Certain relatives can repay a non-resident’s loan

Where an authorised bank in India has a granted loan to an NRI, it may be repaid by a resident close relative such as parents, siblings and their spouses, children and so on


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I have worked in India from 1 April 2015 to 31 July 2015. Then I worked abroad till 24 March 2016. I wanted to know if I can claim income tax exemption for the year 2016?

—Keshav G.

Taxability of income in India depends source of income and residential status. Any income, the source of which is located in India, is taxable in India irrespective of residential status. The residential status is determined on the basis of physical presence of an individual in India during a particular financial year. An individual with residential status of ‘Resident and Ordinarily Resident’ is taxable on her worldwide income and is required to report her global assets in her India tax return. You will qualify as a resident of India if you satisfy one of the following basic conditions:

* If your stay during the financial year is 182 days or more; or

* If your stay during the financial year is 60 days or more, and in the four years immediately preceding the financial year is 365 days or more.

According to the explanation to section 6 of the Income-tax Act, 1961, the period of 60 days is extended to 182 days for Indian citizens who being abroad, come on a visit to India.

Based on the facts provided, assuming that you are an Indian citizen who has been continuously residing in India in the past and has left India for employment purposes during the year, you will qualify as a Non-resident. This is because your in India has been for less than 182 days during the year under consideration. So as a non-resident, you will be liable to pay taxes only on income earned or received in India.

Can my relative in India repay my loan that I have availed from an Indian bank?

—Rishi Sinha

Where an authorised bank in India has a granted loan to an NRI, it may be repaid by a resident close relative such as parents, siblings and their spouses, children and so on, through the account of such relative.

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