Financial Year (FY) which is from April to March for each of the years mentioned by you.During our stay in India. in the year from April 2007 to March 2008. after payment of the applicable tax? --. in India the residentship status is applicable for the financial year and not calendar year. of Q : I am an Indian national & a Singapore Permanent Resident currently working in India. tax laws may change and this information may not hold good. Tax laws for NRIs A N Shanbhag & Sandeep Shanbhag Q : I am an NRI settled in the US.Shrinath A : NRIs/PIO have to seek prior permission of Reserve Bank for investment in sole proprietorship concerns/ partnership firms with repatriation benefits. As per the regulations. However.

Many proactive companies in India have got their offices abroad incorporated in that country just to bypass this problem.while I am in India (in Indian Rupees). since Satyam is an Indian company. you will become a Resident.Amar Singh A : 1. Select Category : Web Classifieds Domain Jobs Mobile Real Estate WWW Search Search WWW Enter Recipes Ringtone Enter Ringtone Na Recipes Sify Shopping More . you may face a problem unless the company has taken a few necessary precautions. Now my question is should I need to pay the tax in India when I come back after a year for the amount that I have saved out of my allowances or it is considered as non taxable. When your status changes to Resident. For FY 07-08. there is a transitional status of RNOR between being an NRI and a Resident. --. It has been two months since I shifted to India & hence am still a Non-Resident Indian (NRI) for the time being. Q : I am working in Canada since July 2006 and I have been paid from my Indian company in the form of allowances and not a salary and I am here on work permit. you should get your NRE/NRO accounts redesignated as Resident accounts. If you are in India for 182 days or more in the FY (Apr-Mar). then the income would be taxable in India. 3. 2. You are likely to be an RNOR for two years but this would depend upon the number of years you were an NRI before coming to India.Raghu A : For FY 06-07. it depends upon when you return to India. you would be an NRI and your foreign income would not be taxable in India. The interest from NRO account was anyway taxable and will continue to be taxable even after redesignation. However. However. What is the implication of the same on my NRE & NRO accounts? --. you will continue to be an NRI and hence the income will not be taxable. if you return earlier. Salaries paid from such offices are not taxable in India if the employee happens to be an NRI for tax purposes. However. If you return after October 2nd. The interest from NRE account will be taxable during the FY for which you are Resident as per the Income Tax Act. your foreign income is not taxable in India. In the RNOR status. but I will be based in India for 12-months due to which my status will change to a resident Indian. You will do well by posing the same query to your employer.

5% (and not 7. Do I have any tax liability in USA.2% return on investment after tax saving.8% with the 6% tax-free that you get in India.8% return after tax (For 20% tax bracket) where as 6% interest in NRE/FCNR accounts in India gives 7. the benefit of investing money in NRE/FCNR account is that we can save tax on interest. My impression is that. 50. For instance. Mail your queries to ww_sify@sify. Is it right???? 5. 3. Kindly get information on US tax laws from a consultant specialising and practicing tax laws of the US. you have to compare this 4.000. What are the benefits and disadvantages of keeping money in NRI accounts in rupees and US dollars? Meaning why people might prefer one on another? I really appreciate you taking time to provide valuable information to help me answer above questions. but also to ensure continuity after the individual returns to India. otherwise opt for NRE account.Enter job title Enter cityname Tax Enquires for NRIs with NRE/FCNR account Sify Finance A N Shanbhag & Sandeep Shanbhag Q: I have some questions as below for NRE/FCNR account: 1. Can I freely move Dollars in FCNR account to and from India-USA (If money is matured or not invested in FD/mutual fund but sitting in savings account)? 4. However. if any. TDS is required to be applied on interest from NRO and also income by way of capital gains without any Q : I am an NRI and have NRE and NRO account bank in joint names with my wife and adult son. The NRE account is maintained in Indian rupees and the FCNR in foreign currencies. 1. exceeds the minimum tax threshold of Rs. . If you feel that the rate of exchange of US$ is likely to rise more than the difference in the rates of interest earned between NRE and FCNR. income from some sources suffers TDS in India. --. There is no legal obligation to file tax returns in India unless the income chargeable to tax. you should opt for FCNR.000 less Tax. an after tax rate has to be compared with the equivalent tax-free rate and not the before tax rate. 6% tax-free is equivalent of 7. We have recently jointly purchased a flat at Mumbai. However. Therefore.2%) before tax.Iswar A : 1.00. We regret legally we can answer queries pertaining only regarding Indian tax laws and Indian investments. You are correct in observing that a 6% taxable rate in the US is equivalent of 4.8% after tax. in order for comparisons. 2. So 6% interest earning in US gives 4. However. Do I have to reveal my investments through NRE/FCNR account in India while filing US tax? If yes what form do I use? 2. The funds from FCNR account can be freely repatriated to USA 4. Do I have to file tax return in India for the NRE/FCNR investments and interests? 3. 5. These accounts can be opened and maintained by remitting funds through normal banking channels in freely convertible currency from abroad or by transfer of funds from NRE or FCNR accounts. It has now been let at a monthly leave & license fee of Rs. it is prudent to file the returns not only for claiming the refund.

You can adjust the amount of TDS (and advance tax paid on self-assessment) against your total tax liability through your tax returns. This liability will be computed on the basis of the income tax rates which again depend upon your income and the exemptions. . The TDS is not the same as your tax liability. You will have to get a PAN card if you do not have one. how do we go about registering with the tax authority? b) Tax is deducted at source from NRO account interest c) can tax deducted at source from a) & b) above can be reclaimed from the tax authorities? --. 2 & 3. If so.Can you please adivse a) if we have to file Tax Returns in India.Vasant A : 1. deductions and rebates you can claim.