ENGAGE

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In focus-Taxation and Investment avenues for Non-resident Indians (NRIs)
Confused about your India related investments? Wondering about the tax implications on each of them?

The below article provides a brief description of the asset classes permissible to NRIs, with the tax implications on each of them. So, go ahead and use the power of knowledge and become a smart NRI Investor! Investment avenues permissible for NRIsThe following investment avenues are permissible for NRIs i) Bank deposits ii) Equity, Mutual Funds and Exchange Traded Funds (ETF) iii) Real Estate iv) Insurance Taxation regulations for NRIs The income of NRI accruing or arising in India is taxable in India. The income tax slabs for NRIs is as follows : Income Under Rs. 1,60,000 1,60,001 – 5,00,000 5,00,001 – 8,00,000 Over Rs. 8,00,000 Rate Nil 10% 20% 30%

Please note that the amount of income tax shall be increased by 3% education cess. Tax implications on Investments i) Bank deposits- An NRI can hold three types of deposits- Non Resident External Account (NRE), Non Resident Ordinary Account (NRO) and Foreign Currency Non Resident Indian Account (FCNR) on the basis of the currency and source of deposits and earns interest on the same.

• NRE deposits. Mutual Funds and ETFs.30% (10% plus 3% education cess) without indexation b) Short-Term Capital Gains tax is payable at slab rates applicable ETFs are taxed on the same lines as debt mutual funds Withholding Tax Implications : Tax on capital gains will be withhold as per the rates specified above.Benefit of DTAA can be availed only if NRI has submitted valid PAN details. proof of residency and other documents as prescribed within specified time. Interest on NRE deposit & FCNR deposit are exempt.No WHT Important note. ii) Equity.ENGAGE Tax Implications Interest on NRO deposit is taxable. • For Equity and Equity Oriented Mutual Funds on which securities transaction tax has been paid a) Long-Term Capital Gains tax is NIL b) Short-Term Capital Gains tax is payable @15. Investment in equity can be made either through PIS (Portfolio Investment scheme) or through IPOs a) Dividend Tax Implications – Dividends on which dividend distribution tax has been paid by domestic company are tax-free.90% (30% plus 3% education cess) or rate specified in Double Taxation Avoidance Treaty (DTAA) with respective country of residence of NRI whichever is lower.45% (15% plus 3% education cess) others • Others. . Withholding Tax Implications (WHT) on interest• NRO deposits. specified mutual funds and ETFs in India.No WHT • FCNR deposits.NRIs can invest in equity. b) Capital Gain Tax ImplicationsShares of a company or any other security listed in a recognised stock exchange or a unit of a Mutual Fund specified under section 10 (23D) of the Act held for a period more than twelve months is treated as long term capital asset and those held for not more than twelve months is treated as short term capital asset.WHT at the rate of 30. inclusive of debt mutual funds a) Long-Term Capital Gains tax is 10.

depending upon the holding period. other than agricultural property a) Tax Implications for Income from House property : The annual value of property shall be taxable as Income from House Property except 1 self occupied residential property.5 lacs subject to conditions.60% (20% plus 3% education cess) after indexation • Short-Term Capital Gains tax is payable at slab rates applicable • In either case. gives tax-benefits under section 80C to you . Repatriation is restricted to a maximum of two properties in a life time. Following deductions are allowed from the annual value as computed above : • Municipal taxes paid to local authority • 30% of (Annual value – Tax paid) • Interest paid on borrowed capital However. if the interest is paid for self occupied property then deduction for interest on loan borrowed shall be Rs. iv) Insurancea) Life Insurance Life Insurance is a good way to protect your family. • Long-Term Capital Gains tax is 20. On sale of property. while at the same time.ENGAGE iii) Real Estate-NRIs can purchase real estate in India. once the tax is paid. Please note if the capital gain earned on sale of residential house or any capital asset other than residential house is invested in other residential house then the capital gain on such asset is exempt from tax as per section 54 (no cap on residential houses) and 54F (cap of two residential houses) respectively of the Act. such capital gain can also be exempt if the money is deposited in the Bonds specified u/s 54EC of the Act. the seller will either earn short-term of long-term capital gains. Annual value of the property would be calculated as higher of rent received or receivable or notional rent as prescribed. the money is freely repatriable. b) Capital Gain Tax Implications Property held for a period more than thirty-six months is treated as long term capital asset and those held for not more than thirty-six months is treated as short term capital asset. However. 1.

e. Implications as per proposed Direct Taxes Code (DTC) The DTC is proposed to be effective from April 1. • Further tax deduction available upto INR 15. 1 lakh to Rs. Some of the major implications as per DTC for NRI are as follows : • Tax Slab under DTC Income Under Rs. parents and dependent children. DTC is silent of applicability of surcharge or cess.001 – 10. Please note that in case any of the persons as specified above is a senior citizens i. above the age of sixty five years then tax benefit upto Rs. 1. 25.000 Over Rs.00. Also. 3 lakh. 1.000 Rate Nil 10% 20% 30% The basic exemption for women and senior citizens above the age of sixty five years shall be Rs.000 shall be available instead of Rs.000 (Please note that the maximum limit of Rs. Tax Implication• Tax deduction available upto INR 15.000 and 2.00. 20.60. 1.60. spouse and dependent children.000 for self. 2011.90.000 10.000 for parents.000.001 – 25. 15.ENGAGE Tax Implication• Tax deduction available upto INR 100.00.00. .40.000 1.00. Further the deduction limit for savings in specified investments has been proposed to be increased from Rs.000 is available aggregate of Section 80C along with section 80CCC and 80CCD of the Act) • Maturity proceeds are tax-free under current Tax laws b) Medical Insurance Section 80D of the Act allows you to claim tax deductions for Medical Insurance Premia paid for yourself and your spouse.000 respectively.

STT is proposed to be calibrated.Capital gains would be computed after allowing deduction at a specified percentage of capital gains. Following capital gain are exempt from tax : Gain arising on sale of Residential property / other property is exempt if such capital gain is invested in another residential property provided that only one residential property is owned by the NRI. • Assets held for less than one year . in case of let out property gross rent taxable shall be amount of rent received or receivable and 20% of gross rent shall be allowed as deduction. 2000. • Capital Gains Income under the head ‘Capital Gains’ will be considered as income from ordinary sources taxed at the maximum marginal rate as follows• Listed equity shares or units of an equity oriented fund held for more than one year from the end of the financial year . gross rent shall be nil and no deduction for taxes or interest shall be allowed.ENGAGE • Income from House Property : Under the DTC. For more details on topics and to obtain responses to your queries. presented by Mr. Also. Please note that the base date of indexation is proposed to be shifed from April 1.Capital gain would be computed after allowing indexation benefit.Capital gains would be computed without any specified deduction or indexation benefit. Please note that benefit of indexation would not be allowed. In case of house property which is not let out. in case of any one house property which is not let out deduction on account of interest on capital borrowed for acquisition or construction shall be allowed only up to Rs. Sandeep Shanbhag. Also the specific rate of deduction for computing capital gains is yet to be finalised. 1. However. • Other assets held for more than one year .icicibank.com/nri . please visit the NRI Engage section of www.5 lakh per annum. “Taxation and Investment avenues for NRIs” was covered as a topic in an exclusive webinar organised by ICICI Bank NRI Services. 1981 to April 1.

In the case of an individual on visit to India or a member of the crew of an Indian ship or a person leaving India for employment outside India. As per the Act an Individual is said to be resident of India if he satisfies any of the following 2 basic conditions : a) He is in India for more than 182 days in the previous year.ENGAGE Please note that the tax write up below is for the general understanding and reference. An Individual is said to be resident but not ordinarily resident of India ifa) He has been non-resident in India in 9 out of 10 years preceeding the previous year or b) He has been in India for 729 or less days during 7 years preceeding the previous year. or b) He is in India for more than 365 days in the 4 years preceeding the previous year and more than 60 days in the previous year. The user need to verify all the facts. . 1961 (the “Act”) is a non-resident in India. law and contents with the text of the prevailing statutes and seek appropriate professional advice before acting on the basis of any information contained herein as the taxation implications may vary depending upon the facts in each case / interpretation by tax authorities and the tax laws are subject to change from time to time. the requirement of stay in India of 60 days in condition (b) above is extended to 182 days. in respect of anything done or omitted to be done by any such person by placing reliance upon the contents of this write-up. ICICI Bank Ltd expressly disclaims any liability to any person. Definition of NRI: An Individual who is not a resident under the Income-tax Act.

It may be noted that the entire sum if it is over and above Rs. However.ENGAGE NRI Expert Speak The scope of taxation for NRIs is extremely vast. To summarise. the fair market value on the date of the gift will be considered for arriving at the assessable value. given the various facets that have to be taken into account. an eminent personality in the field of NRI Taxation guides you through the various aspects of taxation. drawings. sculptures or any works of art etc. shares etc. Shanbhag answers queries on gifts to spouses from NRIs. 50. jewellery. Sandeep Shanbhag. Mr. sent to relatives remains tax-free. Do send in all your NRI taxation queries. transferred without consideration are subject to income tax in the hands of the recipient. 50. In the last article. shares and securities. 50. the important points were • NRE accounts are in Indian banks and hence subject to laws in force in India • The Income Tax Act specifically exempts interest from NRE accounts from tax.000. we will cover another interesting aspect of NRI Taxation. and we will try to answer them. Mr. as mandated through Budget 2009 For immovable property the stamp duty valuation will be considered whereas for movable property. Till then. In the next edition. Happy Investing! . other tax provisions are still applicable In this edition. paintings.000 is taxable and not just the incremental amount above Rs. Now. any sum above Rs. for a non-relative. we had covered “Gifting an Income to a non-earning spouse in India”. any sum money. however. Gifted to my relatives?” Remittances sent by NRIs to their relatives are tax-free as India has discontinued gift tax since 1998. In this edition. The value of any non cash property such as land or building. We hope you found this article useful. we will answer queries related to remittances for NRIs “What is the tax I have to pay if I remit money to my spouse or a friend? Are there any tax implications on jewellery.000 will be taxable in the hands of the recipient.

000 • Coverage for emergency travel to India Move to a World of Exclusive Privileges You can immediately upgrade to NRI Edge by following the simple steps mentioned below: • Fund your account to ensure that the balance is INR 3 lac or more in your NRE/ NRO Savings Account or fund your Customer ID to ensure that it has a balance of INR 5 lac or more.com/nri and mail it to us.ENGAGE NRI Edge . download your copy of the e-brochure from www.icicibank. For more details on NRI Edge.000 • Coverage against loss of passport or baggage in India • Coverage against hospitalisation from accident in India.000 for Point Of Sale terminals • Customisable cash withdrawal and spend limits on the card • Free and unlimited access to any ATM across India • Free multi-city cheque-book facility. Equipped with premium Platinum Debit card. • Log on to your Internet Banking account and apply through the 'Service Requests' option OR download the NRI Edge Upgrade Registration Form available on www.000 for cash withdrawal and INR 200. Special benefits: • Banking Benefit • Free ICICI Bank International Platinum ATM-cum-Debit card with higher limits of INR 100. If you are looking for priority service and exclusive privileges.a cut above the rest 000 000 000 000 0 0 000 000 000 NRI Edge is ICICI Bank’s premium banking offering for NRIs with a superior combination of account features and service.icicibank.com/nri . free demand drafts and pay orders • Service Benefit • Remote Relationship Manager facility • Priority servicing at call centers.000. • India Linked Investment Benefit • Travel Insurance Bouquet with • Personal air-accident coverage worth INR 10. NRI Edge is an ideal choice. a dedicated remote relationship manager it is sure to add pleasure and peace of mind to your India related banking. worth INR 100.

Further. Insurance cover is available at the sole discretion of the customer. 3) NRE FD 4) NRO FD 5) FCNR FD. Investment benefits: ICICI Bank makes and has made no representation or warranty as to the quality.ICICI Bank Limited (“ICICI Bank”) is incorporated in India and regulated by the Reserve Bank of India ("RBI") and maintains its corporate office in Mumbai. Depending on your current or permanent country of residence some of the products and services might not be available to you. Reference to certain product and services in the newsletter or otherwise is for illustration purpose only and should not be construed as solicitation by ICICI Bank and/or its affiliates/group companies and is subject to product/service specific terms & conditions. ICICI Bank shall not be liable or responsible in any manner whatsoever for any loss . opinions. damage cause by availing third party products/services or any demurrage costs or for any defect or variation in the quality. available at www. Nothing herein is intended to constitute legal. condition. hence you can now get the following easily by walking into any ICICI Bank Branch Instant Cheque Book Instant Debit Card Internet Banking: Use the power of ICICI Bank internet banking platform to conveniently perform key banking transactions Download e-statements Funds Transfer Make a bill payment to a registered biller View your transactions and much more Disclaimer. securities or investment advice.com. Please familiarise yourself with the terms and conditions applicable. India. The invitation. condition or fitness or performance of such products/services or any guarantees or warrantees given by third party. we have enabled the following features which will help simplify your banking transactions Phone Banking: To help you manage your India banking needs while you are away we have enabled the following features on all our Phone Banking Numbers Mini Statement through IVR Request for Internet Banking user ID Request for a cheque book Deposit Issue ‘stop payment’ instruction Apply for or Renew a Fixed Update Contact Details India Branches: We understand that while you are in India you might need instant access to your account. that such products/services shall be available at any particular time or location. Please note that NRI Edge is a bouquet of features/facilities offered by ICICI Bank on the following NRI-based products and services 1) NRE SB Account 2) NRO SB Account. or opinion regarding the appropriateness of any investment or a solicitation for any product or service. The opinions. This activity should not be construed as solicitation by ICICI Bank and/or its affiliates/group companies.ENGAGE What’s new at ICICI Bank At ICICI Bank it is our constant endeavor to make banking convenient for you.icicibank. timely. that any defects or errors will be corrected. information provided herein is not intended for distribution to. As a part of this endeavour. correct or secure. By providing your contact details. The use of any information set out herein is entirely at the recipient's own risk. ICICI Bank does not warranty that any third party products/services shall be uninterrupted. tax. reliable. fitness and performance of the third party products and services covered under NRI. views rendered here are of a third party and ICICI Bank representatives in their individual capacity and ICICI Bank shall not be responsible or liable for any loss or damage arising by relying on such views. any person in any jurisdiction where such distribution or use would be contrary to law or regulation. . Please contact us for more details. accurate. you understand and agree that your details would be shared with the insurance provider for verifying customers identity in case of claims. or use by. Edge Facility.

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